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Copyright 2002 The Washington Post

The Washington Post

June 18, 2002, Tuesday, Final Edition

SECTION: A SECTION; Pg. A01

LENGTH: 1818 words

HEADLINE: Infighting Slows Hunt for Hidden Al Qaeda Assets; Funds Put in Untraceable Commodities

BYLINE: Karen DeYoung and Douglas Farah, Washington Post Staff Writers

BODY:

The U.S.-led effort to track money belonging to terrorist groups has been hobbled by bureaucratic infighting and a
growing understanding by investigators that most of al Qaeda's money is not in banks but in untraceable commodities,
including gold and diamonds, according to U.S. and international officials.
The transfer of al Qaeda's assets, the scale of which is only now becoming clear, has left much of the organization's
financial network untouched by the Bush administration's campaign to freeze terrorist funds around the globe.
At the same time, the efforts to shut down terrorist financing, one of the key components of President Bush's
counterterrorism strategy, have been hindered by interagency turf battles in the U.S. government, sources in various
agencies said.
The disputes mirror those that have plagued intelligence-sharing efforts between the CIA and the FBI. Coupled
with the elusive nature of al Qaeda's financing, they reveal the formidable challenges confronting the financial leg of the
war on terrorism nine months after Bush launched it amid great fanfare.
"If we were trying to build a new police force in another country, we would have to tell them, "Look at us and don't
do what we do,'" a senior U.S. official said. "We compartmentalize, we don't share intelligence among agencies, no one
seems to have the authority to make that cooperation happen. We are very much a Third World country in how we are
doing this."
According to dozens of investigators and financial sources interviewed in Asia, Africa and the United States, al
Qaeda operatives long before Sept. 11 began shifting money out of bank accounts that could be traced and into
untraceable gold and precious stones such as diamonds, tanzanite and sapphires. But the move went largely
unrecognized.
"It was a paradigm shift in the financial organization that we missed," said one European financial investigator.
"Everyone was trying to find bank accounts in Geneva when al Qaeda was greatly reducing their exposure in the formal
financial sector. Now we are finding tentacles into all kinds of precious stones and metals."
Such commodities are small and easy to store and transport, and they hold their value over time. They can also be
released in small amounts on the market without arousing attention. Monitoring the shift of millions of dollars into
precious stones was made even more difficult because the U.S. government has still not developed a central database on
what is known about al Qaeda's financial network.
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The government's effort is marred by other problems as well. Senior officials from the Treasury and Justice
departments and their component agencies, along with the CIA and the Pentagon, began weekly interagency meetings