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FBI chief: Al-Qaida hiding its wealth

| Friday, Sept. 20, 2002

WASHINGTON (AP) — FBI Director Robert Mueller said Thursday that the al-Qaida terror network has been shifting much of its wealth from cash to gold and other commodities, making it harder for U.S. agencies to track.

At a hearing, some lawmakers said a recent allegation that a suspected member of a New York terror cell spent $89,000 in a casino raises the possibility that the cell was laundering money for Osama bin Laden's network.

A Democratic lawmaker asked Mueller about criticism that the FBI may have lacked sufficient evidence when it arrested the six men this weekend near Buffalo, N.Y., and was acting under pressure to show results. The six, accused of supporting bin Laden's organization, are being held in jail without bail.

"That is absolutely not true," Mueller replied. "The FBI does not respond to entreaties to find somebody to arrest."

Al-Qaida "is seeking alternative ways" of moving funds, Mueller testified at the hearing of the House Financial Services Committee. He said the FBI and the CIA are following every lead in the government's ongoing effort to shut down the network's finances but because the money is mostly being moved abroad, it's difficult for U.S. investigators to trace it.

Still, committee chairman Rep. Michael Oxley, an Ohio Republican, suggested movements of large quantities of gold should be fairly easy to detect.

Oxley asked Mueller about a report in yesterday's New York Times that al-Qaida has transferred substantial assets beyond the reach of banks into diamonds, gold and other commodities.

Starting after the Sept. 11 attacks, the U.S. government began an aggressive program of freezing bank accounts and other assets of suspected terrorists around the world and groups said to support terrorism.

Treasury Department officials have touted the results, reporting last week that some $112 million in assets belonging to suspected terrorists have been frozen worldwide in more than 500 accounts since the Sept. 11 attacks. Of that total, $34 million has been blocked in the United States and $78 million overseas.

U.S. officials say that the asset freezes and arrests in Europe, Southeast Asia and elsewhere have weakened the al-Qaida organization.

Still, the Treasury report acknowledged that more must be done. Officials say one of the challenges is trying to track money flowing outside traditional financial channels, such as trading in diamonds or gold.

A recent United Nations report said the global campaign to choke off financing for terrorist organizations had stalled, with only $10 million frozen in the past eight months. The report said the campaign has pushed al-Qaida underground but hasn't stopped the flow of money and fresh recruits.

The administration will create a task force to improve regulations for catching drug dealers, terrorists and others involved in money laundering, Deputy Treasury Secretary Ken Dam told the Financial Services Committee yesterday.

He said the new task force would be housed within the Treasury Department and would work with financial regulators, law enforcement, consumers and others.

Congress last fall enacted a sweeping anti-terrorism and anti-money-laundering law in response to the terror attacks and Treasury has been putting out new rules to implement it.

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