President Clinton signs a classified presidential order “directing the Departments of Justice, State and Treasury, the National Security Council, the CIA, and other intelligence agencies to increase and integrate their efforts against international money laundering by terrorists and criminals.” The New York Times will later call this the first serious effort by the US government to track bin Laden’s businesses. However, according to the Times, “They failed.” William Wechsler, a National Security Council staff member during the Clinton administration, will say that the government agencies given the task suffered from “a lack of institutional knowledge, a lack of expertise… We could have been doing much more earlier. It didn’t happen.” [New York Times, 9/20/2001]
August 20, 1998-1999: US Pressure on Persian Gulf Governments Fails to Impact Funding of Al-Qaeda
On August 20, 1998, President Clinton signs an Executive Order imposing sanctions against bin Laden and al-Qaeda. The order gives US officials the power to block accounts and impose sanctions on any government, organization, or person providing “material assistance” to al-Qaeda. Beginning in 1999, mid-level US officials travel to Saudi Arabia and a number of Persian Gulf countries seeking information about charities supporting al-Qaeda and attempting to put pressure of governments allowing such charities to operate (see June 1999). But these governments provide little to no assistance. The New York Times claims that by the end of 1999, “with the [US] embassy bombings receding into memory, the [Clinton] administration largely moved on. ‘These visits were not followed up by senior-level intervention by the State Department, or for that matter by Treasury, to those governments,’ [says] Stuart Eizenstadt, a Treasury official and a participant in the trips. ‘I think that was interpreted by those governments as meaning this was not the highest priority.’” William Wechsler, one US official involved in these efforts, will later claim, “We had only marginal successes.” He will cite the United Arab Emirates imposing money laundering laws for the first time in 1999 and efforts to ban flights by Ariana, the Afghan national airline (see November 14, 1999; January 19, 2001), as the main successes. Counterterrorism “tsar” Richard Clarke later notes that the Saudis promised information and support, but in the end gave little of either. He will claim that they “protested our focus on continuing contacts between Osama and his wealthy, influential family, who were supposed to have broken all ties with him years before. ‘How can we tell a mother not to call her son?’ they asked.” The New York Times concludes that by 9/11, “the assault on al-Qaeda’s finances had largely fallen by the wayside.” [New York Times, 9/20/2001; New York Times, 12/10/2001; Clarke, 2004, pp. 190-195]
Late 1998: US Initiates New Effort to Stop Financing of Al-Qaeda, but to Little Effect
Shortly after the US embassy bombings in 1998 (see 10:35-10:39 a.m., August 7, 1998), the US launches a new interagency effort to track bin Laden’s finances. There had been a previous interagency effort in 1995 but it had fizzled (see October 21, 1995). Counterterrorism “tsar” Richard Clarke sets up a task force. He orders it to find out how much money bin Laden has, where it comes from, how it is distributed, and to stop it. Clarke appoints William Wechsler, a National Security Council staff member, to head the task force. The task force begins an investigation of bin Laden’s finances (see Late 1998). Clarke later writes that he and Wechsler “quickly [come] to the conclusion that the [US government] departments [are] generally doing a lousy job of tracking and disrupting international criminals’ financial networks and had done little or nothing against terrorist financing.” [New York Times, 9/20/2001; Clarke, 2004, pp. 190-191] Clarke will later claim there was only limited effort from within the US government to fight bin Laden’s financial network. He will assert that within weeks of setting up the interagency effort, it was determined that only one person in the US government, a lowly Treasury Department official, appeared to have any expertise about the hawala system, an informal and paperless money transfer system used by al-Qaeda that is popular with Muslim populations worldwide (see 1993-September 11, 2001). Clarke will later write that the “CIA knew little about the [hawala] system, but set about learning. FBI knew even less, and set about doing nothing.” The FBI claims there are no hawalas in the US, but Wechsler finds several in New York City using a simple Internet search. Clarke will say, “Despite our repeated requests over the following years, nobody from the FBI ever could answer even our most basic questions about the number, location, and activities of major hawalas in the US—much less taken action.” The efforts of other departments are not much better. The one Treasury official with some expertise about hawalas is eventually let go before 9/11. [Clarke, 2004, pp. 192-193] Efforts to pressure governments overseas also meet with little success (see August 20, 1998-1999).
Late 1998: US Investigators Reassess Bin Laden’s Finances, Discover Saudi ‘Fundraising Machine’
In late 1998, a new US interagency task force is created to track bin Laden’s finances (see Late 1998). The task force asks for help from the CIA’s Illicit Transactions Group (ITG), a little known entity keeping track of criminals, militants, and money launderers. The task force and ITG scour US intelligence data on al-Qaeda’s finances and soon discover that the assumption that al-Qaeda gets most of its funds from bin Laden’s huge personal fortune and numerous businesses is wrong. While he does have a fortune, according to William Wechsler, the task force director, al-Qaeda is “a constant fundraising machine.” The evidence is indisputable that most of the money is coming from Saudi Arabia. [US News and World Report, 12/15/2003] However, what little pressure the US will put on Saudi Arabia before 9/11 to stop the funding of al-Qaeda will have no effect (see August 20, 1998-1999 and June 1999).
June 1999: US Fails to Get Saudis to Act Against Al-Qaeda Financiers
The US has been pressuring the Saudi government to do more to stop Saudi financing for al-Qaeda and other militant groups, but so far little has been accomplished (see August 20, 1998-1999). Vice President Al Gore contacts the Saudis and arranges for some US officials to have a meeting with their top security and banking officials. William Wechsler from the National Security Council (NSC), Richard Newcomb from the Treasury Department, and others on an NSC al-Qaeda financing task force meet about six senior Saudi officials in Riyadh, Saudi Arabia. One US official will later recall, “We laid everything out—what we knew, what we thought. We told them we’d just had two of our embassies blown up and that we needed to deal with them in a different way.” But the Saudis have virtually no oversight over their charities and do not seem interested in changing that. Newcomb threatens to freeze the assets of certain groups and individuals if the Saudis do not crack down. The Saudis promise action, but nothing happens. A second visit by a US delegation in January 2000 is ineffective as well. [US News and World Report, 12/15/2003]
