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Tenet obtained a modest supplemental appropriation, which funded counter-
terrorism without requiring much reprogramming of baseline funds. But the
CIA still believed that it remained underfunded for counterterrorism.
78
Terrorist Financing
The second major point on which the principals had agreed on March 10 was
the need to crack down on terrorist organizations and curtail their fund-raising.
The embassy bombings of 1998 had focused attention on al Qaeda's
finances. One result had been the creation of an NSC-led interagency com-
mittee on terrorist financing. On its recommendation, the President had des-
ignated Bin Ladin and al Qaeda as subject to sanctions under the International
Emergency Economic Powers Act.This gave the Treasury Department's Office
of Foreign Assets Control (OFAC) the ability to search for and freeze any Bin
Ladin or al Qaeda assets that reached the U.S. financial system. But since OFAC
had little information to go on, few funds were frozen.
79
In July 1999, the President applied the same designation to the Taliban for
harboring Bin Ladin. Here, OFAC had more success. It blocked more than $34
million in Taliban assets held in U.S. banks. Another $215 million in gold and
$2 million in demand deposits, all belonging to the Afghan central bank and
held by the Federal Reserve Bank of New York, were also frozen.
80
After Octo-
ber 1999, when the State Department formally designated al Qaeda a "foreign
terrorist organization," it became the duty of U.S. banks to block its transac-
tions and seize its funds.
81
Neither this designation nor UN sanctions had much
additional practical effect; the sanctions were easily circumvented, and there
were no multilateral mechanisms to ensure that other countries' financial sys-
tems were not used as conduits for terrorist funding.
82
Attacking the funds of an institution, even the Taliban, was easier than find-
ing and seizing the funds of a clandestine worldwide organization like al Qaeda.
Although the CIA's Bin Ladin unit had originally been inspired by the idea of
studying terrorist financial links, few personnel assigned to it had any experi-
ence in financial investigations. Any terrorist-financing intelligence appeared
to have been collected collaterally, as a consequence of gathering other intel-
ligence.This attitude may have stemmed in large part from the chief of this unit,
who did not believe that simply following the money from point A to point B
revealed much about the terrorists' plans and intentions. As a result, the CIA
placed little emphasis on terrorist financing.
83
Nevertheless, the CIA obtained a general understanding of how al Qaeda
raised money. It knew relatively early, for example, about the loose affiliation
of financial institutions, businesses, and wealthy individuals who supported
extremist Islamic activities.
84
Much of the early reporting on al Qaeda's finan-
cial situation and its structure came from Jamal Ahmed al Fadl, whom we have
mentioned earlier in the report.
85
After the 1998 embassy bombings, the U.S.
government tried to develop a clearer picture of Bin Ladin's finances. A U.S.
FROM THREAT TO THREAT
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