In the U.S.-led "war on terror," much of the public attention is focused on efforts to capture or kill key terrorist figures. Counter-terrorism officials are also trying to stop terrorists by cutting off their money supply. But, tracking the flow of terrorist funds is extremely difficult.
Shortly after the attacks of September 11th, 2001, President Bush made it clear that the United States would go after terrorists not just in their hideouts but in their pocketbooks as well.
To that end, U.S. officials have frozen bank accounts of people they suspect of supporting organizations like Hamas and al-Qaida, and have also publicly identified organizations and individuals they believe are contributing to the terrorists' causes.
But tracking that money is extremely difficult. Terrorist groups often resort to using an ancient practice of paperless financial transfers. "Hawala", which means "transfer" in Arabic, allows someone to transfer funds outside any banking system.
Robert Looney, a professor of national security studies at Naval Postgraduate School in California and an expert in terrorism financing, explains how it works.
"Essentially, what you do is go to a local agent and give him money and specify who you would like the money delivered to in, say, Pakistan," he said. "And there's a corresponding agent on the other end who gets the wire or e-mail, whatever, and he goes ahead and makes the delivery to the recipient at that particular point."
No money actually crosses any borders. The two agents settle up accounts at a later date. It is all done with no paperwork. It is also cheap. With a laptop computer and a phone, hawala agents can operate out of a shabby mud hut or a modern high-rise building.
Hawalas are favored by South Asian migrant workers in places like Saudi Arabia and the United Arab Emirates as a way of sending money home. They often do not trust banks and their paperwork and, perhaps, their charges. Mr. Looney says terrorist groups have appropriated hawalas as a way to move funds.
"It's been abused, of course, by the terrorists, who see it ... as an ideal way of transferring money because there's no real paper trail," he said. "And there's not a lot you can do about it in terms of regulation. Some countries have tried. But, again, I'm not so sure they've stopped the terrorist aspects of it."
But speaking recently at the Heritage Foundation, Stuart Levey, the Treasury Department's undersecretary for terrorism and financial intelligence, says intelligence about terrorist finances is usually quite good.
"It tends to be very, very reliable," he said. "People don't send money to each other for no reason at all. And so if you have a transaction you know there's some reason for it. And it also tends to be the kind of hard, concrete information that allows effective followup. It has the kinds of concrete information that you can really use."
But Ibrahim Warde, an adjunct professor at the Fletcher School of Law and Diplomacy and author of a forthcoming book about terrorist financing, says counter-terrorism officials have overrated the usefulness of hawalas to terrorists.
"Most of the cells have been trying to be self-financing," he said. "My guess is most of the money is circulating through envelopes and suitcases of cash than actually through the hawala system because of the current focus on hawala."
In fact, he says, terrorists do not really need a lot of money to operate.
"One problem I have with the terrorist financing discourse is that it's really premised on this axiom that was stated shortly after September 11th, which is that money is the lifeblood of terror, or money is the oxygen of terror, and variations on this kind of statement," he said. "From my work on that subject, I realized that it costs so little money to conduct acts of terror that I don't think that it's a big obstacle."
But Treasury Undersecretary Levey says counter-terrorism officials have made it increasingly difficult for terrorists to move funds around the globe. He says any dent in the terrorists' armor, no matter how financially small, is useful.
"More important than looking at the amount of money we've frozen is to think of these accounts not as pools of money, but rivers through which money was flowing," he said. "And so if you can freeze these accounts, it's nice if you have a lot of money in that pool at that moment, but the important thing is that you've put a dam in the river."
U.S. officials have frozen assets of some Islamic charities they allege are fronts for terrorist groups. But cracking down on those charities has caused resentment, say analysts, because giving to the poor, usually through charities, is a tenet of the Islamic faith.