What Have We Learned?

In the aftermath of the September 11 attacks, the U.S. Treasury immediately went to work finding al-Qaeda’s funding. On September 23, Pres. George W. Bush issued an executive order designating a list of terrorist entities that were on America’s hit list. Targeted financial sanctions became an incredibly powerful tool for capturing terrorist funds. The 9/11 Commission report, released in 2004, gave our government’s efforts in this area high marks. We had reportedly captured tens of millions of dollars in terrorist funds — and perhaps more.

But by the time the 9/11 report came out, al-Qaeda and its affiliates were acutely aware that we were hunting their assets in the formal banking sector, and this drove the jihadi network’s financial system underground. Al-Qaeda now relies almost entirely on bulk cash smuggling, wherein couriers deliver suitcases full of cash to jihadi masterminds.

As a result, the United States rarely gets to freeze assets anymore. The work of the Office of Intelligence and Analysis at the U.S. Treasury is now more about deterrence, rather than capturing funds.

This is not to say that OIA’s role is not important. The office continues to uncover key nodes of the al-Qaeda network. Treasury’s designations have also had a chilling effect on the jihadi philanthropists (for lack of a better term). Wealthy donors to al-Qaeda know they are being watched, which has made them all the more careful.

A decade after the 9/11 attacks, the hard-working terror-finance analysts at the Treasury and other arms of the intelligence community have, in many ways, become victims of their own success. They have denied terrorists the use of the formal banking sector. But the days of electronically capturing funds that would otherwise be used for terror attacks may be behind us, and cash leaves a hard trail to follow.

— Jonathan Schanzer is vice president for research at the Foundation for Defense of Democracies and a former terrorism finance analyst at the U.S. Department of the Treasury.