U.S. Eyes UAE Banks in Terror Money Probe

Banks in this financial hub of the Arab world remain a key focus in the investigation into terror funding despite moves to tighten reporting rules, freeze accounts and control informal money transfers, U.S. and Arab officials told The Associated Press.

The reason: Dubai’s history of shady transactions and the difficulty of tracking a matrix of legal and illegal free trade.

About half the $250,000 spent on the Sept. 11 attacks was wired to al-Qaida terrorists in the United States from Dubai banks, U.S. Treasury and Central Bank of the United Arab Emirates officials said.

Al-Qaida money in Dubai banks also has been linked to the 1998 U.S. embassy bombings in Kenya and Tanzania blamed on Osama bin Laden.

In addition, before Saddam Hussein’s ouster, this Persian Gulf emirate was a favorite transit point for smugglers sneaking past U.S.-led naval patrols enforcing United Nations trade sanctions. And it was through Dubai that Russian arms dealers supplied bin Laden’s Taliban backers in Afghanistan before the U.S.-led war ousted their Islamic government.

Sultan bin Nasser al-Suweidi, head of the Central Bank, told AP that financial officials are working closely with the U.S. government to block terror funding avenues. Central Bank officials have trained with U.S. investigators and other international experts to help them identify money launderers and suspicious transactions, he said.

“We don’t want wrongdoers. We totally don’t need them,” said the U.S.-educated al-Suweidi, who arrives at his office before 8 a.m. and is often seen working until 10 at night in the fortress-like Central Bank headquarters in the Emirates’ capital, Abu Dhabi.

Banks in Dubai, which were not required to report incoming transfers of less than $55,000 before the Sept. 11 attacks, must now tell the Central Bank about any transfer of more $11,000, al-Suweidi said.

One of the Central Bank’s greatest challenges, however, has been regulating an informal system of money transfers known as hawala.

In the Emirates, hawala operators have been ordered to register with the Central Bank and to report transfers larger than $550, although al-Suweidi conceded that not all the dozens of operators have come forward.

Widely used by migrant workers in Dubai and the rest of the Persian Gulf, hawala operators transfer money without a paper trail, raising suspicions the system could be abused by terrorists.

A hawala operator takes in money at one end, then instructs a relative, friend or another agent in another country to hand a like amount to a beneficiary. The traditional system is based on trust and sometimes works by word of mouth without a single paper being signed.

In May last year, the Central Bank used an international forum to call on greater oversight from governments where the system is used.

So far, there’s no evidence the Sept. 11 plotters used hawala to transfer money, instead operating through conventional banks.

For example, a year before the Sept. 11 attacks, the United Arab Emirates reported to U.S. officials a transfer of $69,985 from a Dubai bank to an account in the United States held by Marwan Al-Shehhi and Mohamed Atta, al-Suweidi said. The names meant little then but they turned out be among the suicide hijackers.

U.S. authorities took no action, al-Suweidi said, with little to differentiate that transfer from thousands of others each day, even though it exceeded the $10,000 ceiling for U.S. reporting requirements.

Al-Suweidi points to that overlooked transaction as an illustration of the difficulties faced by banking officials in the United Arab Emirates.

“I don’t want to apportion blame because we must all work together on fighting terrorism,” al-Suweidi said. He added, however, that if U.S. investigators were “unable to predict that the transaction was wrong when it was reported, how can they depend on us?”

Cutting off terrorists’ funds is a key component of President Bush’s anti-terrorism strategy. And Dubai remains a focus of U.S. interest in the war on financing terror along with other financial crossroads, said a U.S. Treasury official in Washington, speaking on condition of anonymity.

“There are opportunities for people to use those facilities for nefarious ends – terrorist financing, drug trafficking, money-laundering, or general fraud,” the official told AP. “We certainly do think there still is activity under way in the region and certainly activity that affects Dubai that we are interested in and we are looking at.”

The Emirates’ Central Bank has frozen 18 suspected terrorist accounts with a total value of more than $3 million, and provided information to international organizations in 14 terror financing cases, al-Suweidi said.

The frozen accounts include those of Somali businessman Ahmed Nur Ali Jim’ale, whose al-Barakaat group of companies is under investigation by U.S. authorities for suspected dealings with al-Qaida.

Other frozen accounts belonged to Marwan Al-Shehhi, one of the Sept. 11 hijackers from the Emirates, and Mustafa al-Hisawai, an alleged al-Qaida financier who was arrested in Pakistan last March, al-Suweidi said.

At one point Al-Shehhi held a joint account in the United States with Atta, the Egyptian who was the suspected leader of the hijackers.

The Sept. 11 plotters received close to $110,000 in transfers from the Emirates between July and August 2000, and wired back about $19,000 in the days before the attacks, according to a U.S. Treasury official.

The Dubai scrutiny may be having an affect: There’s no indication money for post-Sept. 11 terrorist attacks has passed through banks in the Emirates, authorities said.

Most of the trade that flows through Dubai – along with millions of dollars and mounds of gold – is legitimate. But Dubai’s seamier side lurks beneath its flashy exterior of glass-encased office towers, dreamy hotels, manicured golf courses and fancy restaurants where wealthy businessmen woo clients with $8,000 dinners.

Russian, Indian, Somali and Pakistani Mafiosi compete for a slice of a thriving prostitution racket here, catering to clients ranging from poor Asian construction workers to rich businessmen. Two years ago, authorities busted a scheme by Japanese Yakuza gangsters and the Russian mafia to smuggle stolen Japanese cars into Dubai for sale to buyers in Ireland.

Martin Comley, an official with Britain’s National Criminal Intelligence Service, points to a potential crime-terrorism connection.

“Crime money can go into buying a nice Ferrari or into buying bombs and explosives,” he said on the sidelines of an anti-money laundering conference attended by al-Suweidi and other top bankers in Dubai.

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Associated Press reporter Jeannine Aversa contributed to this report from Washington.