Government officials also believe that al-Qaeda used seemingly independent companies as financial fronts. For example, earlier this month, President Bush blocked the accounts of a financial network called Al-Barakaat, which owns an international collection of hawalas, an informal remittance system that moves millions of dollars around the world with virtually no paper trail.
According to law enforcement information provided to the US Treasury Department, the network is controlled by Al-Ittihad Al-Islamiya, an extremist Somali militia designated by Bush as a terrorist organization.
Officials at Al-Barakaat's headquarters in Mogadishu have denied that their money transfer operation has any connection to al-Qaeda.
However, the information suggests that the connection to the terrorist groups works like this: Somali emigrants around the world use Al-Barakaat to send money back home.
That money is sometimes commingled with the illicit proceeds from welfare and insurance frauds and transferred to accounts in Dubai, where terrorist operatives siphon off a portion of it for al-Qaeda and the Somali militia group. Sometimes that portion is used to buy arms.
The balance makes its way to Somalis back home.
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