For years American officials have suspected that Osama bin Laden and his terrorist network were taking advantage of the free-wheeling financial system of the United Arab Emirates, a tiny Persian Gulf nation that boasts of 47 banks and 105 money changers for its three million people.
After the Sept. 11 attacks, American concerns turned out to be well founded as federal investigators traced nearly half the estimated US$500,000 that paid for the hijackings back to the Emirates.
Until now, the US has been largely unsuccessful in enlisting the Emirates, one of three nations that had diplomatic ties to the Taliban-led government of Afghanistan, as a full partner in its financial war against terrorism.
That appears to be changing.
Last month, dozens of UAE and US officials met for more than 10 hours at the Emirates Central Bank to discuss the arcane art of detecting and deterring the movement of money by militant networks. Among other things, they have agreed to begin discussing how to keep track of hawalas, the informal banking networks that terrorists have also used to move money.
The outcome, according to gulf and American officials, may be a new partnership against terror in a Middle Eastern financial hub.
Ultimately, administration officials say, the cooperation of the Emirates, Saudi Arabia, and other nations in monitoring financial transactions may prove as significant as a special-forces strike or a new round of arrests.
"It was a very good forum for understanding how things are done in the US, and for the US to understand how things are done in the UAE," said Sultan bin Nasser al-Suweidi, the governor of the Emirates Central Bank, who was the host of the unusual session and discussed its outcome for the first time in a telephone interview on Sunday.
The Bush administration, though cautious, echoed the optimism. "The UAE has been making all the right noises and moves," said one administration official.
Marcelle M. Wahba, the US ambassador to the Emirates, said that since Sept. 11 the UAE has provided "excellent cooperation and support in the war against terrorism, particularly in the area of combating terrorist financing." Continued sharing of information and close coordination, she added, were "essential in tracking the terrorists' financial network."
Last month the Emirates announced new rules requiring identification of those who transfer more than US$550 out of the country. Previously, the threshold was US$50,000. Suweidi said that change, which grew out of "international cooperation," made the Emirates regulations among the tightest in the world.
Another indication of the changed environment, American officials said, was Suweidi's pledge to organize a regional meeting on hawalas. American officials have already named one hawala in Pakistan as a supporter of al-Qaida, though no hawalas have yet been identified in the Sept. 11 plot.
Suweidi said that hawalas were to some degree a response to currency controls in South Asian countries. As a result, he said, people sought ways of moving currency out of a country covertly. At the same time, workers from those countries who live in the Emirates used hawalas as a cheap means of sending money back home.
Hawalas, unlike money changers or banks, are not licensed in the Emirates. Suweidi said he had "no idea" how many hawalas operated in his country, or how much money moved in and out of the Emirates each year.
American officials agreed that even understanding the hawala system was daunting. "A hawala could simply be someone in a grocery store using a cell phone to send money to another country," said one Western diplomat.
At the closed meeting in the Emirates Central Bank's auditorium on Oct. 20 in Abu Dhabi, the hawala phenomenon was a major part of the American presentation. The American team illustrated its presentation with 173 slides, the last of which concluded that hawalas were "a big problem for all of us."
Suweidi agrees, but said he favored eliminating currency controls first, and then enacting legislation to "legalize" hawala activities.
Both sides predicted that the effort would take years. It "could take a generation" to meet this challenge, one of the slides also concluded.
The Emirates' willingness to join forces with Washington will be tested as early as this week, when the Bush administration plans to issue another list of businesses and individuals linked to terrorists.
The new list could have significant implications for the Emirates, officials said, since several of those on the list are likely to have moved money through the financial markets there.
A large portion of the hijackers' money followed just such a path. American investigators estimate that the attacks on the World Trade Center and Pentagon involved about half a million dollars to pay for flight training, airplane tickets, car rentals and other logistics. American officials say the money passed unnoticed from the Emirates to American banks.
There were at least two separate flows of money from the UAE in the summer of 2000. Mohamed Atta, the Egyptian-born leader of the hijackings, received in excess of US$100,000 in his bank account in the US from more than one bank account in the Emirates.
Marwan al-Shehhi, who American officials believe piloted the second plane that crashed into the towers, shared an address in Florida with Atta and attended flight school with him. He also received US$100,000 through several transfers from a money-changer in Sharjah, one of the seven emirates, according to officials in the US and the Emirates.
Suweidi, the Emirates central bank governor, said that one of the largest single transfers -- for US$70,000 -- should have been big enough to arouse suspicions in the US.
In the days before the Sept. 11 attack, the hijackers -- including Atta and al-Shehhi -- sent about US$15,000 back to the Emirates, money apparently left over from the planning and the execution of the attacks.
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