Bin Laden's Money

War on Terrorism: Two months on

Key questions: two months on

Military campaign

Hearts and Minds

Economy

Opposition

Anthrax

Suspects

Bin Laden's money

This week has seen an intensification of the war on "the financial front" which the White House describes as just as important as the military action. Yet success may be more difficult than ousting the Taliban.

The US Treasury bragged that it had delivered a body blow to al-Qa'ida with an impressive 112 nations freezing accounts suspected of links to international terrorism. A total of $43.8m (£30m) has reportedly been seized, $24m of that in the US. Britain said it had frozen a further £7m this week. Around the world, 120 accounts connected to international terrorism have been frozen. Up to a thousand more "suspect" accounts are under review. But is the crackdown working?

The businesses whose accounts have been frozen vociferously deny any connection to Osama bin Laden and the al-Qa'ida network. No arrests have been made. And in Saudi Arabia where charitable foundations have been allegedly funnelling vast amounts of money to Mr bin Laden for years, the US crackdown has made little headway. The Saudis have refused to allow the FBI access to the charities' books, fearing that the highest levels of the regime may be implicated.

A major problem for intelligence agencies is the fact that most of Mr bin Laden's funds come from legal sources. The question that intelligence agents normally ask – where is the money coming from? – has become: Where is it going? This is far more difficult to gauge, especially when the funds wired by the terrorists were usually in amounts of less than $1,000, and passed unnoticed by the banks.

This week, officials began focusing on links between the informal "hawala" system and suspect money-laundering operations which have used unregulated bureaux de change in London and elsewhere.

The system is based on personal contacts and rarely leaves a paper trail. But by shutting hawala banks, the West has further angered the Islamic world. One of the affected businesses, Barakat, is Somalia's largest remittance company through which expatriates send money home.