Freezing the finances of terrorists is not as easy as Bush may think Â

So, George Bush is going to wage economic war on terrorism. Good luck to him – he is going to need it.

That was the reaction yesterday among law enforcement officers and financial investigators as they absorbed the gung-ho announcement. The same people who tried and failed to cut off the funds of drug barons in Colombia, South-east Asia and elsewhere, emitted a resounding belly laugh. Presumably, the same branding experts in Washington who advise Presidents to come up with slogans such as the "war against drugs" and "the war against terrorism" are also responsible for the idea that tracing the finances of a terrorism network is a piece of cake.

Just how difficult this particular war is going to be was evident yesterday when two of the organisations on Mr Bush's list of 27 that should have their assets frozen promised to fight any such order. "We are purely a humanitarian organisation and have nothing to do with terrorism," said Mohammed Abdullah, a spokesman of the Al-Rashid Trust. "Our mission is to serve humanity and we will continue our work be it war or sanctions."

Al-Rashid Trust is an Islamic charity organisation in Afghanistan. It provides subsidised food to at least 300,000 impoverished Afghans and runs health and education programmes. The group also built several mosques along the road from Kandahar to Kabul and on the road to the Pakistani border town of Torkham. "So far, the Pakistani authorities haven't taken any action," said Mr Abdullah. "We will go to court if Pakistan takes any action to appease the Americans."

Harkat-ul Mujahedeen is an Islamic guerrilla group fighting Indian forces in the disputed Kashmir region. It also said the US decision was unjustified. "We condemn the terrorist strikes in the United States," Ameeruddin Mughal, a spokesman for the group said. "We hope the Americans don't rush with their decision of targeting organisations like ours which have nothing to do with America and have now no role in Afghanistan. We are only fighting in Kashmir."

When planes crashed into the World Trade Centre, the Pentagon and the fields outside Pittsburgh, the 19th Cambridge International Symposium on Economic Crime was in session. The conference brings together several hundred police, intelligence officers, lawyers, academics and politicians from around the world to discuss the difficulties of combating organised crime. There is always a theme to the week. This year's, with remarkable foresight, was "The Hiding of Wealth".

It is doubtful if Mr Bush has read the papers from the symposium, although there are always many Americans present. For, if he had, it is unlikely he would be so confident, as he put it, of "choking off" the lifeblood of the terrorists.

Every year, speakers have a good whinge, about the lack of trust between agencies, incompatible legal systems and the way banks, law firms and governments refuse to co-operate when pressed. This year was no exception.

High-ranking delegates all said the same thing: international co-operation was not working. Rosalind Wright from Britain's Serious Fraud Office blamed the desire for profit by law firms for claiming lawyer-client privilege when her officials wanted to ask awkward questions.

In another presentation, David Chaikin, a leading fraud lawyer from Australia, played a videotape of a banker from Switzerland repeatedly denying her bank maintained an account for the disgraced former Philippines president, Ferdinand Marcos. Finally, she relented: her bank did have an account, "but only a small one, for a few million".

A week later, Mr Bush revealed a key strand of his global strategy. "We're asking the world to stop payment," he said. "We're putting banks and financial institutions around the world on notice."

For that to happen, for terrorists to find they cannot afford the next cargo of Semtex or a round of flying lessons, much will have to change in the world's financial and legal systems. Bank secrecy and lawyer-client confidentiality will have to be waived. States which have built a nice little earner on promoting themselves as secretive offshore havens will have to change their ways. Countries will have to be far less precious about allowing law officers from another jurisdiction to crawl over their banking systems. Companies, banks and law firms will have to ask searching questions of their customers – even at the risk of losing business. Intelligence agencies will have to suspend their mutual suspicion and work together. Laws about seizure of property will have to be changed. Law enforcement bodies will require extra manpower and resources.

It is a tall order. Too tall, say those already versed in the failure of the "war against drugs". The organiser of the Cambridge conference is Professor Barry Rider, director of the Institute of Advanced Legal Studies and an expert in combating financial crime. Professor Rider said: "I can count on one hand the number of Drug Enforcement Agency successes in tracing and freezing assets of drug barons. You can develop intelligence that makes you question someone's wealth but developing systems to do anything about it is quite different."

Bill Tupman, a senior lecturer in politics at Exeter University, has made an extensive study of international organised crime. He holds out little hope for Mr Bush's economic war. "We've never closed down the IRA, the South Africans never closed down the ANC," he said.

In Britain, our record of tracing and seizing the assets of the IRA is lamentable – not through want of trying but because it is so difficult. For years, the Northern Ireland Office had a special unit charged with cutting off the Provisionals' funds. It knew who was involved, it knew where they were getting the cash from but it could not get to the money. Only about £6m of IRA money was frozen and only a handful of prosecutions were brought.

The Northern Ireland Office resorted to a different tack. Instead of going after the money in bank accounts, it tried to stifle the activities that yielded the cash. Suddenly, social clubs in West Belfast found themselves being visited over and over again by VAT inspectors. This forced them to keep better paper records or risk going out of business. The resulting disruption did have some impact on the IRA's finances.

While investigations are ponderous, the transfer of money, especially today, is instantaneous. "Investigators are always 28 transactions behind even if they are 10 seconds late," said Martin Bridges, a partner at Deloitte and Touche specialising in fraud and asset-tracing. "These days, in reality, they are 10 hours, 10 weeks or 10 months too late".

But this is not the time for doing nothing. President Bush has to be seen to be acting – even if that is all it is.