Few Americans now remember that the United States launched its first post-9/11 attack on terrorists from a very unusual front—the financial front. As President George W. Bush put it, “the first shot in the war was when we started cutting off their money, because an al Qaeda organization can't function without money.” Here is my Bloomberg News piece about this financial aspect of the war on terror. The detailed story of the people and what they did is fascinating as I try to describe in more detail in my book Global Financial Warriors: The Untold Story of International Finance in the Post-9/11 World. I will be talking with Tom Keene and Michael McKee about it on Sunday at noon. They will be broadcasting on Bloomberg Radio live from the World Trade Center site.
I was head of Treasury’s international affairs division when the operation began. Under U.S. law, the president had the authority to call on U.S. financial institutions to freeze the accounts of terrorists. In the years before 9/11, however, that law was not used very aggressively. As described later in the 9/11 Commission’s Monograph on Terrorist Financing, “Terrorist financing was not a priority….the Treasury organization charged by law with searching out, designating, and freezing Bin Laden assets, lacked comprehensive access to actionable intelligence and was beset by indifference of higher-level Treasury policymakers.”
Our first action was to end the indifference and define the mission clearly: first to freeze terrorist assets and thereby thwart future attacks; second to trace their assets and thereby get information about terrorists.
We had to have international cooperation; without it, the terrorists and their financiers could escape a U.S. freeze by moving their money to banks abroad. No mechanism for cooperation existed, so we had to create one. We began with the G7 and then fanned out. As Treasury press spokesperson, Michele Davis, said at the time, “We’re talking to everyone under the sun.” A report sponsored by the Council on Foreign Relations in 2002 found that: “The general willingness of most foreign governments to cooperate with U.S.-led efforts to block the assets…has been welcome and unprecedented.”
A total of 172 countries issued freezing orders, 120 countries passed new laws and regulations, and 1,400 accounts of terrorists were frozen worldwide. The total value of frozen accounts was $137 million, much during the crucial months in the fall of 2001. Valuable information from tracking money helped prevent attacks, and to obtain more information about terrorists, we partnered with a global financial messaging service called SWIFT, the Society for Worldwide Interbank Financial Telecommunication. Using this information, intelligence experts mapped terrorist networks and filled in missing links.