How Does the U.S. Government Track These Larger Transactions? As part of U.S. banking regulations, transfers of money of more than $10,000 must be reported to the government by banks and other financial institutions. That provides a record of the movement of funds — and often leads terrorists or others transferring illegal funds to use complicated systems of multiple transfers, bogus holding companies, and other tactics intended to throw investigators off the trail.
How Do Terrorists Handle Smaller Amounts of Money? It seems likely that a great deal of the illegal financial activities of terrorists are conducted in cash. But it is possible for other international financial transactions to take place on a small basis through informal, under-the-radar financial businesses. According to some news reports, the Bush administration is also examining ways to crack down on the hawala or hundi, the name for the small, storefront money centers that allow funds to move back and forth between the United States and the Middle East with barely a trace. Video: Hawala Explained
What About Money Laundering? Do Terrorists Engage in it?
Money laundering is the process by which illegally earned funds — from drugs, arms deals or other activities — enter into the legitimate financial system. Though many different methods are used, typically the cash proceeds of a criminal enterprise will be slipped into the revenues of an apparently legal company owned by or affiliated with the criminals in question.
Some of the funding for terrorists presumably comes from illegal, laundered money, but it is not the main thrust of the Bush administration's terrorist investigation. Additionally, experts think drug trafficking, not terrorism, is the main worldwide source of money-laundering activity. According to the Financial Crimes Enforcement Network (FinCEN), another branch of the Treasury Department, drug dealing "generates tens of billions of dollars a year" in laundered money. And while some estimate that a worldwide total of $50 billion to $100 billion is laundered annually, a FinCEN statement notes that many investigators think "it is simply not possible to pinpoint the amount."
What About These Stories That the Terrorists Profited on the Stock Market? And What Is 'Selling Short' or Using A 'Put,' Anyway? Part of the government's investigation of the Sept. 11 plot involves scrutinizing heavy selling in the stock market in the weeks before the hijackings, including the dumping of airline stocks that were later hurt as a result of the attacks.
In general, "selling short" on a stock means getting rid of it at a higher price, usually with the intention of buying it later for less. A "put" is a kind of trade in which investors bet that a stock will go down; they can sell shares — even if they don't own any at the time — and buy them back later. Among other things, an unusually large amount of "put" options were exercised in August on American Airlines and United Airlines, the two carriers whose planes were hijacked and crashed. Investigators continue to look into the situation.
Did Terrorists Know Which Stocks Would Drop?