Al Qaeda has been handicapped by financial problems, the Treasury Department’s top sanctions attack dog said today.

“In the last few years, it became clear that al Qaeda was encountering financial difficulties. By 2010, we believed the organization was in its worst financial position in years. We assessed that al Qaeda’s increasingly precarious financial situation would not only impair its ability to operate, but also would likely send al Qaeda and its affiliates in search of new sources of funding,” Under Secretary for Terrorism and Financial Intelligence David Cohen told a conference on efforts to combat terrorism financing, now a decade after the September 11 attacks.

Cohen said that recent intelligence shows the terror group’s detailed accounting practices betray its budget woes.

“We have learned that al Qaeda kept meticulous accounting statements on operating costs – such as weapons, fuel, and salaries – tracking expenditures that amounted to little more than one dollar,” he said.

Cohen touted efforts begun under the Bush administration and continued under President Obama to target sources of al Qaeda’s funding. The Treasury Department has sanctioned individuals and entities who have facilitated fundraising for terror groups and has encouraged other countries to choke off flows of cash. Those methods, he said, have hindered their ability to carry out attacks.

“New information reveals that early last year, al-Qaeda not only was stressed financially, it was struggling to allocate funds to plan and execute terrorist attacks against the U.S. homeland and Western interests,” he said.

Challenges, however, persist.

As their traditional sources of funding, like donors in Saudi Arabia,  were choked off, Cohen said Kuwait and Qatar have emerged as “permissive environments for extremist fundraising.”

Likewise, al Qaeda and its regional affiliates have turned to new tactics to fund their operations. Specifically, Cohen said kidnapping for ransom has become the most worrisome trend. He said al Qaeda in the Islamic Maghreb, the terror branch in North Africa, has raised “tens of millions of dollars” since 2008 through ransom operations.

The shift in funding tactics poses a new problem for those looking to cripple al Qaeda financially. The new methods are harder to combat since they are not as vulnerable to sanctions and other financial instruments that the US government and its allies can employ.