Taliban Gains Money, Al-Qaida Finances Recovering

The informal money transfer system known as hawala or hundi is also still flourishing in Pakistan, Afghanistan, the Middle East, Europe and the United States. During his tenure that ended in 2007, Pakistan's former prime minister, Shaukat Aziz, said upward of $5 billion was secreted out of Pakistan every year through this system, which operates without regulation and moves money with just a phone call. Mostly it's corrupt politicians, bureaucrats and businessmen secreting their ill-gotten windfalls out of the country, but terrorists also piggyback onto the system, say financial investigators.

In three of the last five years, the number one source of money into Pakistan through this hawala system has been the United States, according to the Pakistani security official. He couldn't say how much of the money went to terrorists and how much was sent from Pakistanis abroad to their families.

After the attacks of Sept. 11, 2001, the financial crackdown closed some of al-Qaida's most lucrative sources of funding. But with the help of the hawala system, al-Qaida has since re-established its money line, latching onto Taliban crime while making a modest comeback on illicit business and donations after the American-led invastion of Iraq, according to interviews with jihadis, traders, security officials and terrorism experts.

In the last two years, al-Qaida has racheted up the call for donations, told new recruits to bring money with them, and shown signs of being more frugal. For analysts, that adds up to one of two things: Either al-Qaida is saving up for another 9/11-style attack, or the crackdown of the last nine years has curbed its fundraising abilities. It could mean both.