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Bank system in Emirates under review

DUBAI, United Arab Emirates (CNN) -- The United Arab Emirates' banking practices are under review after government officials said they believe the financial system was used as a transfer point for the suspects of the September 11 attacks in the United States.

The review stems from the fact that a man believed to be one of the financial chiefs for suspected terrorist mastermind Osama bin Laden went to Dubai, the UAE commercial center, from Qatar in late June and remained until September 12, when he flew to Karachi, Pakistan.

Investigative sources say just prior to the September 11 attacks, three of the suspected hijackers sent more than $15,000 to a man known as Mustafa Ahmed al-Hawasawi, a man investigators say stayed in Dubai for two months and is believed to have been one of the al Qaeda money men behind the attacks.

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The UAE government said earlier in October that two days before the attacks on the World Trade Center and the Pentagon, a man it then identified only as a Saudi Arabian passport holder had received wired payments from three of the hijackers -- Waleed M. Alshehri; Marwan Al-Shehhi, who is believed to have been at the controls of the second plane that crashed into the World Trade Center; and Mohamed Atta.

Atta is believed to have been the commander of the 19 hijackers, and Shehhi is the only confirmed citizen of the United Arab Emirates among them.

Investigators now say they believe that the man who wired the three hijackers money was al-Hawasawi.

U.S. investigators allege that Atta received $100,000 in start-up money wired from the United Arab Emirates to banks in Florida to underwrite the plot.

"Mohamed Atta was like any adult expatriate in the UAE," said Sultan Nasser al Suwaidi, governor of the Central Bank of the United Arab Emirates. "I'm sure people could not predict two years ago that he would become a hijacker and a terrorist."

Al Suwaidi said Atta opened his account and closed his account one year ago, and his account was not with the Dubai Islamic Bank; it was with Citibank.

"If Citibank was not able to predict the future of Mohamed Atta, I don't think anybody can," al Suwaidi said, pointing to the anti-money laundering laws the U.S. bank follows.

Officials in the United Arab Emirates said that they have found no bank accounts linked to individuals or organizations on two lists provided to them by the United States. But they say they are ready to help.

Complicating the investigation is a matter of language translation. Names supplied in English could correspond to various names when translated in to Arabic. Many individuals carry the same name. So without middle initials or dates of birth, banks run the risk of freezing the wrong bank account, officials say.

Emirates face dilemma over banking system

The review of its banking system has posed a dilemma for Dubai. Its attraction to many financiers is its lack of regulation and its position as a gateway between East and West . But there is concern in the Emirates that if it tightens banking regulations to crack down on money laundering and suspected terrorists it might also drive away a lot of legitimate business.

Multinational corporations have flocked to the United Arab Emirates, attracted by a hands-off government that allows for full international ownership and repatriation of profits, no corporate taxes for 15 years, no currency restrictions and no income tax.

Dubai -- with a population of more than 850,000 -- is not a separate country, but one of the seven emirates that joined to create the United Arab Emirates in 1971.

Officials and bankers in the UAE are anxious to dispel the notion that the Emirates' liberal banking system makes them vulnerable to all kinds of suspicious transactions, including the flow of terrorist funds.

Still, Dubai has a reputation for lax supervision of its banks. In 1999, senior U.S. officials came to the UAE to check on suspicions that bin Laden was funneling money through the government controlled Dubai Islamic Bank. The bank was subsequently restructured -- but UAE officials insist no accounts linked to bin Laden were uncovered.

In recent weeks, the government has accelerated a plan it introduced two years ago to impose severe penalties for money laundering. But many doubt that such a law can really be enforced in such a free -wheeling financial environment.

-- CNN's Rym Brahimi contributed to this report.