HOW COULD IT HAPPEN; BBC REPORTER JANE CORBIN ASKS WHY THE TERRORISTS SUCCEEDED DESPITE A SOPHISTICATED WORLDWIDE SECURITY NETWORK. HERE SHE IDENTIFIES THE FAILINGS IN THE US INTELLIGENCE, IMMIGRATION AND BANKING SYSTEMS IN THE LEAD UP TO SEPTEMBER 11.

Byline: JANE CORBIN

PROBING the money trail which led, over two years, from bin Laden in the mountains of Afghanistan to the American travel agencies where business-class tickets were purchased days before the fated flights, provides insights into the terror organisation's rules of good financial house-keeping.

It reveals how al-Qaeda kept below the radar screen of the world's banking institutions, despite their much-vaunted claims to be able to detect the ill- gotten gains of organised crime.

The money to fund the Twin Towers attacks came through the United Arab Emirates, one of the world's most successful and anonymous banking centres.

Most of the sums transferred by al-Qaeda to the terrorist-cum-flight student Marwan al-Shehhi's account were kept at a level which would not trigger alarm bells. Around dollars 10,000 was moved on the first two occasions and dollars 20,000 in the third transaction.

Only in the final transaction, in September 2000, was the substantial sum of nearly dollars 70,000 paid. That payment, it later transpired, had raised an automatic Suspicious Transaction Report, an STR, to the US Treasury's Financial Crimes Enforcement Network (FINCEN).

But, like most of the 150,000 similar reports sent each year, it went unnoticed until investigators started probing in the wake of September 11. That missed report of the dollars 70,000 was a small piece of the jigsaw, but nonetheless a clue that could have put investigators on the trail of the al-Qaeda plotters.

Meanwhile, a second al-Qaeda cell was at work in the United States.

Three Saudis - Khalid al-Midhar, Nawaf al-Hazmi and Hani Hanjou - were taking flying lessons at schools in San Diego and Phoenix. A sharp-eyed FBI agent at the Bureau's Phoenix office, Ken Williams, noticed that a number of Islamic militants in his patch were signing up for flying courses that summer at the Embry-Riddle Aeronautical University.

He knew some were members of a British extremist organisation, al-Muhajiroun, which had links to bin Laden. One Saudi even had contacts with Abu Zubaydah, the master recruiter of al-Qaeda. Williams' suspicions were fuelled still further when he learned that some of the men were enquiring about airport security.

Williams' boss at the Phoenix office had worked on the Osama bin Laden specialist unit within the FBI's international terrorism section.

He fired off a five-page memo on July 10 suggesting the monitoring of "civil aviation universities/colleges around the country".

The memo specifically raised the possibility that Osama bin Laden could be using US flight schools to infiltrate the country's civil aviation system. It suggested that local FBI field officers liaise with the flight schools about suspicious individuals and bring in the CIA to add any information they might have on those students.

The memo went to FBI headquarters in Washington and to New York, where the bin Laden unit was based.

But it went no further up the chain. Its suggestion smacked of "racial profiling" and it was quietly buried without being shown to the CIA.

The Williams memo might have raised too many awkward questions about intrusive government, civil liberties and the role of the FBI in intelligence- gathering - which is the preserve of the CIA - rather than the Bureau's traditional duties of law-enforcement. It might have ruffled feathers, but in the process it might also have led to a nationwide sweep of flying schools. Although by then the terrorists had completed their flying lessons, a joint FBI/CIA trawl of recent Middle Eastern students might have led to some connections being made and might even have prevented four Islamic militants, newly qualified pilots, from taking off on September 11.

Security agencies also missed valuable clues as to the real identities of al-Hazmi and al-Midhar.

Khalid al-Midhar frequently came and went from California across the Pacific, and was sometimes accompanied by Nawaf al-Hazmi.

In January 2000, they slipped into Kuala Lumpur, in Malaysia, on a tourist visa for a meeting with one of bin Laden's closest aides to co-ordinate the attack on the USS Cole. That attack would be carried out nine months later, in October 2000. Unknown to the al-Qaeda terrorists, the CIA had tipped off the Malaysian security service to video the meeting.

Khalid al-Midhar was captured on film with the man known to be a bin Laden associate. The purpose of the meeting was not, however, clear, and the identity of al-Midhar was uncertain.

What was unforgivable was the delay in getting the tape into the hands of the CIA analysts. It was not until after the Cole attack nine months later that attention re-focused on the video.

It was now assessed as being a possible record of a planning meeting for that attack. But another two months passed and it was December 2000 before American intelligence received the tape. All this time Khalid al-Midhar was travelling in and out of America, a valuable conduit for al-Qaeda to send information into the States, and to bring progress reports back to bin Laden's military command.

Al-Hazmi, as a travelling companion of al-Midhar's, fell under suspicion, too.

But it was not until August 2001, a month before the Twin Towers attacks and eight months after the CIA received the video, that the two names were formally placed on a watch-list distributed to all American ports of entry.

By then it was too late - both men were now back inside America to stay. FBI agents would still be searching for them when the planes hit their targets. Back in Florida, American authorities missed other chances to question the would- be terrorists just after they had completed their flight training.

Both Mohamed Atta and Ziad Jarrah had left and re-entered the States and their journeys showed up on the radar screens of at least two American government agencies in January 2001.

Jarrah headed from Florida to Afghanistan, via Pakistan. It was his second trip to bin Laden's camps.

Western intelligence agencies were alert to the movements of young militants using Pakistan as a stopover on their way to the training camps in Afghanistan.

The Americans cabled the authorities in the Emirates to ask them to question Jarrah on his stopover. A source in the Emirates revealed this unusual request to me, late one night in a hotel in Dubai.

His voice was lowered but emphatic. He said: "It was at the request of the Americans and it was specifically because of Jarrah's links with Islamic extremists, his contacts with terrorist organisations. That was the extent of what we were told."

Ziad Jarrah was his usual friendly, smiling self when challenged at the airport. He admitted he had spent two months in Afghanistan.

When asked about the US visa in his passport he replied that he was a pilot and would be returning to the United States.

The information was relayed back to Washington, but no more instructions were forthcoming, so Jarrah was allowed to proceed and board his flight. The Americans knew he had links with extremists. They were told he was on his way to America and, crucially, that he was a pilot. Yet nothing was done and no checks were made on him when he returned to America.

Two weeks before Jarrah was stopped in Dubai, Mohamed Atta had tested the weak points in another American front line agency in the fight against terror, the Immigration and Naturalisation Service (INS). He was taking a calculated risk, coming back into Miami on January 10 from a week's trip to Europe. His visa, the one he had used to come to America six months earlier, had expired.

Atta remained cool under fire during an hour of intensive questioning.

He displayed the classic character requirements of "tranquillity and unflappability... patience for enduring afflictions" as laid down in the al-Qaeda training manual. Atta insisted that he had applied for a student visa in September 2000, before his visitor's visa expired, but had not yet received the papers.

Under a strict reading of the law, Atta should have been deported, but he knew that individual officers had discretion. Atta persuaded the officer to let him in with an extension to his expired visa.

Atta left and re-entered America at least twice, in April and July, two months before the attacks. His extended visa had again run out, but he was not challenged by immigration officers.

Nine months later, the young Egyptian successfully completed the most daring act of terrorism ever.

Adapted from The Base: In Search of al-Qaeda by Jane Corbin, pounds 18.99, published by Simon & Schuster.