For years, individuals and charities based in Saudi Arabia have been the most important source of funds for Al-Qaeda. And for years, Saudi officials have turned a blind eye to this problem.

That's one of the findings of a Council on Foreign Relations task force report on combating terrorist financing. The report also criticizes the Bush administration for not following through on the initial burst of momentum in cracking down on terrorist financing late last year.

The allegation against Saudi Arabia is dead-on accurate. When I was at Treasury, it was commonly acknowledged that all of the Gulf Cooperation Council countries did not take money laundering or terrorist financing seriously. The allegations against the Bush administration are 50% accurate -- the overreaching is probably due to the fact that the principal authors are ex-Clinton officials, albeit very competent and professional ones. The devastating criticism is that the administration appears reluctant to use the Financial Action Task Force (FATF) or the Egmont Group -- the chief international anti-money laundering organizations -- to blacklist and potentially sanction countries that are lax on terrorist financing. A similar approach to crack down on countries that laundered drug money was extremely effective in 2000 and 2001. One reason it was so effective was that the U.S. was unafraid to threaten sanctions against "politically sensitive" countries such as Israel and Russia. Blacklisting the Gulf countries is an option that needs to be on the table, even if it's awkward for FATF [Why would it be awkward for FATF?--ed. Because the Gulf Cooperation Council is a member of FATF, but its member countries are not. This has allowed Saudi Arabia and the other Gulf nations participate in all FATF deliberations while claiming that they don't need to strictly adhere to FATF standards. This use to drive me crazy at FATF meetings. The whole enterprise was a joke to them, and they were not afraid of displaying their contempt].