An unidentified man walks outside a street money-change and transfer office Tuesday in Milan, Italy. Italian officials recently charged four people with involvement in a steady transfer of small funds allegedly for recruiting Islamic extremists.

Milan, Italy ? Prosecutors call it terrorism on the cheap.

Every few weeks, the Tunisians would stop at a bank or Western Union office and wire funds to a city in Europe or the Middle East. The sums were small – sometimes only a few hundred dollars – and thousands of other people were doing the same thing across Italy, many of them immigrant workers sending money home.

This group, however, allegedly had dark motives.

In June, Italian officials broke up the ring with the arrest of four people, three in Milan and one in London, after examining financial records showing a steady transfer of funds allegedly used to recruit Islamic extremists and send them to training camps in Afghanistan.

Small sums bypass trackers

“They were small amounts, below the limits that require reporting,” said an assessment by Italian financial police.

The Associated Press uncovered previously undisclosed details about how terrorist cells move money – often by transferring sums so small they elude programs that track terrorist financing. The loophole raises questions about the effectiveness of the post-9/11 effort governments have made to choke off funding.

“How much do you think it takes to carry out a terrorist attack?” Milan prosecutor Elio Ramondini asked during an interview in his office. “Not very much,” he said.

The operation that blew up three London subways and a bus in July 2005, killing 52 commuters, used readily available materials and cost just $15,000, the British government says.

For the March 2004 bombings on four Madrid trains that killed 191 commuters, some analysts say the perpetrators spent less than $1,360. Others say the total was closer to $136,000. Police say most of the money came from low-level drug deals.

In its recruiting activities, the cell uncovered by Italian authorities provided false documents, cars and communication devices registered under false names. Ramondini said it is suspected of providing logistical and financial support to an al-Qaida affiliate linked to April bombings in Algiers that killed 30 people.

Italian law requires only transfers above $14,400 to be reported to its Foreign Exchange Office. Despite the tightening of other laws since the Sept. 11, 2001, attacks, the limit for automatic reporting has remained much the same in Europe.

As shown by the arrests of militants in Germany and Denmark, Europe with its growing immigrant populations and open borders has become a target for Islamic radicals.

‘The most simple means’

Reports of the lifestyles of the suspects – the Germans were unemployed and living on welfare – and the chemicals they were allegedly using was an indication that great expense was not involved.

Many of the recent plots in Britain, and the alleged plot in Germany, featured hydrogen peroxide, which is cheap, as the principal bomb-making ingredient. At a recent police briefing, London’s chief counterterrorism officer said a failed plot to attack the city’s transport network- two weeks after the July 7, 2005, attacks – cost $1,000.

The German plan “is part of the tendency to carry out attacks with the most simple means,” said Germano Dottori, an analyst at Rome’s Center for Strategic Studies.

Loretta Napoleoni, a London-based expert on terrorism financing, acknowledges that government filters are weakened by their inability to catch small amounts, but if Western Union and others had to report every transaction of a few hundred dollars, “there would be a revolution.”

Ramondini, the prosecutor, emphasized that the money transfer agencies did no wrong and that it would be unreasonable to demand more of them.

“You would bring the economy to a halt,” he said.

Col. Antonio Grimaldi of the Guardia di Finanza, who led the Milan investigation, said Islamic extremists are increasingly resorting to small transfers to evade detection.

Ramondini said investigators tracked 40 money transfers by the group between 1999 and 2001, totaling about $68,000, to a range of countries in Europe and the Middle East.