Despite freezing $112 million in assets belonging to terror network Al Qaeda, terrorists still have funds to carry out devastating attacks against the United States, Bush administration officials told Congress on Wednesday.

"Organizations still have access to sufficient funds to carry out operations that will be very damaging to American citizens and to our national security," said Alan Larson, the State Department’s undersecretary of economic, business and agricultural affairs.

Speaking before the Senate Financial Services Committee, Larson said that despite the government’s aggressive efforts at stemming the flow of money to the terrorists after the Sept. 11 attacks on the World Trade Center and Pentagon, terror mastermind and primary suspect Usama bin Laden's fortune and allies continue to generate money from a number of sources.

“The magnitude of the problem is such that I don’t think lack of access to resources is a major impediment to the operations of terrorist organizations at this state,” Larson testified. 

On Wednesday, Attorney General John Ashcroft announced that officials had filed charges against Enaam M. Arnaout, 40, head of the Benevolence International Foundation, a Chicago-area Islamic charity that is accused of funneling money to bin Laden's terrorist network and Chechen rebels.

Arnaout has been in federal custody since April. While officials declined to say how much the group has sent to Al Qaeda, the FBI said it had a document showing that BIF sent nearly $700,000 to Chechen rebels and a man accused of plotting the U.S. embassy bombings in Africa in 1998.

"The Arnaout case demonstrates that terrorists also can obtain money from ostensibly legitimate businesses and charities, like BIF," said Michael Chertoff, assistant attorney general at the Justice Department's criminal division.

Though officials were unable to put a price tag on the amount of money flowing to Al Qaeda, information from the United Nations has led them to believe that the terrorist group continues to get money from leader bin Laden’s personal inheritance and investments, from his members and supporters and from Muslim charitable organizations.

According to a report released by the U.N. in August, estimates of the value of the portfolio managed on behalf of bin Laden and Al Qaeda by unidentified intermediaries range from $30 million to $300 million -- including investments in Mauritius, Singapore, Malaysia, the Philippines and Panama, according to a U.N. report in August. The report provided no sources or details. 

“There are sufficient finances out there,” said Jimmy Gurule, undersecretary for enforcement at the Treasury. “We need to remain vigilant and alert.”

"That these organizations still have access to sufficient resources to do us real harm is the part of the report that is unquestionably true," he added.

The biggest challenge in keeping up with the money trail is tracking the funds flowing outside of the traditional banking system, the officials said. This might include, but is not limited to informal money networks known as hawalas that don't leave a paper trail; bulk-cash and cigarette smuggling; trafficking of diamonds, gold and drugs; and donations to charities.

Gurule said they believe a lot of the money flowing to terrorists was through these alternative methods. 

“We have to be flexible. We have to be fluid," Gurule said. "As the bad guys continue to adjust their strategy, we need to be sufficiently agile to adjust our strategy." 

To aid with that effort, Senate Finance Committee Chairman Max Baucus, D-Mont., and the panel's highest ranking Republican member, Chuck Grassley of Iowa, are introducing legislation that would suspend the tax-exempt status of any organization put on the United States' list of terrorist financiers. 

The Associated Press contributed to this report.