KABUL, Afghanistan -- The al-Qaida terror network and Afghanistan's ousted Taliban regime are managing to find new sources of funding despite global economic sanctions, the head of a U.N. committee overseeing those sanctions said Tuesday.

Increasingly, the Taliban have turned to drug revenue to pay for their insurgency against Afghanistan's U.S.-backed government, said chairman Heraldo Munoz, who is the Chilean ambassador to the United Nations.

He was in Afghanistan to meet with President Hamid Karzai and other leading Afghan officials to discuss ways to improve intelligence gathering on individuals and companies linked to both the Taliban and al-Qaida.

Afghanistan is the world's largest producer of poppy -- the raw material used to make heroin. Before it fell, the Taliban enforced a ban on poppy cultivation, but business is booming in the power vacuum that has followed. Many feel local warlords loyal to the government are also profiting from the trade.

"Many of these commanders of the Taliban are cashing drugs for weapons, so there is a strong suspicion of the link between drug trafficking and increased Taliban activity," Munoz said at a news conference.

He said individuals in several Middle Eastern countries are also suspected of backing both the Taliban and al-Qaida, but did not elaborate.

According to Munoz, the U.N. sanctions committee has already frozen more than $120 million around the world from several hundred people and organizations identified as having ties to the two groups.

Al-Qaida and the Taliban, however, are aggressively finding ways to work around them.

"Transfers of money have become more sophisticated," he said. "Al-Qaida has started to adapt to our sanctions."

Munoz said the global effort had changed al-Qaida's structure, with more power falling to individual terror cells.

"It is less hierarchical and more horizontal," he said. "Their units have more autonomy to gain access to funding and weaponry. This makes detection more difficult."

But, he warned: "As they change methods, we as a committee will also be looking at other distribution channels of money."

Munoz said Karzai promised that the Afghan government would meet a requirement to submit a report on al-Qaida and Taliban activities -- required from all 191 U.N. member states -- by the end of the year.

Munoz also expressed hope that Pakistan and Afghanistan would work together to fight the Taliban and al-Qaida, and said improved intelligence information from Afghan authorities will help the Pakistanis crack down on any Taliban and al-Qaida elements in their territory.

Afghan and Western officials say the two groups have little trouble hiding in the mountains that straddle Pakistan and Afghanistan, and that they sometimes receive safe haven from sympathetic Pakistani officials. The Pakistanis say they are doing all they can against the groups.

The sanctions committee was established by the Security Council in 1999.

The council shifted sanctions from the government of Afghanistan to terror leader Osama bin Laden, al-Qaida and remnants of the Taliban in January 2002, after a U.S.-led force ousted the Taliban.

All nations are required to impose an arms embargo and a travel ban and freeze the assets of individuals and groups on a list compiled by the council committee monitoring sanctions.