In the early 1990s, as Somalia fell into disorder following the collapse of the Siad Barre regime, Osama bin Laden took advantage of the chaos to fund al-Itihaad, later sending foreign militants who trained and fought alongside al-Itihaad members with the goal of creating an Islamist state in the Horn of Africa. AIAI was also active in setting up sharia courts.
The al-Itihaad sent a delegation to the Peace and Unity Conference of the Somali Nation, which was held February 1995 at Kebri Dehar, at which they made pledges which would cause the organization to effectively cease to exist as a political and military force within the Ogaden.
An article published in the San Francisco Chronicle, on December 16, 2001 quoted unnamed intelligence officials who claimed AIAI was extensively connected to Al Barakaat. The San Francisco Chronicle called al Barakat a Somali-based business conglomerate and money transfer organization. They quoted former U.S. Treasury Secretary Paul O'Neill who called al Barakat as one of the "financiers of terrorism". The 9/11 Commission Report subsequently cleared al Barakat of involvement in financing the 9/11 hijackers.
Funded by wealthy Saudis, al-Itihaad had extensive connections with the Somali expatriate community in Kenya, in particular the Eastleigh district of Nairobi and the predominantly Muslim coastal regions. At its height, the AIAI militia numbered over 1000. According to U.S. intelligence officials, al-Itihaad cooperated with the al-Qaeda operatives who carried out the 1998 United States embassy bombings in Nairobi and Dar es Salaam that killed 224 people.
On 24 September 2001, AIAI's finances were sanctioned by the administration of U.S. President George W. Bush under Executive Order 13224. Its then-head Hassan Dahir Aweys was also sanctioned under Executive Order No. 13224 in November of that year. In June 2004, Hassan Abdullah Hersi al-Turki, who had become leader of the organization, was also sanctioned for his connections to bin Laden. Al-Qaeda operatives were reported to have used the AIAI base on the island of Ras Kiyemboni, south of Kismayu near the border with Kenya. Other sources indicate that al-Qaeda formed a training camp on Kiyemboni, while al-Itihaad set up its own training camp at Las Quoay near the northeast port of Boosaaso. In the aftermath of the September 11, 2001 attacks, these camps were dismantled and the hundreds of trained militants sailed for the safety of tribal areas in Yemen.
A 2007 report from the Canadian government's Integrated Threat Assessment Centre says "some part of the proceeds involved in the global khat trade possibly finances terrorism" (National Post). The al Qaeda linked Somali terrorist group Al Ittihad Al-Islam has been identified as being very active in the Greater Toronto Area (GTA), and has been operational in Ontario since the late 1990’s. The group has been implicated in smuggling Khat into Canada and the United States.