OTTAWA - Canada's under-funded and under-staffed police and intelligence agencies are doing their best to combat terrorist financing, but they desperately need more money and more personnel to get the job done, the Air India inquiry has heard.

RCMP Supt. Rick Reynolds testified Monday that only two charges have been laid - and so far no convictions have been obtained - in the six years since federal legislation was enacted to crack down on terrorist fundraising.

Reynolds said he asked for 126 people, including support staff and intelligence analysts as well as front-line criminal investigators, when the RCMP terrorist financing unit was set up in 2001.

"That was - from my position when I initially put in - what I felt our needs would be," he told the inquiry headed by former Supreme Court justice John Major.

Instead he got a modest $2.8 million in funding that allowed him to take on just 17 people. Reynolds recently received word that he'll be able to add 33 more, although he couldn't give precise budget figures for them or predict exactly when the new staff will be in place.

He noted, in the force's defence, that terrorist financing was far from the only operational unit scrambling for a share of the Mounties' budget in the wake of the 9-11 attacks in the United States.

Reynolds compared his problem to the one that faces NHL clubs when they're forced to compete for a limited pool of high-quality hockey players. "Everybody was vying for the same talent."

Despite that explanation, Major expressed dismay that the resources allocated to tracking terrorist fundraisers were so slim. And he wondered how anyone could expect to mount successful prosecutions under the circumstances.

"It's like strangling a snake, in a manner of speaking," he said. "You cut the head off, not much happens to the rest of the body."

When Reynolds appeared to grope for an answer, Major assured him he wasn't the one who should have to shoulder the blame.

"I don't want you to be critical of your political masters, but I can be," said the retired judge.

"It seems to be inadequate . . . If you asked for 126 (and) six years later you have somewhere around 50, it just seems to me that it speaks for itself."

Reynolds wasn't the only terror-fighter to complain Monday that he had to operate on a shoestring.

Jim Galt, head of the financial analysis unit at the Canadian Security Intelligence Service, said he currently gets by with a staff of six - two of whom are contract employees and one of whom is seconded from another government department.

"I think it's fair to say . . . there aren't enough resources," said Galt

He added that senior managers at CSIS are considering a plan to beef up his unit, and he's hoping for "significant" improvement in the near future.

Asked to be more specific about his needs, Galt replied: "If the unit was, certainly, doubled or tripled that would be significant."

Jacques Shore, one of the lawyers for the families of the Air India victims, congratulated Reynolds and Galt for their frankness and suggested their testimony puts the ball squarely in the court of the Conservative government.

"We all understand that if you choke terrorist financing you will choke terrorism," Shore said outside the hearing room. "What we need to do is to ensure that the political resolve is there."

Shore said it was "devastating" for the Air India families to hear that Ottawa didn't even begin to take the problem of terrorist financing seriously until the 9-11 attacks by al-Qaida in the United States - a full 16 years after the Air India tragedy.

"We certainly understood and appreciated back in the 80s and 90s, as this was proliferating, that this was a problem that had to be addressed."

It's already a matter of public record that Babbar Khalsa, the militant Sikh separatist group blamed for the 1985 bombing of Air India Flight 182, held tax-exempt status as a federally registered charity.

Successive Tory and Liberal governments didn't get around to revoking that status until 1995, and critics complain that many former Babbar Khalsa activists simply moved on to new charities and continued to raise funds.

The inquiry, however, has no mandate to delve into the money trail that led to the downing of Flight 182 with the loss of 329 lives. Instead, it's looking at current efforts by the RCMP, CSIS and other federal agencies in the hope of offering recommendations for improvement.