U.S. Raids 17 Businesses That Send Cash Abroad

Effort to Curb Terrorism Hurts Immigrants, Some Critics Say

Federal agents have raided 17 money-transmitting businesses in the Washington area that allegedly sent millions of dollars abroad without obtaining licenses, part of a nationwide crackdown aimed at curbing the ability of terrorists to move cash.

Authorities have seized $3.6 million in the local raids, which began after the USA Patriot Act took effect in October 2001, tightening regulations on money senders. Although authorities have released few details of the operations, they suspect that three of the firms have sent funds to countries accused by U.S. authorities of supporting terrorism. No terrorism-related charges have been filed.

"When you have an underground banking system, it tends to make us very vulnerable to terrorist activity" as well as other crime, said Kevin Delli-Colli, assistant special agent in charge of the local Bureau of Immigration and Customs Enforcement office, which has headed the effort.

But some immigrants and crime specialists say the crackdown has targeted many mom-and-pop businesses that have nothing to do with financing terrorism. These informal money-senders are running afoul of the Patriot Act simply because they lack the resources to meet all of its licensing requirements, critics say.

"We're alienating communities that we should be bringing together in our corner for coalitions against terrorism," said Nikos Passas, a professor at Northeastern University who has studied terror finance.

The most recent raid occurred at the Eritrean Cultural and Civic Center at Sixth and L streets NW. On April 13, federal agents and D.C. police swept into a second-floor office at the center and seized documents and computers. The office, which was rented from the club, had allegedly been sending hundreds of thousands of dollars overseas.

Immigrants who gather at the club to swap gossip and watch Eritrean television programs were shocked at the raid on the office, which many use to send cash to needy families back home.

"To include us like a terrorist group is unacceptable. Of course we're offended," said Estefanos Mesmea, 55, a cabdriver from Alexandria who was sipping espresso at the club on a recent day. The case is under investigation, and officials declined to provide details.

Informal money-transmitters have flourished in the United States, thanks to growing immigration and improved technology. For many immigrants, such services offer a quick, cheap way to send money to regions with inefficient banks -- or none at all.

The businesses sometimes function through clan or family ties and use unorthodox methods to move cash to hard-to-reach areas. For example, some are hawalas, an Arabic word for transfer, in which money is not immediately wired to the final destination. Instead, a U.S.-based hawala operator tells his counterpart in another country to give cash to the recipient and leaves an IOU. The two hawala operators settle up later, sometimes through offsetting transactions or trade-finance arrangements.

Eritreans in the Washington area say they started using informal cash-sending channels decades ago, when their homeland was controlled by a Marxist Ethiopian government. Eventually, a money-transmitting office was set up at the cultural center. It has been run for the last few years by the Eritrean Embassy, according to several immigrants. The embassy did not respond to several messages seeking comment.

"It was a well-intentioned community service, done by volunteers initially," said Haile Mezghebe, a prominent local Eritrean who is a surgeon at Howard University Hospital.

But after the Sept. 11, 2001, attacks, authorities grew increasingly concerned about such services and their hard-to-trace transactions. Under the Patriot Act, money transmitters must register with the Treasury Department and obtain state money-transfer licenses. The law also requires them to report suspicious transactions and run programs to prevent money laundering.

Even as the new regulations were being rolled out, agents pounced on a money transmitter that appeared to illustrate their worst fears. On Nov. 7, 2001, FBI and Customs agents raided offices of Al Barakaat in six U.S. cities, including Falls Church and Alexandria. U.S. officials say Al Barakaat, an important institution for local Somalian cabdrivers and hotel workers, also was used by al Qaeda to move money around the globe.