Moe Jii works behind the counter of Dahabshiil, a money transfer company, in Falls Church, Va. The U.S. government and banks are shutting down cash transfers to Somalia because of fears of fraud and funds going to terrorism. (Jahi Chikwendiu/The Washington Post)

Last week, Abdia Sheikh made her regular trip to Dahabshiil, a tiny office in Falls Church, Va., and a financial nerve center of the Somali community in Northern Virginia. She had brought $200 in cash, which she sends every month to the widow and children of her brother, who was killed in Somalia’s brutal civil war.

But this time, she was told the transaction would not be allowed. Across the country, thousands of other Somalis were being told the same thing, sending panic through their close-knit enclaves. Under pressure from federal agencies trying to curb money flows to criminals and terrorists, the last American bank willing to arrange cash transfers to their impoverished East African country had just cut them off.

“This is devastating. My sister-in-law is alone with seven children, no income and no help,” said Sheikh, 57, an employee of the World Bank. “If it weren’t for the few hundred dollars my sisters and I send them every month, they would be evicted and have no way to buy food.”

The endless troubles of Somalia, one of the world’s poorest and most chaotic countries, have generated both compassion and alarm from officials in the United States, where more than 80,000 Somalis have sought refuge from bouts of civil war, dictatorship, drought and persecution by Islamist fanatics.

Now, with the total shutdown of cash transfers from U.S. banks — which had been moving about $200 million per year to Somalia from emigres like Sheikh — the humanitarian impetus to help the country survive and rebuild has been trumped by the more urgent need to prevent the illegal funding of crime and terror.

Hawa Salad, second from left, and shop owner Ayan Diriye work at Ayan’s Shop, which sells Somali goods and houses a money transfer office called Juba Express, in Falls Church. (Jahi Chikwendiu/The Washington Post)

Lawmakers and aid agencies have appealed to U.S. officials to find an alternative means of keeping family remittances flowing while working to improve the security of money transfers. The prime minister of Somalia has asked U.S. banks to reconsider their decision. Officials in the Obama administration have expressed concern and numerous meetings have been held, but no solution has yet emerged.

“Eliminating the ability to send money into Somalia could throw the country and its already vulnerable economy deeper into crisis,” warned a letter last week from a dozen members of Congress to senior administration officials. It added that cutting off funds could “strengthen the appeal of terrorism and piracy” and “reverse the limited gains” made so far to rid the region of terror.

The reason money transfers are so critical to Somalia is that, after years of war and anarchy, there is no central banking system. There are also no international transfer agencies like Western Union, so families abroad must rely on informal networks known as “hawalas” to deliver money to needy relatives. Roughly one-third of the nation’s economy is reported to depend on individual cash remittances.

But Somalia is also home to a brutal Islamist insurgency called al-Shabab, as well as an epidemic of piracy as depicted in the film “Captain Phillips,” and U.S. federal agencies have become increasingly concerned about American cash transfers ending up in dangerous hands.

Most Somalis living in the United States — mainly in Minneapolis, with clusters in Seattle; Columbus, Ohio; Atlanta; and greater Washington — are law-abiding Muslim emigres who drive taxis, run small businesses or work as professionals. Many are longtime refugees from the civil war who have become U.S. citizens.

But the Treasury Department, the Justice Department and the FBI have raised repeated alarms about Somali emigres with radical Islamic views and connections. Just last month, the FBI placed a former Somali taxi driver from Northern Virginia on its list of most-wanted terrorists. The man, now missing, was suspected of channeling funds to al-Shabab and of traveling home to join the group.

Such concerns have led the federal government to press banks to monitor risky transactions more closely. Officials also stepped up prosecution of banks when transfer agencies they service have been caught sending cash to illicit recipients. As a result, many large banks have stopped wiring funds for informal companies such as Dahabshiil. The company’s local agents deliver the cash to remote villages, and it becomes very hard to track.

Samantar Samantar Mussa, left, and Yusuf Nasir, center, are among the Somali men gathered for conversation over coffee in Falls Church. The inability to send money to relatives in Somalia has many of them worried. (Jahi Chikwendiu/The Washington Post)

That has left smaller banks, eager for business and more willing to take risks, to service the hawala trade. By last month, 85 percent of all U.S. cash remittances to Somalia were going through tiny Merchants Bank in California, which finally abandoned ship recently. The rest was funneled through scattered small financial entities such as credit unions. Officials at Merchants did not return calls, but officials of the American Bankers Association said such banks have been squeezed too hard.

“The government wants these transactions to be fully transparent, but in a country like Somalia, there is no transparency,” said Robert Rowe, a vice president of the ABA in Washington. “You don’t know whether the money goes to feed a starving mother with six kids or to buy machine guns. You have law enforcement concerns on one side and humanitarian concerns on the other. The banks get caught in the middle.”

This week, the effect of Merchants’ decision was palpable in the distraught faces of Somalis who gathered in coffee shops and transfer agencies around Baileys Crossroads to exchange news of the cutoff.

Some were still carrying envelopes of cash they had been planning to send to an ailing grandmother, to pay for their children’s school fees or to subsidize relatives stuck in refu­gee camps. Several rejected customers said they were helping to support relatives in South Sudan, Eritrea and Kenya, as well.

“My country has no stability, no security, no jobs,” said Yusuf Nasir, 55, a retired Verizon employee in Arlington. “America saved my life and my children, and I would never do anything to harm it. I have worked hard to send $100 to my family in their village. It is the same for all of us. If we don’t send this money, people will starve.”

Several local Somalis in the money transfer business insisted that they were strictly compliant with financial safeguards and reporting rules under the Banking Security Act Bank Secrecy Act and the Patriot Act. On the wall at Dahabshiil is a sign that reads, “Dahabshiil does not pay or send any money from or to finance terrorism or other unlawful activities.” Next to that is a new poster that reads, “Help Save Somalia’s Lifeline.”

“We have always done everything the government asked,” said Farah Mohammed, 50, a former compliance officer at Dahabshiil, who recently returned from a visit to Somalia. Like other Somali emigres interviewed, he said he has no sympathy for al-Shabab and views the fanatical militants as a terrible scourge on his homeland.

“The problem is all the youths who have no jobs and no future,” he said. “Without the money families are sending home, it is easier for them to be recruited by the militants.”

Treasury officials have said they understand the critical role cash remittances play in Somalia as well as other poor countries and that they are working to find a solution. They say they want banks to monitor transfer clients on a case-by-case basis, not to get out of the business altogether, as Merchants did.

David S. Cohen, a Treasury undersecretary, said last month that while remittance payments to poorer, less-regulated countries present “real money laundering and terrorist financing risks,” the government is eager to develop a more secure transfer system where “legitimate customers” can be served but “terrorists and criminals are turned away.”

Legislators and officials of aid groups led by Oxfam America and Adeso, or African Development Solutions, have proposed a number of possible emergency remedies, such as using the World Bank or the United Nations to handle family remittances along with assistance funds they regularly send to Somalia. They have been meeting with administration officials over the past several weeks.

But with no immediate solution in sight, Somalis like Abdi Kani, 46, a UPS driver in Arlington who sends $500 a month to support his mother, sisters and brothers back home, say they will grow increasingly fearful for their families’ survival.

“This is not some abstract issue. It is a physical thing, and we are all feeling it,” Kani said Wednesday, brooding over coffee in a cafe at Baileys Crossroads. “I thank God I was able to send money last week before everything closed down. But if another month passes, the kids will have to leave school and the landlord will evict them. My whole family will start to suffer.”