Blacklisted by the bank

Hossam Algabri ripped open his statement from Fleet Bank one day after work last November, and began to read: "We regret to inform you that we have decided that it is not in our best interest to continue your banking relationship with us."

Mr. Algabri assumed that a mistake had been made. He hadn't bounced a single check since he opened an account at the institution's predecessor, BayBank, 11 years earlier.

As he dialed customer service, he began to wonder: Did this have anything to do with the war on terrorism?

"You hear about it all the time, but you never think it will happen to you," says the Egyptian native, who came to the United States at age 12 and became a citizen this year.

Algabri sat on hold that day for 20 minutes. Nine months later he is still, in essence, on hold. The bank has told him that his account was flagged for suspicious activity, but says that is all it is at liberty to reveal. He has since opened an account elsewhere.

Banks have long played a role in stopping the flow of money among suspected terrorists, money launderers, and narcotraffickers. But the terrorist attacks of Sept. 11, 2001, raised the bar. More watch lists have been generated, more institutions have become accountable - and more consumers may feel the heat.

And while alleged government violations of civil rights under the USA Patriot Act have received steady attention, consumer complaints in the private sector have fallen largely off the radar.

"No one paid attention to the lists because they primarily affected foreign nationals," says Peter Fitzgerald, an expert on government watch lists at Stetson University in Florida. "Now it affects those who do business with those who do business with those who do business with someone suspected of terrorism."

Financial institutions are under pressure from the government. They face stiff fines - up to $1 million in some cases - if they don't stop money flows or freeze accounts.

Some observers worry, however, that financial discrimination has become an unwanted byproduct. Under an article of the Patriot Act, some investigations are now conducted in secret, and American consumers like Algabri are increasingly finding their accounts closed without explanation - and with little recourse.

"Blacklisting was set up as a foreign-policy tool," but as the practice creeps into the realm of criminality, there are questions about whether the mechanisms in place to protect those who are accused, Fitzgerald says.

Targeted financial sanctions are widely supported, both in and out of the financial community, as a homeland-security measure. They are intended to punish "the bad guys," say sources, instead of an entire nation, such as Iraq.

But are its tentacles reaching too far, gathering up batches of mistaken identities? And are financial institutions too often erring on the side of caution?

Algabri's story probably dates back to his former employee, Ptech, of Quincy, Mass. The software firm made headlines last winter when it became public that one of its financiers, a Saudi national, showed up on a Treasury Department watch list.

The company was later cleared, but Algabri's account - as well as those of four Muslim and Arab colleagues - remains closed. Each received the same letter from Fleet on Nov. 2, about a month before the Ptech story broke, according to sources involved in the case.

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