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Blacklisted by the bank

In an age of homeland insecurity, financial institutions add layers of scrutiny that some critics call overzealous.

By Sara B. MillerSpecial to The Christian Science Monitor / August 25, 2003

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."

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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.

Algabri says he believes in the nation's war on terrorism, but not the "overzealous" one that is unfolding today. "I believe they closed my account because I am a Muslim," he says. He plans to file a discrimination complaint against FleetBoston Financial Corp. in the coming weeks.

Fleet Bank did not return calls to discuss Algabri's account.

According to civil rights advocates, consumer complaints regarding account closures, canceled credit cards, and disrupted wire transfers have increasingly surfaced across the nation.

In Boston, Fleet Bank has closed at least 15 accounts of Muslim and Arab holders without explanation, according to the Massachusetts office of the American Arab Anti-Discrimination Committee. In New Jersey and New York City, dozens of Muslims have been asked to provide large amounts of documentation without cause, or face credit-card cancellation, say several sources, including the American Civil Liberties Union (ACLU).

"Recently we have started to see a number of cases ... all of which seem to have something to do with the Patriot Act," says Christopher Dunn, a legal adviser with the New York branch of the ACLU. But it is a nascent issue, he says. "We are only now trying to understand what is happening."

In fact, the pockets of complaints that have bubbled up are thought to signal a much deeper problem.

"Many of [those targeted] are immigrants. They don't want to draw attention to themselves," says Khurram Wahid, a legal adviser for the Council of American-Islamic Relations in Washington. "They don't want themselves on any system complaining about anything."