US officials are investigating hundreds of Muslim and Arab small businesses suspected of sending money raised through criminal activity in the United States to terrorist groups overseas. The Washington Post reported Monday the investigation into some 500 Arab and Muslim businesses -- many of them convenience stores -- was initiated after the September 11 terror attacks.

"It wasn't until after September 11th that we understood the magnitude of the (terrorist) fundraising from our own shores," John Forbes, a former US Customs Service official who directed a financial crimes task force in New York, told the Post.

US authorities said they believe small-scale scams are generating tens of millions of dollars a year for militant groups.

"We were always looking to catch the big rats" in terror financing, he added. "But in looking for rats, thousands of ants got by." Forbes said.

The criminal activity includes skimming the profits of drug sales, stealing and reselling baby formula, illegally redeeming huge quantities of grocery coupons, collecting fraudulent welfare payments, swiping credit card numbers and hawking unlicensed T-shirts.

Federal investigators suspect that some of the money has gone to Palestinian groups that use bombings to kill Israeli civilians, including the Resistance Movement Hamas, and the Popular Front for the Liberation of Palestine.

Some of the suspected criminal rings have operated in this country for decades, according to the daily. But until recently, law enforcement agencies paid only scant attention to the schemes because they are difficult to crack and time-consuming to prosecute.

Since September 11 terrorist attacks, however,they have deployed hundreds of investigators to pursue the plots, the Post reported

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The first comprehensive survey of Muslims in the United States has revealed that the community has grown to more than six million, with 1,200 mosques across the country. In a report released in April, 2001, the Council on American-Islamic Relations, found that mosques are increasingly less bound by ethnic and racial divisions than in the past, and are adapting to US culture.