A businessman was arrested Wednesday on charges that he unwittingly funded a Connecticut man's attempt to bomb Times Square on May 1 by providing unlicensed banking services, an arrest that continues an effort by federal authorities to reduce the illegal flow of money that can finance terrorism.

Mohammad Younis, 44, was accused in an indictment in U.S. District Court in Manhattan of engaging in hawala activities, an informal banking system which relies on wire transfers, couriers and overnight mail. He was arrested at his Long Island home.

A bail package agreed to by lawyers on both sides called for Younis to be released on $100,000 bail after his brief afternoon court appearance.

His lawyer, Phil Solages, said outside court, after Magistrate Judge Andrew J. Peck set bail, that his client "is not a terrorist."

"Mr. Younis has no ties to terrorism. Mr. Younis is a hard working family man," Solages said.

A release issued by U.S. Attorney Preet Bharara said Younis provided thousands of dollars in cash on April 10 to two individuals who traveled from Connecticut and New Jersey to meet him on Long Island at the direction of a coconspirator in Pakistan. Authorities said one of the individuals was Faisal Shahzad, who has pleaded guilty to 10 terrorism and weapons counts in connection with the attempted bombing. He is awaiting sentencing.

The release said there were no allegations that Younis was aware of the intended use of the funds.

"By engaging in the alleged conduct, Mohammad Younis unwittingly funded a terror plot that, if successful, would have caused mass casualties in New York City," Bharara said. "These charges remind us how international terrorists use the cover of informal money transfer systems to avoid detection and to inflict catastrophic harm."

Younis of Centereach, N.Y., was charged with conducting an unlicensed money transmitting business between Pakistan and the United States and conspiracy to do so. Both charges carry a potential of up to five years in prison.

Shahzad, a former U.S.-trained financial analyst, pleaded guilty on June 21. He acknowledged during the plea receiving a cash payment in April in the United States to fund his preparations, and he said it was arranged in Pakistan by associates of the Tehrik-e-Taliban, the militant extremist group based in Pakistan that trained Shahzad to use explosives.

Shahzad was arrested two days after his bomb in the back of a sport utility vehicle on a warm Saturday night sputtered but never ignited, catching the eye of a street vendor who alerted police nearby.

"I consider myself ... a Muslim soldier," Shahzad said as he pleaded guilty. He added that he chose to try to set off his bomb when he knew Times Square would be packed with tourists, making it likely he would kill or injure many people.

He said then that he conspired with the Pakistan Taliban, which provided more than $15,000 to fund his operation and five days of explosives training late last year and early this year, just months after he became a U.S. citizen.