Police are investigating whether childcare subsidies allegedly obtained by fraud have been funnelled to terrorists overseas as a series of raids across Sydney led to charges against two men for defrauding the federal government.

Two men were arrested this week - Ali Assaad, 26, from Moorebank, on Wednesday and Hussein Dandachi, 26, from Old Guildford, on Thursday.

Signpost for Play School Family Day Care. Credit:ABC News Online

Both men have been charged with several fraud offences, primarily dishonestly obtaining a financial advantage by claiming childcare benefits and childcare rebates from the Commonwealth Department of Education and Training worth tens of thousands of dollars in total.

Court documents allege that the men had been doing so for at least a year.