A United States federal court in Brooklyn heard opening statements on August 14, 2014, concerning a civil case 10 years in the making brought by 297 individuals against the Jordan-based Arab Bank. The suit originated in 2004 when 297 U.S. citizens who were victims or family members of victims of terror attacks carried out by Hamas sued the Arab Bank for providing funding to the Hamas terror organization from 2001-2004.
When the suit was first filed in 2004, there were six victims involved, and that number grew exponentially over the years. According to the plaintiff’s lawyers, the Arab Bank provided “extensive and substantial material support” to Hamas, violating the U.S. Anti-Terrorism Act of 1990. The Anti-Terrorism Act allows for all victims of foreign terror organizations to pursue monetary compensation in a U.S. court. The bank was referred to as the “paymaster, the distributor of funds” to Hamas during the first day of the trial. The case stalled for many years due to the Arab Bank’s noncompliance with releasing certain documents and account information. This is the first time in the United States that a civil suit has been brought against a bank on the accusations of funding a terrorist organization.
The Arab Bank operates over 6,000 locations in 30 countries, and the almost 300 plaintiffs in the case allege that the Arab Bank handled transactions on behalf of people it knew were associated with terrorism. They claim that the bank had a part in the funding of at least 24 terrorist activities between 2001 and 2004. The Arab Bank has a branch in Manhattan so they can be tried in a civil suit in the U.S. The plaintiffs are U.S. citizens who have been victims of Hamas suicide bombings and terror activities or are the family members of victims who perished in the attacks.
The object in question was called “the Beirut Account,” a virtually unidentifiable standard account in the Arab Bank’s Al-Mazra location in Beirut. The account was under the name of Osama Hamdan, a Hamas spokesperson, and during the six years that this account was open, at least three transactions that went through the account were earmarked for Hamas activities.
The plaintiffs made the argument that this account was used to distribute funds to the families of successful suicide bombers. An ad that ran in 2002 in an Arab language newspaper encourages “The relatives of the martyrs, whose names hereby follow, are requested to head for the Arab Bank branches in their places of residence in order to receive the tenth payment from the honorable Saudi Committee — a sum of $5,316.06 USD for each family”. Wire transfers for this same exact amount of money have been made to families of successful suicide bombers from this account on multiple occasions. The Arab Bank allegedly funneled funds from the “charity” the Saudi Committee through it’s accounts and paid sums of money to the relatives of 55 suicide bombers. The bank also held personal accounts for 30 senior members of Hamas, many of whom were designated terrorists by the United States while this was going on. Lastly, the Arab Bank held funds for over a dozen charities that have turned out over time to be just fronts for Hamas business dealing and money laundering.
The Arab Bank contended that it did not handle the finances of known terrorists and was not aware of any illegal activity happening with its customers. The lawyers for the bank stated that they followed all regulations regarding screening transactions against lists of known terrorists and had no way of knowing where the funds were being allocated after distribution. The term “martyr” was used loosely in the 2002 newspaper ad, according to bank officials, and they claim,, in this case, it simply means someone dead, not necessarily a terrorist.
On September 22, a unanimous verdict was handed down after 30 days of trial and two days of deliberation. The Arab Bank was found guilty of knowingly aiding Hamas by providing money transfers through their institutions earmarked for Hamas use. The jury did not believe that the Arab Bank had not done business with names that they knew were associated with terrorists. This verdict represented a legal milestone, as it was the first time a financial institution had been held liable for their clients’ activities. A separate trial determines the amount of monetary compensation to be received by each family in the case.
The Arab Bank filed a motion for a retrial on October 10, 2014. The bank argues that in eight instances during the trial, the federal court that heard the case in Brooklyn made errors in applying the law to reach the verdict. The bank may appeal the verdict even if a retrial is not granted.
Three days before the second trial to determine the amount of compensation the families would receive was to begin, a spokesman for the Arab Bank revealed that the bank and the plaintiffs had settled out of court for an undisclosed amount of money. The out-of-court settlement covered all claims brought against the Arab Bank, according to individuals briefed on the case.
Sources: Vaughan, Bernard. “Arab Bank called Hamas 'paymaster' as trial opens in New York,” Reuters, (August 14, 2014).
Clifford, Stephanie / Silver-Greenberg, Jessica.“Terrorism trial of mideast bank worries the financial world,” The New York Times,(August 13, 2014).
“The long arm of the plaintiff,” The Economist, (August 16, 2014).
Bob, Yonah Jeremy.. “Arab Bank demands retrial in terror financing case,” Jerusalem Post, (October 13, 2014).
Clifford, Stephanie. “Arab Bank reaches settlement in suit accusing it of financing terrorism,” New York Times, (August 14, 2015).