A United States federal court in Brooklyn heard opening statements on Thursday 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 US citizens who were victims or are 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 6 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 US Anti-Terrorism Act of 1990. The Anti-Terrorism Act allows for all victims of foreign terror organizations to pursue monetary compensation in a US 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 US. The plaintiffs are US 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 Osama Hamdan, who is a Hamas spokesperson, and during the 6 years that this account was open at least 3 transactions that went through the account were earmarked for Hamas activities.
The argument was made by the plaintiffs 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 funneld 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 it's customers. The lawyers for the bank stated that they followed all regulations as far as 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 who is dead, not necessarilly a terrorist.
On September 22 a unanimous verdict was handed down after 30 days of trial and 2 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 the fact that the Arab Bank had not done business with names that they knew were associated with terrorists. This verdict represents a legal milestone, as it is the first time a financial institution has been held liable for their clients activities. A seperate trial will determine the amount of monetary compensation to be recieved by each of the families in the case.
The Arab Bank filed a motion for a retrial on Friday October 10. The bank is making the argument 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 is a retrial is not granted.
The implications of the outcome of this trial may be much more broader than anticipated. With financial heavy-hitters watching the trial closely, this negative ruling against the Arab Bank could trigger a massive exodus of funds out of banks in dangerous war-torn areas around the world. A ruling handed down against the Arab Bank means that a bank could be held liable for wrong doing even if their institutions followed the banking rules strictly. The world financial system has already begun to see the effects of cases similar to this, with banks like JP Morgan Chase and Bank of America slowly winding down their money transfer services to Mexico.