Jury Finds Arab Bank Guilty of Helping Finance Terrorism

Wednesday, September 24, 2014

In a decision with implications for international banking, a leading Middle Eastern bank has been found liable for helping terrorists carry out attacks in Israel last decade.


The ruling in a U.S. court came against Arab Bank, which was sued by relatives and representatives of victims of Hamas terrorism against Israelis between 2000 and 2004, during the second Palestinian uprising.


In the lawsuit that was originally filed 10 years ago, the 297 plaintiffs cited the U.S. Anti-Terrorism Act (pdf), which for the first time was successfully used to hold a financial institution responsible for knowingly supporting terrorism efforts. They claimed Arab Bank supported Hamas by handling transfers and payments for the group.


And they did so despite a “high” burden of proof, which entailed proving Hamas was behind 24 suicide attacks and that Arab Bank’s financial support was the “proximate cause” of those attacks, according to Stephanie Clifford at The New York Times.


“The money and the financing is the oxygen for the terrorists,” said Jill Rath, the lone juror who agreed to speak to the media following the verdict.


Arab Bank insists it did not knowingly conduct transactions for terrorist groups. Some of the groups were not detected due to errors caused by different renderings of names in English and Arabic, it claims. One of the main groups in question, the Saudi Committee, is a legitimate charity and does not appear on any U.S. terrorist lists, it added.


Arab Bank lawyer Shand S. Stephens said that identifying terrorists is the job of governments, not banks. “The proposition that’s being floated here,” he argued to the jury, is “that private businesses, including banks, are supposed to make up their own lists of terrorists. Imagine, actually, what that would do, if a bank did that.”


The bank had refused to release requested documents in the case, citing privacy laws. That earned the bank sanctions from the judge, one of which prevented it from revealing to the jury its reason for the withholding of evidence. The plaintiffs, however, were free to tell the jury about the bank’s refusal.


Industry officials paid close attention to the case, and may revise their business practices in light of the verdict against Arab Bank, a major player in the Middle East with $46 billion in assets.


“What this has done is it’s made the effects of American law felt in far-off places, and that is significant,” Jonathan Schanzer, vice president for research at the Foundation for Defense of Democracies and a former terrorism finance analyst for the U.S. Treasury Department, told the Times. “I don’t think any country, any bank, would want to be cut off from the U.S. financial sector, and they’re going to start thinking very carefully about whether they accept financial transactions,” even if they are from groups or individuals whose names don’t appear on designated terrorist lists.


Several similar cases are pending, including a lawsuit against the National Westminster Bank that was filed by victims of Hamas terrorist attacks in Israel.


The Arab Bank trial was held in Brooklyn because the plaintiffs are all U.S. citizens. A separate trial, which hasn’t been scheduled yet, will determine what damages the bank must pay.

-Noel Brinkerhoff, Danny Biederman


To Learn More:

Arab Bank Liable for Supporting Terrorist Efforts, Jury Finds (by Stephanie Clifford, New York Times)

Arab Bank Found Liable for Helping Terrorists (by Nick Divito, Courthouse News Service)

As Arab Bank Jury Deliberates, a Similar Brooklyn Case Is Revived (by Nick Divito, Courthouse News Service)

Expert Witness in Bank Terrorism Financing Case Admits She can’t Read Arabic (by Noel Brinkerhoff, AllGov)

First Civil Case against Bank under 2001 Anti-Terrorism Act Opens (by Noel Brinkerhoff, AllGov)


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