Terrorism financingA first: Jury finds bank guilty of financing terrorism

In a major development on the terrorism financing front, a U.S. jury found Arab Bank Plc liable for providing material support to Hamas and ordered the bank to compensate nearly 300 Americans who are either victims or relatives of victims of at least two dozen attacks tied to Hamas in Israel and the Palestinian territories.

On Monday, jurors at the U.S. District Court for the Eastern District of New York reached their verdict after a six-week trial, considered the first terrorism financing civil case in the United States. The victims first filed suit against Arab Bank in 2004, accusing the Jordanian bank of violating the Anti-Terrorism Act, under which victims of U.S.-designated foreign terrorist organizations could seek damages.

The Insurance Journal reports that two other lawsuits are pending in New York against Bank of China Ltd., for providing services to Palestine Islamic Jihad, and Credit Lyonnais SA, for aiding Hamas (regarding the Bank of China case, and the Netanyahu government’s reluctance to go against it, see“Israel withdraws from U.S. terror case to placate China,” HSNW, 22 November 2013).

 In a separate case, the court also ruled on Monday that Royal Bank of Scotland Group Plc’s National Westminster Bank unit must face allegations by terrorism victims regarding banking services it gave a Hamas-linked charity.

Lee Wolosky, an attorney representing plaintiffs against Bank of China, warns that the Arab Bank verdict shows “it is insufficient to simply say it is the job of governments to identify terrorists.”

“Knowing your customer is essential,” said Will Schwartz, senior vice president for the U.S. financial sector at DBRS credit rating service. “You are at least partially responsible if it’s discovered you are, inadvertently or not, financing nefarious activity.”

According to the judge’s instructions, jurors had to find liability by concluding that Arab Bank knowingly supported Hamas, and that such support was a “substantial factor” in the group’s attacks, and that the attacks were a “reasonably foreseeable” result.

The court found that Arab Bank knowingly maintained accounts for Hamas operatives and charities, adding that the bank financed millions of dollars in payments for families of suicide bombers between 2000 and 2004.

“That is how we stop terrorism,” Tab Turner, an attorney for the plaintiffs, said in his closing argument last week. “You take the money away.”

Arab Bank rejects the charges, noting that people and organizations alleged to have received improper banking services had not been designated by the U.S government as terrorists. “The plaintiff’s evidence was a mile wide and an inch deep,” Arab Bank’s lead lawyer Shand Stephens said on Monday. “The government is supposed to designate people, and the banks react,” Stephens said.

Arab Bank plans to appeal, saying the verdict is based on a series of what it considers legally incorrect court rulings that kept it from offering a proper defense, and effectively “put Hamas on trial.”

Mark Werbner, an attorney for some of the plaintiffs, said the verdict sends a message that “when a bank opens its doors to terrorists, they’re going to be held accountable.”