Georgetown Public Policy Review
June 1, 2015
Michael Deluca
In September of 2014, Arab Bank, a large Jordan-based financial institution, was found liable under the Anti-Terrorism Act (ATA) of processing payments used by Hamas to commit acts of terrorism in Israel during the early 2000s. In a significant broadening of the scope of the ATA, the jury in Linde v. Arab Bank found that the processing of these payments resulted in the death and injury of over 100 American citizens. Similar cases are also pending trial in the United States, including lawsuits against the Royal Bank of Scotland Group Plc’s National Westminster Bank, Bank of China Ltd., and Credit Lyonnais SA for their alleged involvement in processing transactions destined for Hamas and Islamic Jihad. Civil litigation against banks under the ATA for alleged involvement in handling financial transactions related to acts of terrorism in the Middle East poses a threat to diplomatic efforts in the region, collaborative investigation of terror financing, and the future stability of already vulnerable Arab states.
Civil Litigation as a Security Threat
Linde v. Arab Bank is the first case against a bank brought under the ATA, which was enacted in 1992. While civil litigation against banks that might have financed terror activities may serve to compensate the families of victims, the overall effect can be damaging to relationships with key regional partners and weaken the United States’ capacity to investigate terror financing. Additionally, litigation against banks operating in the Middle East could contribute to further regional destabilization by discouraging financial institutions from operating in areas heavily impacted by terrorism for fear of civil penalties. Setbacks in these areas may increase the vulnerability of the US and its allies to acts of terrorism.
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