In July 2004, the first of a number of civil lawsuits was filed against Arab Bank by victims of terrorism in Israel and the Palestinian Territories in the U.S. District Court for the Eastern District of New York; additional actions were filed in the ensuing years. The plaintiffs included American citizens, who sued under the Anti-Terrorism Act (ATA), and foreign nationals, who sued under the Alien Tort Statute (ATS). They did not allege that the Bank engaged in acts of terrorism. Rather, they claimed that the Bank provided banking services to individuals or organizations that it allegedly knew to be affiliated with terrorist groups. Arab Bank has denied any wrongdoing; it maintains that it provided lawful and legitimate banking services, including the processing of automated, electronic fund transfer instructions in conformity with governing compliance rules. The Bank did not knowingly or intentionally do business with terrorists, but rather adopted measures to combat terrorist financing.
On November 6, 2012, Senior Judge Jack B. Weinstein dismissed in its entirety Mati Gill v. Arab Bank, PLC, the first case to reach a final judgment. In this case brought under the ATA, Judge Weinstein evaluated the evidence and found that it did not support the claim “that the Bank acted with an improper state of mind or proximately caused plaintiff’s injury.” [Read the full opinion here.]
On August 23, 2013, Eastern District Court Judge Brian M. Cogan ordered the dismissal of separate claims filed by more than 6,000 plaintiffs against Arab Bank under the ATS. The decision dismissed more than 90 percent of the claims pending against the Bank. [Read the opinion here.]
On September 22, 2014, after a trial governed by sanctions that the U.S. Government has found to be “erroneous” and warned would be “subject to close scrutiny on appeal,” a jury reached a liability verdict in Linde v. Arab Bank, PLC, the lead case for the claims remaining against Arab Bank. The initial damages phase of the case is scheduled to begin on August 17, 2015 and will include 17 plaintiffs injured by three acts of terrorism. The trial will determine the compensation owed to these plaintiffs for their injuries. This damages trial is a necessary and final step in the district court, before the Bank will be able to argue its case on appeal, where it fully expects to be vindicated.
This section outlines the primary allegations that the plaintiffs assert in their complaints against the Bank.
The Saudi Committee
Plaintiffs allege the Bank provided material support to terrorists by processing wire transfer instructions received from another bank that were initiated by the Saudi Committee, a government-sponsored charity in Saudi Arabia. The Bank maintains that it processed these transfers, in accordance with its customary procedures and with the understanding that they were intended to alleviate a humanitarian crisis in the Palestinian Territories. The Saudi Committee was not a customer of Arab Bank, and the Bank did not have any role in choosing the recipients of Saudi Committee funds. In processing these transactions, the Bank adhered to the anti-money laundering and anti-terrorism regulations promulgated by its regulators. To this day, the Saudi Committee remains in good standing in the United States.
Plaintiffs also allege that the Bank provided material support to terrorists by providing banking services to charities operating in the Palestinian Territories that were allegedly “front organizations” for, or “alter egos” of, terrorist groups such as Hamas. The Bank maintains that it followed routine banking procedures in providing services to these charities, and that it did not have any reason to believe that they were “front organizations,” as the plaintiffs allege.
The charities to which the Bank provided routine banking services were authorized and lawful in the jurisdictions in which they operated. Moreover, the United States government provided funding to many of these same charities during the time period at issue in the lawsuits. And none of these charities were designated by the United States as terrorist organizations or affiliates of terrorist organizations at the time the Bank provided the banking services at issue.
In granting the Bank’s motion for summary judgment in Gill, Judge Weinstein held that the plaintiff had “fail[ed] to provide sufficient information to establish… that the charities were alter egos of Hamas,” and noted that “[t]here is no proof that anything but routine financial services to the charities alleged to be front organizations were provided, and none of the charities were designated by the United States as front groups when the charities received services from the Bank.”
Finally, plaintiffs allege the Bank provided material support to terrorist groups by processing automated, electronic fund transfers involving individuals allegedly affiliated with terrorist groups such as Hamas. In commenting upon its own counter terrorism measures that it had pursued from 2004, in 2009 the Israel Defense Forces stated that it had no “information that indicated that the Bank or any of its employees were involved in any way whatsoever in terrorist activities, or funded terrorism.” The IDF also stated that “… neither the IDF nor the Israeli Defense Authorities have any intention of taking steps against the Arab Bank for involvement in terrorist acts or in funding terrorism.”
In evaluating the evidentiary record with regard to these allegations, Judge Weinstein noted that the transfers at issue involved individuals that had not been blacklisted in the jurisdictions in which the financial transfers occurred, and, with few exceptions, involved individuals that had never been designated as terrorists by the United States. On this record, Judge Weinstein concluded that the plaintiff’s proof was “[i]nsufficient… to tie the personal bank accounts of individuals who may be affiliated with Hamas to Hamas itself.” Judge Weinstein also held that “[c]onsidering the large number of customers the Bank had, the evidence [adduced by the plaintiff] has less than a trace of probative value,” and that “[p]laintiff can point to no evidence that the Bank consciously disregarded a substantial risk that the services it provided would end up in the hands of Hamas.”