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August 14, 2014 – Arab Bank PLC moved tens of millions of dollars for the Islamist group Hamas knowing it was likely to use the money to finance violence, a lawyer for victims of Hamas attacks told jurors on Thursday.
The comments came at the outset of the first U.S. trial in a terror-financing lawsuit against a financial institution. The suit was filed under the Antiterrorism Act of 1990, which created an avenue for victims of international terrorism to seek reparations in U.S. courts.
The case could lead to the development of new law around terror financing and place greater onus on banks to police their customers’ transactions. The plaintiffs need to show that the bank could have foreseen that its services would contribute to the Hamas attacks. Arab Bank argued unsuccessfully before the trial that the victims must show a more direct link between its conduct and the violence.
“They knew that they were banking for Hamas. It wasn’t, the evidence will show, an accident or a mistake or just routine banking,” Mark S. Werbner, a lawyer for American victims and family members in 24 terror attacks in Israel, Gaza and the West Bank from 2001 to 2004, said during opening statements in a federal courthouse in Brooklyn, N.Y. “It was a choice that Arab Bank made.”
Meanwhile, Shand S. Stephens, a lawyer for the bank that has 200 branches in 30 countries, said on Thursday that Arab Bank relies on the U.S. and other governments to designate terrorists and then checks transactions against the blacklists.
The bank couldn’t have known it was servicing Hamas operatives who carried out attacks because they never appeared on any government blacklist, he said. “It is not the case that these are the neighbors of everybody who works at the bank,” Mr. Stephens told jurors.
The victims sued Arab Bank in 2004, alleging it knowingly routed compensation payments from Saudi donors to the families of Hamas suicide bombers and provided financial services to Palestinian charitable organizations they allege are controlled by the group, which is designated by the U.S. as a terrorist organization.
Lawyers for the victims said they plan to show the jury records of transactions that flowed through the bank’s New York branch, as well as records of bank transactions involving a Saudi charity called the Saudi Committee, which the lawsuit alleges made so-called martyr payments to the families of Hamas suicide bombers.
The bank’s lawyer Mr. Stephens said the Saudi Committee had a humanitarian mission and supported families of Palestinian prisoners, as well as Palestinians injured in the conflict. “During 2001 to 2004, not the U.S., not the U.N. or the European Union designated the Saudi Committee a terrorist organization,” he said.
Arab Bank has said it provided routine services to Palestinian charities and that it legally processed tens of thousands of automated fund transfers for the Saudi Committee. “Arab Bank processed the Saudi Committee transfers with the understanding that they were intended to alleviate a humanitarian crisis in the Palestinian Territories and not, as the lawsuits allege, to incentivize Palestinians to commit terrorist attacks,” the bank said in an online statement.
The trial is expected to run several weeks.
The victims’ case will rely largely on experts, who are expected to testify about Hamas’s structure and financing, and about the attacks described in the lawsuits. Arab Bank’s chairman, Sabih Masri, is likely to testify for the defense, along with other officials, including the chief banking officer at the time of the attacks, lawyers for the bank said.