Legal Affairs: Bankrupting global jihad

Lawsuits in US courts are exposing the role played by international banks in financing terrorism.

By JOANNA PARASZCZUK
In a recent ruling that sent shockwaves through the Western financial world, the New York District Court revealed that Clearstream, a Luxembourg subsidiary of Deutsche Borse bank, is being sued by 1,000 victims of international terror attacks as part of a larger lawsuit against Iran.
Plaintiffs in the suit, known as Peterson vs. Iran, are suing Tehran over its alleged funding of Islamic Jihad, the Hezbollah paramilitary wing that perpetrated the 1983 US Marine Barracks bombing in Beirut. They allege that Clearstream, one of the world’s largest international securities depositories settling cross-border transactions, helped Iran move millions of dollars in frozen assets out of the US banking system.
According to The Wall Street Journal, court documents had been sealed until recently for national security reasons and to honor strict Luxembourg banking rules.
The lawsuit, brought under US anti-terror legislation, is one of a string of ongoing actions that legal experts say are exposing the role played by international banks in helping finance terror.
One of the largest and most influential of the antiterror funding suits is Almog vs. Arab Bank, filed by survivors and family members of victims of attacks by groups including Hamas, Palestinian Islamic Jihad and the Popular Front for the Liberation of Palestine.
While usually only US citizens can file complaints in US courts, in the case of Arab Bank the judge has allowed other nationals – including citizens from Israel, Russia, Ukraine and France – to join.
Arab Bank, which is headquartered in Amman, is accused of aiding and abetting terrorist acts by providing extensive banking services for several organizations that gave money to suicide bombers’ families.
Among those organizations is the Saudi Committee, which is alleged to have routed over $100 million raised in a Saudi-government-supported campaign to Palestinian terror groups.
According to Prof. Reuven Paz, an Israeli expert on Islamic movements who has been involved in 18 of the terror-funding lawsuits, Arab Bank acted as a “pipeline” that channeled funds to Gaza bank accounts.
“Arab Bank transferred the money to the families of Hamas ‘martyrs’ killed in the second intifada,” said Paz.
According to the Arab Bank complaint, the Saudi Committee paid money into an Arab Bank account opened for the family of Izz Ad-din Shuhail Ahmad al-Masri, the Hamas suicide bomber who murdered 15 people and wounded 130 in the 2001 Sbarro bombing in Jerusalem.
Arab Bank is also alleged to have set up an administrative process whereby the relatives of suicide bombers had to receive official certification of their deceased family member’s “martyr” status before receiving funds.
According to attorney Richard D. Heideman – whose Washington firm Heideman Nudelman and Kalik, PC, represents American terror victims in several civil actions – although Arab Bank filed a motion to dismiss the suit in the US District Court of New York, the judge overruled that in a published opinion and has allowed the case to proceed. It is expected to go to trial.
WHATEVER THE final outcome of these civil suits in terms of damages settlements for terror victims and their families, lawyers and regional experts agree they are raising public awareness about the global reach of terror funding, as well as making it increasingly harder for Hamas and Hezbollah to route funding through international banks.
“We believe these lawsuits are of crucial importance because they put facts about terrorism and the funding and sponsorship of terror organizations on public view in public courts,” Heideman said.
Attorney Nitsana Darshan-Leitner of Tel Aviv-based NGO the Israel Law Center, who is involved in a number of civil cases against terror sponsors in the US courts, agrees with Heideman that “terror funding” lawsuits are effective.
“The lawsuits have sent a shockwave through the international banking community,” she said.
She also pointed to several UK banks, including Barclays and Lloyds TSB, which had provided accounts to charities that were giving money to terror groups.
“Those accounts were closed,” Darshan-Leitner said. “As a result of the lawsuits, banks stopped providing financial services to areas where terror groups work, like Gaza. So the suits have also affected Hamas’s government operations there because Hamas now can’t get money for its activities.”
Paz believes the Arab Bank action is so far the most effective of the civil lawsuits, in terms of its impact on terror funding.
“One of the most successful fights against global Jihad has definitely been in the world of finance,” he said. “And one of the results is that terror groups have become more cautious about their financial activity.”
Although Arab Bank denies knowingly providing support to terrorist activity, it has frozen the accounts of the Saudi Committee.
“Arab Bank is in a panic,” Paz added. “It is a very large private bank in the Arab world, and it is a very important basis of the Jordanian economy. It even had relations with the Bank of Israel. If Arab Bank collapses, it will hurt Jordan and the West Bank.”
According to Paz, the Arab Bank lawsuit has also been effective in impacting other governments in other Gulf States.
“Governments like Jordan, Saudi Arabia, Qatar and other Gulf states were afraid to be harmed economically and financially,” he said. “And also, of course, they are linked economically and financially to the USA.”
As far as the banks themselves are concerned, Paz said the lawsuits were forcing them to look more carefully at who their clients were.
“The problem is to prove the bank’s involvement in the transfers,” he added. “In many cases the banks are just passive.”
THE GLOBAL nature of banking operations means that even non-US banks must face the consequences of transferring funds to terror groups or to NGOs connected with them.
Several more Western banks are also facing terror-funding lawsuits.
According to Heideman, in a separate action, German bank Commerzbank is also being sued for allegedly providing financial services to Hezbollah through various front organizations. In that action, Commerzbank is accused of providing financial services to the Orphans’ Project Lebanon in Germany, which plaintiffs claim collected funds and transferred them to the Martyrs’ Foundation, a Lebanese Hezbollah front.
“The judge overruled the motion to dismiss filed by Commerzbank, and that case is expected to proceed to trial as well,” Heideman noted.
After the Arab Bank suit revealed that even Middle Eastern banks were vulnerable to terror-funding lawsuits, some Hamas financial operations moved to China, where Hamas is not considered a terror group.
However, in what has been called a huge precedent for Israeli terror victims, a judge in the Supreme Court of the State of New York recently gave the green light to a lawsuit against the Bank of China by 84 victims of Hamas rocket attacks.
The plaintiffs in that suit allege that a Hamas operative maintained a bank account in Beijing, through which he transferred large sums of cash to Hamas accounts in Gaza.
Initially Chinese authorities refused to freeze the accounts, as the country does not consider Hamas a terror organization. However, China’s policy on Hamas does not prevent the Bank of China being sued in the US courts under US antiterror legislation.
“Bank of China has a branch in New York, so it must act according to US rules on terror funding, and as a result of the lawsuit, China has closed Hamas’s account,” added Darshan-Leitner.