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
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 –
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.
organizations is the Saudi Committee, which is alleged to have routed over $100
million raised in a Saudi-government-supported campaign to Palestinian terror
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.
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.
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.
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
“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.
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.
lawsuits have sent a shockwave through the international banking community,” she
She also pointed to several UK banks, including Barclays and Lloyds
TSB, which had provided accounts to charities that were giving money to terror
“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
Paz believes the Arab Bank action is so far the most
effective of the civil lawsuits, in terms of its impact on terror
“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
Although Arab Bank denies knowingly providing support to
terrorist activity, it has frozen the accounts of the Saudi
“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
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
“The judge overruled the motion to dismiss filed by Commerzbank,
and that case is expected to proceed to trial as well,” Heideman
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.
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
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.
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.