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Logos of the Arab Bank

(JNi.media) Following an historic legal ruling that has profound implications for global financial institutions, Arab Bank agreed to pay an unspecified amount in a settlement with victims of terrorism and their families.

Arab Bank, based in Jordan, argued that it did not intend to channel funds to those linked with terrorist groups, that it followed a screening process which included a blacklist of names and that money was transferred to Hamas officials accidentally because of clerical errors. The bank claimed the only reason it transferred $60,000 to Sheikh Ahmed Yassin, Hamas’ spiritual leader who was assassinated in 2004, was because of a spelling error in his name.

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Nevertheless, in September 2014 the Bank was found liable for financing terrorism in a unanimous jury decision in Brooklyn Federal District Court.

Phase two of the trial, which was going to determine the amount that would be paid to the 17 plaintiffs representing 300 victims, has been postponed until May 2016, and Arab Bank has, in the meantime, agreed to a settlement.

The bank was found to have acted in violation of the Anti-Terrorism Act of 2001, which allows victims to sue banks for funding terrorist activities. The case involves plaintiffs representing 300 victims and their families who were attacked by Palestinian terrorists in Israel between 2000 and 2004. The bank was also found to have funded 24 acts of terrorism traced to Hamas. Executives of Arab Bank expressed concern that such lawsuits may become more common, and large banks may be reluctant to extend operations into political hotspots for fear of being held responsible for funding terrorism.

The cases centered on the death of John Linde, a US citizen from Texas, who was murdered when his car exploded in Israel from a remote controlled bomb. In addition, Ruth, Zeev, Moshe and Tomer Almog, along with seventeen others were murdered in an explosion at the Maxim restaurant when a female suicide terrorist detonated her bomb. Arab Bank complained about  the re-creation of the attacks during the trial, which involved replicas of the cars filled with dummies and said it would prejudice the jury. However, Judge Brian Cogan said the re-enactment was needed to allow the jury to assess the damages in the case. Arab Bank walked away from the initial decision in September 2014 unhappy, although recently it has decided to settle.

There is still a possibility it might appeal, but that hinges on whether Arab Bank waived the right to appeal as part of the settlement. This point should become apparent as more details of the settlement come to light. The bank, which has a $46.4 billion market cap, initially disagreed with the 2014 decision and said it intends to appeal the “incorrect and prejudicial rulings,” according to news media.

 

THE FINANCIAL ANTI-TERRORISM ACT OF 2001

The law that Arab Bank was found to have violated is the Financial Anti-Terrorism Act of 2001, which was an expansion of the Foreign Intelligence Surveillance Act (FISA) of 1978. The previous legislation only covers acts that are backed by a foreign power, while the 2001 law acknowledges that many of these groups are not necessarily government-sponsored, or if they are, only through covert means. Terrorism, according to the wording of the law, is defined as acts that are used to create fear or attempt to coerce a government or population, break laws and endanger lives. The Financial Terrorism Act expanded the Federal government’s ability to control such funding and sentence financial criminals. As a result, banks have had to become more vigilant about money laundering and ensuring funds do not go to terrorist groups. The law passed the House of Representatives by 412-1, with the only “Nay” vote coming from Rep. Ron Paul (R-TX). The law, along with others contained in the Patriot Act, was seen as a response to the 9/11 terror attacks.

Arab Bank is a major force in the financial world of the Middle East, and has been in operation since 1930. It has 600 branches on five continents. Arab bank began with 15,000 Palestinian pounds in Jerusalem, until Israel gained its independence and the Jerusalem branch, along with those in Haifa and Jaffa, were closed. The ability of these branches to return deposits to Palestinians at that time, according to the website, “earned it a great reputation and became an historical turning point in its growth.” Arab Bank moved its headquarters to Jordan. Global Investors named it Best Cash Manager in the Middle East. Euromay has called it The Best Bank in Jordan for sixth years running and JPMorgan gave Arab Bank Switzerland a Quality Recognition Award.

The jury decision in 2014 may have been the first time a bank was found to be in violation of the Anti-Terrorism law, but it is not the first time Arab Bank was caught with permissive standards regarding money laundering and other suspicious activity. In 2005, the bank was fined $24 million for failing to enact an anti-money laundering program and for not complying with suspicious activity requirements of the Bank Secrecy Act. The Financial Crimes Enforcement Network and the Office of the Comptroller of Currency made the charges against the bank, which did not admit or deny the offense, but paid the fine. In its defense, Arab Bank said it was not aware it was supposed to be responsible for wire transfers in which it played a secondary role. In addition, bank officials complained that the fine was “unreasonably high,” especially as they had not received a warning first, according to American Banker. Arab Bank sought to improve its image after paying the fine, and participated in the International Anti-Money Laundering/Combating Financing Terrorism Conference hosted by the Union of Arab Banks and supported by the US Department of the Treasury.

However, it didn’t seem that Arab Bank had entirely mended its ways, and in 2011 US and Israeli citizen and former Minister of Public Security Mati Gill filed a lawsuit against Arab Bank for damages that it violated the Anti-Terrorism Act. Gill had suffered gunshot wounds after having been fired on by a gunman in Gaza, who was a Hamas terrorist. US District Judge Jack B. Weinstein threw out the claim on the grounds that Gill failed to show that Arab Bank caused the attack. “The clear, present and serious dangers now posed to the nation by terror acts cannot excuse a lack of due process in applying civil law,” Judge Weinstein wrote in a ruling, as reported by Bloomberg.

 

LINDE V. ARAB BANK

The recent case, Linde V. Arab Bank, contains under its heading also Almog V. Arab Bank, which was filed by the Motley Rice law firm in 2004. It claimed Arab Bank was a financier of terrorist activity and was brought on behalf of US and foreign citizens under the Anti-Terrorism Act and the Alien Tort Statute (ATS). Motley Rice co-founder, Ron Motley, issued a statement saying, “We allege that Hamas and their similar-minded organizations declared a war of genocide,” and that funding organizations like Hamas made terrorism possible and made the one providing the funds partly responsible.”

The plaintiffs specifically identified payments processed from “Saudi Committee in support of the Intifada Al Quds” to Palestinians, between 2000-2004. The bank denied knowingly transferring funds for terrorist groups. In a 2002 interview on “Meet the Press,” then Secretary of State Colin Powell said the Bush Administration had spoken with Saudi officials about money that had gone from a telethon to the Saudi Committee, and the Saudi Administration assured the White House the funds were going for peaceful purposes to families and would not be used as an incentive for suicide bombing.

The Arab Bank retaliated against the accusations in the lawsuit by filing its own lawsuit against three Israeli banks, Bank HaPoalim, Israel Discount Bank and Mercantile Discount Bank, alleging they transferred funds to and from organizations that were a front for terrorist groups. A District Court dismissed these claims. Arab Bank was asked to make available customer account records of 40,000 clients. It handed over a number of records, but withheld a large amount of information and said it was not required to hand over certain records. Plaintiffs requested that sanctions be placed against the bank to “restore the evidentiary balance” that was disturbed by non-production of certain evidence.” In response, the bank filed a petition in 2010 for a Writ of Mandamus with the US Court of Appeals to overturn the sanctions order. Jordan’s government issued an amicus curiae that the sanctions would have an injurious impact on the bank and its clients and would interfere with its anti-terrorism efforts. In 2012, a three judge panel dismissed the Writ of Mandamus and the amicus curiae.

In 2014, Arab Bank was found liable for doing business with more than 150 Hamas leaders. Attorney Michael Elsner told Bloomberg, “The verdict is an incredible message that should be understood and heard by the entire financial community. If you do business with terrorists, you can be held liable.” In response to the news, Joshua Foudan, a Detroit resident who was injured in an explosion at Mike’s Bar in Tel Aviv in 2005 said, “There’s a huge wake up call, not just for banks, but for all big businesses, to wash their hands off these kinds of clients.”

The case is a precedent that may facilitate other lawsuits aimed at putting a stop to funding terrorists. Nitsana-Darshan Leitner is head of Tel Aviv-based Shurat HaDin, whose motto is, “bankrupting terrorism, one lawsuit at a time.” The law firm is not only involved in litigation against terrorist organizations and those who fund them, but in fighting economic and academic boycotts of Israel. According to the Shurat HaDin website, the law firm has had a tangible impact on the ability to transfer money to terrorist groups. It says that while money used to flow “freely” from the West, it is now easier to trace where the terrorists are getting their money, thanks to more oversight and intelligence services.

 

NITSANA DARSHAN-LEITNER

Nitsana Darshan-Leitner is representing a large group of American victims of terrorism who are filing a federal lawsuit to request the US government prevent the release of billions of dollars of Iranian assets under President Obama’s nuclear deal. The plaintiffs represent 24 victims who were injured or killed in suicide bombings in Israel from 1995 to 2006. While the plaintiffs were awarded $1.6 billion with $152 million in compensation, Iran has not yet paid them. If the Iran deal is approved, it will free up $100 to $150 billion in assets to Iran, which is a major supporter of terrorism. Nitsana Darshan-Leitner told the Wall Street Journal, “To release the funds instead of turning them over to the victims would make a farce out of this hard-fought legal process.”

Nitsana Darshan-Leitner has made multiple requests to the International Criminal Court. She has asked that Rami Hamdallah, Prime Minister and Minister of the Interior for the Palestinian Authority, be charged for allowing the use of torture of Palestinians and Jibril Rajoub, another Palestinian leader, be tried for war crimes. Shurat Ha Din has requested the IRS take action against the Presbyterian Church in the United States in an effort to revoke its tax free status, because it is engaging in political activity, contrary to its own mission statement, with its involvement in the anti-Israel Boycott, Divestment and Sanctions (BDS) movement. So far it has divested $21 million from Caterpillar, Hewlett-Packard and Motorola Solutions for their association with Israel. The Presbyterian Church has said it is a religious body which is not engaged in political activities, but Shurat ha Din argues that its BDS advocacy belies that statement.

While Darshan-Leitner’s passion is undeniable, her tangible successes seem to be outshone by publicity. Some call the Orthodox mother of six a visionary, others a quixotic nuisance. She is famous for saying, “There is a price for Jewish blood,” but while she has scored some victories, she hasn’t actually gotten very much of that money for her clients. According to the New York Times, 90% of the $1.6 billion total her cases have been awarded have not been paid by Syria, Hamas, Iran and other countries and groups. While some would say that, given the achievements advertised on her website, the fact that few clients have received their money makes the PR misleading or the process pointless, Darshan-Leitner disagrees. “What happens in the end doesn’t affect your mission. If we win the money, great, but that is not the reason we are going to court,” she told the NYT.

Critics call her tactics “lawfare” and say it is abusing the legal process to push a political agenda. Jonathan Arnon, who represents the Palestinian Authority, calls her a “nuisance” who brings in every point, relevant or not, in a war of attrition. However, New York Attorney Bob Tolchin, whose law school roommate was Darshan-Leitner’s husband, calls her a “visionary” who “looks at situations and sees arguments that most lawyers don’t see.” As for the lawfare accusation, Tolchin told the NYT, “The idea of litigation as sending a message is a very valid one. It is part of our democratic system.”

Some of Darshan-Leitner’s clients who are terror victims feel that she is at least a voice for them and is pleading their case when no one else has been interested or has found a way. Nitsana Darshan-Leitner has successfully retrieved money for plaintiffs in at least a few cases: $378 million from North Korea for the murder of Christians at Ben Gurion airport by the Japanese Red Army, $338 million from Syria for the a kidnapping in Turkey, $70 million against Iran and $156 from Islamic charities. She says she has received money for plaintiffs from Palestinian terror groups, but anonymously.

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