(The opinions expressed here are those of the author, a
columnist for Reuters.)
By Alison Frankel
NEW YORK - According to Arab Bank, the world's primary
defense against terrorist financing is computer software. As
Arab Bank lawyer Shand Stephens of DLA Piper told a Brooklyn
federal jury Thursday morning, banks run programs that
instantaneously monitor transactions to make sure money
transfers don't involve people and organizations on
international terrorist lists.
"It is the government who decides who should be designated
as a criminal and put on the lists," Stephens said during
opening statements in the much anticipated trial of civil terror
financing claims against the Jordan-based bank. "That is the way
Except when it doesn't. Stephens told jurors about four Arab
Bank transactions that put money in the hands of officially
designated terrorists during the time of the second Palestinian
Intifada against Israel from 2000 to 2004.
In two of those transactions - one of them a $60,000
transfer to an Arab Bank account held by the founder of Hamas -
Arab Bank's compliance software failed to detect variations in
the spelling of the names of U.S.-designated terrorists. The
other two transactions, both transfers to an ostensible charity
deemed to be a front for Hamas, were "by mistake," Stephens
He told jurors that these were only four transactions out of
the millions Arab Bank processed during the four years at issue
in the case. He also said that screening software is better now
than it used to be. But there's still something unsettling about
Arab Bank's depiction of how the international financial system
fulfills its obligation to choke off funding for terror
The U.S. Treasury's Office of Foreign Assets Control has
10,000 names on its terrorist list, which runs to 545 pages,
according to Stephens. And apparently, a tiny variation in the
spelling of any of those names can result in the transfer of
tens of thousands of dollars to a militant as notorious as the
founder of Hamas.
You can see why lawyers for the Americans suing Arab Bank -
almost 300 plaintiffs who were injured or have family members
who were killed in Hamas bombings during the Second Intifada -
argue that Arab Bank is an exception, not the rule.
"They weren't doing routine banking," said Mark Werbner of
Sayles Werbner, the second of three victims' lawyers to deliver
arguments Thursday morning. "It was a choice."
Werbner told jurors about newspaper ads that ran in the
Palestinian territories, advising the families of "martyrs"
killed in the Intifada to come to their local Arab Bank branch
to collect a $5,300 payment pledged by the Saudi Committee for
the Support of the Intifada al Quds. He also said the evidence
would show that Arab Bank required its employees to donate part
of their salaries to the Intifada and blamed Israel's "occupying
force" for suffering in the Palestinian territories in its 2003
Another of the victims' lawyers, Tab Turner of Turner &
Associates, said Arab Bank officials were "next door neighbors"
who knew the identity of Hamas leaders, yet provided more than
10 of them with banking services. People at the bank saw big
funeral processions celebrating suicide bombers, according to
Turner. Posters lauding bombers were sometimes plastered on the
banks' outside walls. But that didn't stop Arab Bank, according
to the victims' lawyers, from dishing out cash payments to the
families of 24 suicide bombers, 145 families of Hamas operatives
and 11 operatives themselves. In all, according to the victims'
lawyers, Arab Bank paid out $35 million from the Saudi Committee
to Palestinians killed, injured or imprisoned in the uprising.
Almost all of it was in cash to people who didn't hold accounts.
The Saudi Committee even disclosed in documents sent to Arab
Bank officials that some of the recipients of its largesse had
been killed in "martyrdom operations," according to slides shown
to the jury by Michael Elsner of Motley Rice. The bank's own
files, Elsner said, listed the cause of death of one of the
"martyrs" whose family received a payment as "car bomb."
"That's not a routine transaction," Elsner said.
The bank, of course, offered alternative explanations for
everything the victims' lawyers told jurors. The Saudi Committee
was a legitimate humanitarian group that has never been
designated a terrorist organization by the U.S. or the United
Nations, Arab Bank counsel Stephens said. And Arab Bank didn't
pick the recipients of Saudi Committee money, he said; it merely
administered the payments.
Only one of the charities the victims have accused of
operating as Hamas fronts has been officially listed as a terror
group, and that designation came after the events at issue in
the case, according to the bank. Only two of the Hamas leaders
who held accounts at Arab Bank were listed as terrorists, and
Stephens told the jury that when the bank found out that Hamas
had published the account number of one of them on an associated
website, it reported him to Lebanese authorities. (The victims
said that the bank filed a "false" declaration about the account
and ended up returning about $8,500 to a listed terrorist when
the account was shut down.)
The two sides in this case obviously see the facts
completely differently, but there's surprisingly little dispute
about what the facts are. The Brooklyn jurors will have to
decide whether bank records and public documents show Arab Bank
was doing what a bank should to filter out payments to
terrorists, or whether it was tacitly encouraging Hamas to bomb
(Reporting by Alison Frankel; Editing by Ted Botha)