Banking and Bombs: What the 'Linde' Verdict Portends

Things did not go as Arab Bank had hoped. After 10 years of litigation and a five-week trial, a federal jury in Brooklyn took only two days to reach its verdict: Jordan’s Arab Bank PLC is liable to the plaintiffs for providing material support in the form of financial services to Hamas, a U.S. State Department-designated foreign terrorist organization (FTO). The damages phase has yet to be tried, so the bottom line impact on Arab Bank is not yet known. But the verdict in Linde v. Arab Bank, 04-cv-02799 (E.D.N.Y.), should serve as a warning to international financial institutions: The consequences of ineffective monitoring of financial transactions for suspicious activity are potentially dire.

The Case Against Arab Bank

The Linde plaintiffs are hundreds of U.S. nationals who were either victims of international terrorism or the relatives of such victims. They brought a private action under the Anti-Terrorism Act (ATA), 18 U.S.C. §§2331 et seq., against Arab Bank for knowingly providing material support in the form of financial services that enabled Hamas to carry out 24 terrorist attacks between 2001 and 2004. The plaintiffs specifically alleged that Arab Bank transferred millions of dollars to Hamas operatives and charities serving as Hamas front organizations, and facilitated cash payments to families of Hamas operatives, including suicide bombers. These payments were part of a “martyr” payment program sponsored by an entity called the Saudi Committee for the Support of the Intifada Al Quds (Saudi Committee).