Civil Suits Against International Banks Alleged to Have Funded Terrorist Activities

Zuckerman Spaeder LLP partner Aitan D. Goelman is currently representing a group of American citizens in several lawsuits against international banks that have widespread implications for America’s fight against terrorism. Recent changes in America’s anti-terrorism laws have empowered civilian victims to take legal action on their own against those responsible. Just how large of a role they will play could be determined in cases against Arab Bank, Credit Lyonnais, National Westminster Bank, and UBS.

In these cases, Americans victimized by terrorist attacks overseas are filing lawsuits in American courts targeting banks that have helped terrorist groups fund their activities. The plaintiffs are Americans injured by, and the families of those murdered by, terrorist attacks, predominantly suicide bombings, in Israel. They include a mother and three young girls who were injured in a bus bombing in Jerusalem that killed their three-year old sister/daughter, who was sitting on her mother’s lap at the time of the bombing. They include as well Steve Averbach, who was rendered a quadriplegic after moving to confront a suspicious-looking passenger who turned out to be a suicide bomber sent by Hamas. Although crippled by the bombing, Steve survived the attack and lived, in pain and disability, for seven years before succumbing to his injuries.

The Arab Bank case centers on allegations that the bank was a central conduit for funneling monetary rewards to the families of suicide bombers and other terrorists killed in the Al Aqsa Intifada between 2001 and 2004. In the cases of UBS, National Westminster and Credit Lyonnais, banking services were provided to Hamas front groups—organizations masquerading as charities but in fact fundraisers for extremist causes. Although these groups had already been linked to terrorist activity, the banks chose to turn a blind eye to their extremist connections, allowing critical funds to be channeled to groups supporting terrorist attacks against civilians.

The cases will test two very important questions. First, what role can civilians play in fighting terrorism, and particularly in cutting off the funding that is vital to terrorist efforts? Having already lost key procedural motions in the case, and facing a potentially devastating trial in the year ahead, Arab Bank now claims that civil lawsuits such as this one jeopardize international diplomacy and has actively lobbied the administration to reduce citizens’ legal rights in the war on terror.

As the trials—and worldwide attention they will bring—draw close, the second question is whether these banks will firmly and publicly align themselves with the legitimate financial businesses of Wall Street and London, or whether they will continue to reap the financial rewards—or in the case of Arab Bank, the rewards of being viewed as a hero among terrorists—of providing a channel for terrorist funding.

Although each of the four cases is at a different point in litigation, motions to dismiss have been defeated in all four, and each case is currently pending in the U.S. District Court for the Eastern District of New York. Through these cases, Zuckerman Spaeder hopes to both recover damages on behalf of the victims and to change the behavior of international banks with respect to international terrorist groups. Thus, using American courts, ordinary citizens may well be able to accomplish something that governments have had great difficulty doing—shutting down a major source of terrorist funding.