A venerable Jordanian bank is found complicit in terrorist attacks

The Economist

AFTER a six-week trial it took only two days for a jury to find that Arab Bank knowingly provided assistance to Hamas, the Palestinian militant group that runs Gaza, and consequently was complicit in two dozen terrorist attacks Hamas launched between 2001 and 2004 in which Americans were hurt or killed.

The case was originally filed a decade ago and this week’s verdict notwithstanding, it is far from over. Damages will be assessed in another trial. Arab Bank, which is based in Jordan, has vowed to appeal, labelling the proceeding “a show trial”, in which it was prevented from providing exonerating evidence by other countries’ laws on bank secrecy.

The case was the first test of an anti-terrorism law passed in 1990 in response to the murder of an American tourist by Palestinian militants in 1985. Arab Bank faces additional claims from hundreds of others harmed during the same period but by other Palestinian groups. Similar cases have been filed in American courts against various foreign banks, including Bank of China, Crédit Lyonnais and a unit of Royal Bank of Scotland (RBS).

At the nub of these cases is the question of how far a bank can reasonably be expected to go to understand its clients’ activities. Arab Bank argued that it had never intended to provide any service that contributed to terrorism, and to that end had screened its clients using official lists of known terrorists. It failed only by mistake, when the spelling of names on the lists did not match its own.

The plaintiffs argued that it must, or at least should have, known better. Bank documents, for example, showed payments tied to “martyrdom operations”; the most notable misspelt name was Ahmad Yassin, the founder of Hamas.

Among the most important legacies of the case will be the standard used to determine complicity. Arab Bank argued that there must be a direct causal relationship between a service and a terrorist act—that but for the service, the act would not have occurred. But the court ruled that the assistance need only be substantial and its consequences foreseeable. There are conflicting precedents, but on September 22nd the appeals court hearing the case involving RBS ruled that the standard for culpability need only be “material support to a terrorist organisation”, not whether it “aided terrorist activities.” That is a much lower bar.

Correction: An earlier version of this story said Arab Bank had been found “guilty” of complicity in Hamas’s attacks. In fact, the proceedings were civil rather than criminal; it has been found liable.