(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 banking works."
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 said.
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 operations.
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 annual report.