by: Henry Meier
That is the question at center stage this morning in the Banking legal world thanks to two decisions in New York Federal Court yesterday. First a Brooklyn jury found the Arab Bank liable for aiding the terrorist group Hamas. Second the Court of Appeals for the Second Circuit reinstated a lawsuit against National Westminster Bank of England claiming that the Bank violated American anti-terrorism laws by providing banking services to a not-for-profit organization that allegedly funneled money to Hamas. (Weiss v. Nat’l Westminster Bank PLC, 13-1618-CV, 2014 WL 4667348 (2d Cir. Sept. 22, 2014).
The Second Circuit ruling won’t directly impact most credit unions but anytime a federal appellate court clarifies the obligations of financial institutions to monitor account activities the decision is one to which all institutions should pay attention.
National Westminster Bank is a British chartered Bank that maintained a bank account and performed banking services for the Palestine Relief & Development Fund, Interpal, from 1994 to 2007. In 2003 OFAC designated interpal as a terrorist organization. In response to this decision the British government froze the account but reversed its decision after it concluded that the US Government was unable to support its allegations.
Nevertheless the bank was sued under US antiterrorism laws by survivors of Hamas terrorist attacks and their relatives claiming tha, by maintaining the accounts it was providing material support and resources to a foreign terrorist organization. The plaintiffs alleged that Interpal engaged in “terrorist activity” by soliciting funds, and otherwise providing support for Hamas a recognized terrorist organization .continue reading »