Leaked docs: Arab Bank was involved in potential terrorist financing until 2016

A massive leak of financial intelligence reports reveals that Arab Bank facilitated payments to organizations and bodies suspected to be connected to terrorism, even after the Jordan-based bank had agreed to pay massive amounts in compensation to terror victims.

The information appears in a confidential financial intelligence report compiled by a British bank named Standard Chartered Bank (SCB), which served as a correspondent bank for Arab Bank. SCB suspected that Arab Bank continued to transfer money to “entities with suspected links to terrorist groups” until 2016, the year the report was filed.

The Arab Bank, which operates from Amman, is one of the largest banks in the Arab world.

In 2004, Arab Bank was sued in the United States by American victims of terror attacks carried out in Israel. The plaintiffs claimed that the bank had carried out wire transfers to various entities linked to Hamas and had thus been a party to terror financing.

The trial itself opened a decade later, in 2014. After six weeks the jury decided in favor of the plaintiffs.

The bank appealed the verdict but at the same time entered into settlement negotiations. The details of the settlement that was ultimately reached remain confidential, but according to Israeli media reports the bank agreed to compensate the plaintiffs for about $1 billion.

In 2018, the bank won its appeal on the basis of the claim that the judge had given incorrect instructions to the jury prior to the trial. While the jury verdict was voided, the settlement remained in effect.

At the end of 2019, another lawsuit was filed against the bank by more than 1,000 terror victims and their families. This lawsuit was filed by Israeli citizens in Jerusalem District Court. The complaint mentions a long list of terror attacks, including the March 2002 Passover suicide bombing at the Park Hotel in Netanya (in which 30 civilians were killed in the worst such attack of the Second Intifada), the June 2001 Dolphinarium discotheque attack in Tel Aviv (in which 21 Israelis, most of them teenagers, were killed), and the August 2001 suicide bombing at the Sbarro restaurant in Jerusalem (in which 15 civilians were killed).

Now, a massive leak of classified financial reports submitted by banks all over the world to the Financial Crimes Enforcement Network of the US Treasury Department (FinCen), has revealed that the British bank continued to work with the Jordanian bank during the years of the lawsuit and afterwards, and that some of the bank transfers that passed through the British bank raised its suspicions.

The financial reports, which were submitted to the US Congress as part of the investigation into Russian interference in the 2016 elections, were leaked to the Buzzfeed news site, which in turn shared them with the International Consortium of Investigative Journalists, and through them with 400 journalists from 108 media outlets around the world.

(ICIJ’s Israeli partners are Uri Blau, the author of this article, and Shomrim, the Center for Media and Democracy, which made it available to The Times of Israel.)

The Arab Bank was a client of Standard Chartered Bank for 25 years. The British bank served as a correspondent bank for, and executed wire transfers on behalf of, the Arab Bank.

Reports that SCB submitted to FinCen reveal that between 2013 and 2014, years after the filing of the US lawsuit, the Arab Bank carried out over 2000 bank transactions, totaling about $24 million, that raised SCB’s suspicions as being intended for organizations and bodies connected to terrorism.

At the beginning of 2016, SCB submitted another report describing 910 new wire transfers totaling more than $11 million that struck the bank as suspicious.

The last group of transfers were carried out through February 1, 2016 — in other words, over a period of about a year and a half after the US trial against the Arab Bank had begun and ended.

Many of these transfers were categorized as intended for “donations,” “charity,” “support,” or “gifts.” SCB reported its concerns that these transfers were in fact illegal payments in disguise, and that many of the transfers had been carried out by people whose identity it was not possible to verify.

SCB said in its report that these discoveries had caused it to stop working with the Arab Bank.

It is important to emphasize that the act of submitting reports to the US government is not sufficient to determine that any illicit activity took place, and that it is possible that the transfers were legal and that their pattern of execution happened to raise the suspicions of the reporting bank.

In a statement, Arab Bank told ICIJ it “abhors terrorism and does not support or encourage terrorist activities.” The bank said that allegations against it date back nearly 20 years to a time when anti-money-laundering laws, tools and technologies were different than they are now.

“In every country where it operates, Arab Bank is in good standing with government regulators and complies with anti-terrorism and money laundering laws,” the bank said. The 2005 US regulatory limits against the bank were formally lifted in 2018.

Standard Chartered told the BBC, a partner of ICIJ, that it “initiated account closure” in connection to Arab Bank shortly after the jury verdict. “This process can take time in some cases,” the bank said, “but in all cases the bank continues to fulfill its regulatory obligations” while exiting accounts.

Arab Bank noted it “enjoys a longstanding relationship with Standard Chartered” that “continues today.”

Standard Chartered no longer processes US dollar transactions for Arab Bank, but it still provides other banking services for the Jordanian financial institution, Arab Bank told ICIJ.

Thousands of suspicious activity reports leaked

The documents reached reporters as part of an unprecedented leak of financial intelligence reports that were submitted to the US Treasury Department. The leak also includes reports on Israeli businessmen, companies and banks.

These financial intelligence reports, known as suspicious activity reports, document suspicious economic activities that may be linked to money laundering and/or terrorism financing.

Financial institutions all over the world are required to submit such reports to the Financial Crimes Enforcement Network of the US Treasury Department. That is why this leak has been dubbed the FinCen files.

FinCen is responsible for gathering information on suspicious financial activity that could turn out to be money laundering or terror financing. FinCen’s Israeli counterpart is the Israel Money Laundering and Terror Financing Prevention Authority in the Ministry of Justice.

The leaked reports were among thousands of documents that were submitted to the US Congress as part of the investigation into suspicions of Russian interference in the 2016 presidential elections.

They were leaked to the US-based website Buzzfeed, which shared them with the ICIJ and through the ICIJ with more than 400 journalists from 108 media outlets around the world, including NBC in the United States, the BBC in the UK, Le Monde in France, L’Espresso in Italy, WDR and NDR in Germany and many others.

Buzzfeed did not reveal the source of the documents but in January of this year a former FinCen employee, Natalie Mayflower Edwards, pleaded guilty to “conspiring to unlawfully disclose suspicious activity reports.”

The complaint filed against Edwards, a Virginia resident in her 40s, mentioned that twelve news articles were published as a result of her leak. She is expected to be sentenced in October.

This article was written in collaboration with Shomrim, the Center for Media and Democracy