WEISS v. NATIONAL WESTMINSTER BANK PLC
Osen LLC (together with co-counsel) represents 35 families who were victims of terrorist attacks committed by the Palestinian terrorist organization known as Hamas. The Complaint in Weiss v. National Westminster Bank Plc alleges that NatWest, a multinational British bank owned by the Royal Bank of Scotland, knowingly provided banking services and maintained accounts for Interpal, a U.K.-registered charity designated a Specially Designated Global Terrorist by the United States Government in August 2003.
The United States Treasury Department issued a statement in connection with its August 2003 designation of Interpal in which it proclaimed:
Interpal, headquartered in the UK, has been a principal charity utilized to hide the flow of money to HAMAS. Reporting indicates it is the conduit through which money flows to HAMAS from other charities, e.g. the Al Aqsa Foundation (designated under EO 13224 on May 29th) and oversees the activities of other charities…. Reporting indicates that Interpal is the fundraising coordinator of HAMAS. This role is of the type that includes supervising activities of charities, developing new charities in targeted areas, instructing how funds should be transferred from one charity to another, and even determining public relations policy.
The Weiss lawsuit alleges that as a result of Interpal's financial support to Hamas institutions, the State of Israel outlawed Interpal in 1997, and designated it a terrorist organization in 1998.
One of Interpal’s senior trustees, Essam Yousef, has been identified by the United States Government as “the secretary general of the Union of Good - which was designated in 2008 for providing financial support to Hamas under the cover of charitable activity - and Yousef was described as a member of the “Hamas executive committee under Hamas leader Khaled Misha'al.” The Chairman of the Union of Good, Yusuf al-Qaradawi, has a long track record of inciting hatred against Jews, advocating terrorism against Israel and raising funds for Hamas.
As detailed in the Weiss Sixth Amended Complaint, from 1996 to 2007 NatWest maintained accounts for Interpal and transferred funds at Interpal’s behest to Hamas-controlled organizations in the West Bank and Gaza Strip. The Weiss plaintiffs further allege that as far back as 1996, NatWest knew that its customer Interpal was transferring money to Hamas-controlled entities. For example, in 1996, the Financial Times reported that “Israeli military intelligence claimed that Interpal … had masterminded fund-raising for the Hamas Islamic movement in Europe….A senior military officer said Interpal, also known as the Palestinian Relief and Development Fund, raised money for Hamas institutions and directly provided support to families of Hamas guerillas and suicide bombers.”
In September 2001, a whistleblower website published a purported South African intelligence agency report that identified 6 NatWest accounts held by Interpal and claimed that Interpal and the Al Aqsa Foundation were key fundraisers for Hamas. In fact, in an article published in 1997, The Guardian paraphrased Ibrahim Brian Hewitt, Interpal’s chairman, as saying, “it was possible that some of Interpal's beneficiaries in the Palestinian territories had been established by Hamas, but argued that Hamas runs a social welfare and religious network separate from its military wing, Izz el-Deen al-Qassam.”
On September 27, 2006, in largely denying NatWest’s motion to dismiss the Complaint, United States District Judge Charles P. Sifton of the Eastern District of New York noted:
[D]efendant has pointed to no case law, nor can this Court find any, which holds that an American Court must decline to apply the laws of this country to a defendant over which the court has jurisdiction because the laws of the defendant's own country are more lenient.
Plaintiffs believe that no person or corporation that chooses to conduct business in the United States should be allowed to knowingly provide material support to Specially Designated Global Terrorists.
On March 28, 2013, United States District Judge Dora L. Irizarry of the Eastern District of New York granted NatWest’s summary judgment motion, finding, inter alia, that:
There is no authority for the proposition that knowledge of an OFAC designation equates to knowledge of terrorist activities under the ATA for purposes of civil liability. Otherwise the scienter requirement of the ATA would be meaningless. Banks would be strictly liable for maintaining such accounts, and the scope of ATA liability would be radically enlarged…. NatWest makes a compelling argument that, if the scienter element of the ATA is satisfied simply by knowledge of an OFAC SDGT designation that the Court would be sanctioning an extraterritorial application of United States law…. Because OFAC is unable to block transactions conducted by non-U.S. financial institutions for non-U.S. persons, it is unlikely that Congress intended for private ATA plaintiffs to rely on a foreign bank’s knowledge of a foreign customer’s SDGT designation to establish scienter under the ATA. However, this finding is not essential to the outcome of this case. Moreover, clarification of this issue is better suited for the political branches of government.
On April 23, 2013, Plaintiffs filed their notice of appeal to the United States Court of Appeals for the Second Circuit. On September 22, 2014, the Second Circuit vacated the district court’s grant of summary judgment and remanded the case for further determinations, noting:
Even if the British authorities had investigated whether Interpal provided material support to Hamas for any purpose and had concluded that Interpal had no links to Hamas at all, the British authorities’ conclusion would not be inconsistent with liability under the United States statutes and could not justify summary judgment in the face of contrary evidence. The views of foreign governments, particularly when addressed to the same questions of fact as are pertinent under United States law, could support NatWest’s contentions to the jury that it believed Interpal was not supporting a terrorist organization just as its inquiries to the U.K. authorities (and the answers it received) could support the contention that it was not indifferent to the issue. However, in the face of contrary findings—in this case by the United States Treasury Department—such views of foreign governments could not support summary judgment.
In December 2013 NatWest’s parent company, RBS, entered into a settlement agreement with the U.S. government admitting that, beginning in 1997, NatWest began laundering money for Iranian banks to help them evade detection by U.S. financial institutions and government regulatory agencies. According to OFAC’s Consent Order, during the period relevant to the case, RBS developed a payment system “that would allow RBS to send USD payments to Iran and/or Iranian banks through a third-country bank that would omit information about the Iranian nexus in any cover payments sent to a U.S. financial institution.” The New York State Department of Financial Services concluded that “senior RBS employees, including RBS's Group Head of Anti-Money Laundering, as well as the Head of Operational Risk, Global Transaction Services, and the Head of Global Banking Services for Europe, Middle East and Africa, were fully aware of and in some instances even provided such instructions [to remove sanctioned country names from U.S. dollar payments] to employees.”
In November 2014, NatWest brought a renewed motion to dismiss the case on the grounds that the Court lacked personal jurisdiction over the Bank in light of a recent Supreme Court decision, Daimler AG v. Bauman. Judge Irizarry denied the Bank’s motion on March 31, 2016, noting in particular Defendant’s purposeful availment of New York to effect transactions at the heart of the case:
Here, Defendant had a New York Branch where it maintained a correspondent account to facilitate the clearing of U.S. Dollar transfers requested by its customers. Whatever efficiency and cost savings Defendant gained as a result allowed Defendant to retain relationships with customers that had a need to deal in U.S. currency, a contingent that from time to time included Interpal. Most importantly, Defendant executed the 196 New York Transfers, repeatedly and deliberately using New York’s banking system to effect the alleged financial support of Hamas that is the basis for Plaintiffs’ claims. Given the quality of those contacts and their close connection to New York, the Court concludes that § 302(a)(1) permits the exercise of jurisdiction over Defendant. (Decision at 19-20.)
In December 2016, NatWest brought a renewed motion for summary judgment, arguing that it did not proximately cause Plaintiffs’ injuries as a matter of law. The briefing of this motion was completed in February 2017.
No trial date has yet been set for the Weiss case, but the Second Circuit's ruling powerfully affirms that U.S. law alone determines whether a defendant has violated the Anti-Terrorism Act and that any material support given knowingly to a Foreign Terrorist Organization is illegal, regardless of the stated purpose of that support.