Under pressure from American regulators and three lawsuits brought by families of American and Israeli victims for its alleged role in financing Palestinian terrorism, the Arab Bank of Jordan has decided it will “gradually” close its sole American branch.
The closure was announced in a statement released Tuesday by the Central Bank of Jordan, which oversees the operations of Arab Bank, the kingdom’s largest financial institution, with $27.3 billion in assets.
The statement did not refer to the suits, which were filed in a federal court in Brooklyn, but noted that “serious discussions” were under way with “supervisory sides in New York and Washington.”
The Wall Street Journal reported last week that the Treasury Department was mulling possible sanctions against the bank for serving as a conduit for Saudi money sent to Palestinian terrorist groups and the families of suicide bombers.
The Treasury Department declined to comment.
The Arab Bank has denied repeatedly that it supplies any financing for terrorism. An official at its New York branch declined further comment on the decision to close the branch and on a possible American regulatory investigation.
Lawyers for the plaintiffs vowed to press ahead with their cases and are considering steps to prevent the Arab Bank from removing assets and documents from the United States.
“I am encouraged by reports of a federal regulatory investigation of its New York branch, and trust that the courts and the executive branch will protect the interests of the victims of the intifada — including scores of American citizens — as the bank retreats from the United States,” said Lee Wolosky, one of the lawyers and a former National Security Council official.
Sources close to the case said the Jordanian government was concerned about it, noting that the closure decision was announced by the country’s central bank.
The Jordanian embassy did not return a call seeking comment.
On Tuesday, the bank, which is owned by a prominent Jordanian family, the Shomans, and includes former Lebanese prime minister Rafik Hariri among its shareholders, reported a 40% increase on net profits in 2004 to $319.4 million.
According to the civil suits, the bank channeled large sums of money raised in Saudi Arabia and sent to terrorist groups and the families of Palestinian suicide bombers. Its Manhattan branch converted riyals to dollars and shekels, according to the complaints pending in the U.S. Federal Court for the Eastern District of New York.
In the past weeks, the bank has agreed to shut one suspicious bank account in Lebanon but has refused to take action on three other accounts in Europe. The accounts are controlled by three Palestinian support organizations listed in August 2003 by the U.S. Treasury as terrorism-supporting entities. A document shows a money wire, after the U.S. Treasury designation, from one of the acounts, held by the Swiss-based Association de Secours Palestinien, to the Tulkarem Zakat committee, identified by American and Israeli authorities as a Hamas front, using the Zurich branch of the Arab bank.
The three groups, however, have not been on terrorist lists compiled by the European Union or the United Nations.
Lawyers also have found six instances in which the official Saudi Committee supporting the Palestinian intifada posted on its Web site information about payments made to alleged perpetrators of attacks against their clients. The information, according to a translation of the documents, includes basic biographic information, the sum and a receipt number.
“Arab Bank abhors terrorism and does not support or condone terrorist activity of any kind by anyone,” the bank said in a statement. “The allegations in the civil lawsuits are completely false, and the bank plans to fight them vigorously in court.”