The information being turned up by government probes and lawyers suing Arab Bank “will give people a better understanding of the way money moves in that part of the world to support Hamas” and other militant groups in the West Bank and Gaza Strip, said Stephen Kroll, a terrorism finance specialist and until recently counsel to the Senate Committee on Banking, Housing, and Urban Affairs.

“It’s important in focusing the public’s attention on the issue of what is and what is not acceptable for banks to be involved in.”

The Justice Department is conducting a criminal investigation into the New York office of Arab Bank, which is based in Jordan, and its financial links to organizations and individuals accused of terrorism, according to three former U.S. counterterrorism officials.

In 2005, the bank agreed to pay the federal government US$24 million in fines for violating U.S. laws aimed at preventing terrorist financing, including failing to report suspicious transactions.

The bank is also being sued in federal court in Brooklyn by relatives of Americans and Israelis killed in suicide bombings or other fighting in Israel and the occupied territories. No trial date has been set, but assuming the cases do go to trial, they could establish ground rules for what obligations banks have in handling money bound for militant groups. They could also provide an unusually detailed and public look at the flow of money from Saudi donors to Palestinian groups that the U.S. and Israel list as terrorist.

Lawyers suing Arab Bank accuse the company of facilitating acts of terrorism by providing accounts and other financial services to Hamas, Islamic Jihad and similar groups. Arab Bank also acted as the administrator of a plan in which suicide bombers and others designated as “martyrs” by the Palestinian Authority were compensated for their actions on a sliding scale, based on the extent of their injuries, according to documents filed in the cases. The lawsuits charge that the payments provided an incentive for suicide bombings.

Arab Bank officials deny such charges and say they have never knowingly supported acts of terrorism. Bank officials say their agreement to pay the fine in 2005 was not an acknowledgment of any wrongdoing. Bank officials say they provide an important financial service in the impoverished Palestinian territories and that they were merely acting as intermediaries between banks representing Saudi donors and Palestinian organizations and individuals who were being compensated for suffering at Israeli hands.

They also say that a “martyr” can mean almost any Palestinian killed or injured as part of the struggle with Israel, including innocent victims.

“Arab Bank had reason to believe these were humanitarian payments or social welfare payments, and there was certainly nothing in any of the public information that suggested to the bank at the time that these were in any way (meant) to induce terrorism or reward terrorism,” said Robert Chlopak, a Washington-based spokesman for the bank.

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