Complaints That Banks Aided Terrorists Fail

In Wildman v. Deutsche Bank, the US District Court for the Eastern District of New York dismissed an action brought on behalf of terrorist victims against three major international banks and two other financial service providers for allegedly aiding and abetting the terrorist organization responsible for terrorist attacks in Afghanistan over a six-year period that killed or harmed Americans.

In its decision issued 29 December 2022, the Court said of the nearly 600-page voluminous complaint: “The Complaint is less a novel, and more a series of vignettes describing a wide range of criminal activity. While these vignettes often go into great detail about the complex interplay between different criminal players, and how those criminals or terrorists contributed to Plaintiffs’ injuries, none of them sufficiently allege that any Defendant was ever aware of any of these connections, or that the alleged assistance Defendants provided ‘substantially’ helped these criminal players cause Plaintiffs’ injuries.”

Among its charges, the Complaint alleged that Standard Chartered provided letters of credit and other banking services to two fertilizer companies in Pakistan. The Compliant contended that “a small portion, around one percent, of calcium ammonium nitrate fertilizer produced by these companies was eventually used” by designated Foreign Terrorist Organizations to build improvised explosive devices (IEDs) to cause grievous injuries.

Similar to other allegations directed at the Defendants attempting to connect them to the terrorist acts, the Court found this assertion against Standard Chartered to fall short. The Court determined that: “While Plaintiffs have drawn a line from the fertilizer produced by [named fertilizer companies] to IEDs used in Afghanistan, that by itself does not establish that Standard Chartered was generally aware of the role it was playing in terror attacks by providing routine banking services to those companies.”

In another case, Freeman v. HSBC Holdings PLC, decided on 5 January 2023, the US Court of Appeals, Second Circuit affirmed a district court judgment because victims of terrorist attacks in Iraq (Plaintiffs) failed to adequately allege that various named banks (Defendants) conspired, either directly or indirectly, with terrorist groups, or that “the terrorist attacks that killed or injured the service members were in furtherance of the alleged conspiracy to circumvent U.S. sanctions.”

The Complaint included Plaintiffs’ allegation that the banks “helped various Iranian entities such as [Islamic Republic of Iran Shipping Lines (IRISL), National Iranian Oil Company (NIOC), and Iranian airline, Mahan Air] obtain letters of credit that concealed their identity, thereby allowing them to circumvent the [US designed] Iran Trade Regulations and acquire prohibited goods, technologies, and weapons.”