Judge: Bank Not Liable for Terror Attacks Possibly Funded by Its Wire Transfers


A group of victims of terrorist bombings by Hezbollah and Hamas lost a suit in New York this week against the Swiss banking giant UBS. A federal judge ruled that that bank’s transfer of large amounts of U.S. currency to Iran didn’t count as “aiding and abetting” international terrorism.

45 victims or family members of victims of attacks that took place between 1997 and 2003 in Israel had sued the bank based on the its admission, in June 2003, that it had transferred $440 million in U.S. currency to Iran and Iranian counterparts in violation of U.S. Office of Foreign Asset Control regulations. (For that violation, UBS paid the U.S. government $100 million in 2004 and got attacked publicly by members of Congress. UBS swore off doing business with Iran in 2006.)

In his decision, U.S. District Judge for the Southern District of New York Jed Rakoff wrote, “The sympathy one feels for the plaintiffs in this case cannot disguise the fact that their counsel has attempted to stretch the law beyond all recognizable limits”…

Meaning? Federal law requires the injury be “fairly traceable” back to the defendant. The victim’s case was built on little more than UBS’s own admission that it transferred money to Iran, and the well-known assumption that Iran sends money to Hamas, Hezbollah and other terrorist groups.

The judge, whose decision is printed in the New York Law Journal, faulted the victims for not making the effort to demonstrate the money flow between Iran, terrorist groups, and UBS. The victims didn’t try to answer the question of whether it was actually UBS money that made its way to these groups. (Since one imagines that once the government of Iran receives a money transfer, it pools it with its other funds, it seems it would be almost impossible to prove where exactly the U.S dollars Iran received from UBS ended up).

UBS, one of the largest wealth managers in the world, has admitted to providing Cuba, Libya, and Saddam’s Hussein’s Iraq with cash. Osama bin Laden’s brother had a UBS bank account, and faced legal scrutiny three years ago over whether the money was every transferred to his brother. The bank is also facing public scrutiny for helping wealthy Americans evade millions of dollars in taxes using offshore accounts.