MANHATTAN (CN) — Families of Americans killed in the war in Afghanistan on Wednesday sought to revive a lawsuit alleging that some of the world’s largest banks aided al-Qaida and Taliban terrorist activity that killed or wounded their loved ones.
A group of around 500 plaintiffs claim global lenders including Deutsche Bank, Standard Chartered and Danske Bank became “laundromats,” or hubs of illicit finance, for groups like the Taliban and al-Qaida, which used the banks to launder money and obtain U.S. currency to further their missions and carry out attacks.
The families argued the banks violated the 2016 Justice Against Sponsors of Terrorism Act, but a lower court disagreed, dismissing the suit in 2022 for failure to state an aiding-and-abetting claim.
Arguing against the plaintiffs' appeal to the Second Circuit on Wednesday, the banks said they were engaging in standard banking activities with reputable companies, even if their services were being “diverted” to bad actors.
“They’re banking lawful customers,” said Jeffrey Wall, an attorney with Sullivan & Cromwell representing the defendants.
But the plaintiffs say the banks were well aware of the terror activity they encouraged. For instance, they claim Deutsche Bank charged higher rates than usual to move the money around, knowing the risks.
According to the plaintiffs, the banks even helped the terror groups obtain the necessary materials for those attacks: Two Pakistani fertilizer factories that shipped bomb-making materials to the groups did business with U.S. dollars through Standard Chartered.
In fact, a vast majority of the improvised explosive devices used in the war in Afghanistan at the time involved fertilizer from those two factories, the plaintiffs say.
“We think 90% of the casualties are directly attributable to those bombs,” Sparacino attorney Tejinder Singh, who represents the plaintiffs, said Wednesday.
Again, Wall claimed the bank was doing business with legitimate companies that sold a legal product. “About 1% of what they’re producing is making its way across the border in Afghanistan, it’s being diverted and it’s being turned into bombs. That’s the substance of the allegation,” Wall said.
Singh argued the fertilizer plants weren't so innocent. “This was not just a company whose products incidentally ended up in the hands of terrorists,” he said. “There is a reasonable inference at the pleading stage that they wanted that outcome to happen.”
Still, Wall contended that the banks had no reason to know this was happening. It’s the very reason the claims were dismissed in the first place: In late 2022, U.S. District Judge Hector Gonzalez found that the families didn’t adequately allege that the lenders had the “general awareness” to be held liable under anti-terrorism law.
Wall on Wednesday praised Gonzalez for his “remarkably thorough job of setting aside the often misleading rhetoric” from the lengthy, several-hundred-page complaint.
He likened the banks’ relationship with Afghani terror groups to that of Twitter with ISIS. Last year, the Supreme Court ruled that the social media site wasn’t responsible for aiding and abetting the Islamic State by allowing the group to post tweets.
“The Supreme Court’s overriding message there is that aiding and abetting liability under the [Anti-Terrorism Act] should be confined to cases of truly culpable conduct: those who consciously assist terrorist groups and aid in particular attacks,” Wall argued. “The plaintiffs do not and could not plead that.”
U.S. Circuit Judge Alison Nathan, a Biden appointee, raised questions about whether doing business with the fertilizer plants was “routine business” once the plants’ criminal ties became clear.
“Isn’t the proceeding with routine business services, at that point, non-routine?” she asked.
Singh agreed with Nathan’s concerns.
“This wasn’t just a failure to follow a couple of rules here and there,” he said. “It was quite serious deviations from the norms of ordinary banking.”
It remains unclear if the banks will have to answer for those "serious deviations." The three-judge panel, which included Nathan, George Bush appointee U.S. Circuit Judge Richard Wesley and Bill Clinton appointee U.S. Circuit Judge José Cabranes, didn’t immediately issue a ruling.
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