Arab Bank never backed Hamas, lawyer tells U.S. trial

NEW YORK (Reuters) - Arab Bank Plc never provided material support for the Palestinian group Hamas, a lawyer told jurors on Thursday during closing arguments at the bank's trial on civil charges under the U.S. anti-terrorism law.

The Jordan-based bank is accused of providing financial services to Hamas by almost 300 U.S. citizens who were the victims or family members of victims of 24 attacks the Islamic militant group is alleged to have carried out in Israel and the Palestinian territories between 2001 and 2004.

Shand Stephens, a lawyer for the bank, said most people and organizations the plaintiffs claim were affiliated with Hamas who received banking services were not designated as terrorists during the relevant period. Plaintiffs are essentially arguing that private businesses, such as Facebook Inc Google Inc , should decide who are criminals, he said.

"The bank does not figure out who the criminals are," Stephens said in Brooklyn federal court. "The government is supposed to designate people, and the banks react."

In a lawsuit filed in 2004, plaintiffs accused the bank of violating the U.S. Anti-Terrorism Act, which allows victims of U.S.-designated foreign terrorist organizations to seek compensation.

Arab Bank, one of the Middle East's oldest financial institutions, has denied the allegations. It contends it provided routine banking services in compliance with counterterrorism laws and never intended to support Hamas, which the U.S. State Department designated a terrorist organization in 1997.

The closely watched case comes at a time when U.S. regulators have increased scrutiny of international banks' cross-border transactions. A lawyer for the plaintiffs has described Arab Bank as the target of the first civil court terrorism-financing case against a bank to go to trial in the United States.

Stephens also said it was not clear that Hamas carried out all 24 attacks, and that there was no evidence the bank caused any of them. Stephens said "It defies the imagination" to believe the bank's processing of payments to people who were not designated as terrorists caused the attacks rather than the decades-long "cycle of violence" between Israelis and Palestinians.

Lawyers for the plaintiffs, who say the bank could be liable for millions of dollars, are expected to deliver their closing arguments this afternoon. In opening statements last month, they said the bank served as the "paymaster" of funds supporting Hamas.

The case is Linde et al. v. Arab Bank, U.S. District Court for the Eastern District of New York, No. 04-2799

(Reporting by Bernard Vaughan; Editing by Tom Brown)