Jordan Is Having A Rough Couple of Days

[Annie]

http://www.washingtonpost.com/wp-dyn/content/article/2005/08/17/AR2005081701882.html

Arab Bank to Pay $24 Million Fine

By Marcy Gordon
Associated Press
Thursday, August 18, 2005; D03

Arab Bank PLC, one of the largest financial institutions in the Middle East, will pay a $24 million civil fine for allegedly inadequate controls against money laundering at its New York branch, U.S. regulators announced yesterday.

The fine was levied by the Office of the Comptroller of the Currency and the Financial Crimes Enforcement Network, both Treasury Department agencies. The comptroller's office in February ordered the bank to stop transferring money or opening new accounts at the New York branch, which was converted into an entity that does not conduct traditional banking activities but continues to engage in corporate and trade financing.

The agencies said yesterday that the $24 million fine was a follow-up to the February consent order that Arab Bank signed with the comptroller's office.

"It is vitally important that banks have effective anti-money laundering programs in place to ensure that the financial system is not used to facilitate terrorism or criminal activity," Comptroller of the Currency John C. Dugan said in a written statement.

Jordan-based Arab Bank, in a written statement, said it had cooperated fully with the regulators. The bank said it had been "diligently applying" anti-money-laundering controls to the transactions made by customers of its Manhattan branch, but did not think the law required those controls to be applied to wire transfers to non-customers for which the branch was an intermediary.

"We have agreed to the consent orders and to pay the fine in order to put this matter behind us," said Shukry Bishara, the bank's chief banking officer.

The bank, with $32 billion in assets and operations in 30 countries, has been sued in the United States by relatives of bombings in Israel who allege that it supported terrorism by funneling donations to Palestinian suicide bombers and their families.

Families of about 40 U.S. citizens killed in attacks in Israel sued Arab Bank in federal court in New York last year, accusing it of channeling money to Palestinian terrorist groups and of making insurance payments to beneficiaries of suicide bombers.

The plaintiffs also allege that the Texas-based Holy Land Foundation for Relief and Development used Arab Bank's New York branch to transfer money to Hamas, a Palestinian terrorist organization blamed for dozens of attacks in Israel. The U.S. government has accused the Holy Land Foundation of funneling more than $12 million to Hamas.