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Siegel v. HSBC Bank USA, N.A.

United States District Court, S.D. New York

July 27, 2018

JEFFREY SIEGEL, Administrator of the Estate of MOUSTAPHA AKKAD, deceased, and MOUSTAPHA AKKAD'S heirs; SOOHA AKKAD, individually; SUSAN GITELSON, Special Administrator of the Estate of RIMA AKKAD MONLA, deceased, and RIMA AKKAD MONLA's heirs, ZIAD MONLA, individually, and on behalf of his minors sons; and MICHAEL BUTLER, Plaintiffs,

          For Plaintiffs: William T. Gibbs Corboy & Demetrio, P.C.

          For Defendants: Mark G. Hanchet Robert W. Hamburg Mayer Brown LLP 1221 Avenue of the Americas



         Plaintiffs, victims or family members of victims of a terrorist bombing in Amman, Jordan in 2005, bring claims under the Anti-Terrorism Act, 18 U.S.C. § 2333 (“ATA”), as amended by the Justice Against Sponsors of Terrorism Act, Publ. L. No. 114-222 130 Stat. 852 (2016) (“JASTA”). Plaintiffs claim that defendants, two United States financial institutions, through services they provided to Al Rajhi Bank (“ARB”), a Saudi Arabian bank, supported the terrorist organizations al-Qaeda and al-Qaeda in Iraq (“AQI”) that perpetrated the attack. Defendants have moved to dismiss the plaintiffs' complaint for failure to state a claim. For the reasons that follow, the defendants' motion is granted.


         The following facts are drawn from the Third Amended Complaint (“TAC”). The facts are construed in favor of the plaintiffs.

         This action arises out of terrorist suicide bombings perpetrated by al-Qaeda and AQI on November 9, 2005 at three hotels in Amman, Jordan (“November 9 Attack”). The plaintiffs are Americans who survived the attacks or descendants of American victims who died in the attacks, as well as the administrators of the estates of the victims who died. The plaintiffs bring claims against HSBC Bank USA, N.A. (“HBUS”) and HSBC North America Holdings, Inc. (“HSBC-NA”).

         HBSC-NA is a financial institution holding company. It is the parent company of HBUS. HSBC-NA does not provide banking services, but its directors oversee the anti-money laundering activities of HBUS. HBUS is a banking services institution. Both defendants have their principal place of business in New York.

         The TAC alleges that the defendants failed to take reasonable steps to ensure that HBUS was not dealing with banks that may have links to or that facilitate terrorist financing. HBUS opened U.S. correspondent accounts for high risk affiliates without conducting due diligence, thereby facilitating transactions that hindered U.S. efforts to stop terrorists. HBUS also altered, falsified or omitted information from payment messages that involved “prohibited” countries and institutions for the express purpose of concealing financial activities and transactions from detection or monitoring by the United States authorities.[1]

         Before the November 9 Attack, the defendants knew that ARB was associated with terrorist financing and that ARB provided accounts to clients linked with terrorism. Despite this knowledge, HBUS provided ARB with correspondent banking and banknotes accounts.

         ARB is the largest private financial institution in the Kingdom of Saudi Arabia. It holds over $80 billion in assets. ARB has been linked to terrorist organizations by United States government authorities, including the United States Treasury and the Central Intelligence Agency.

         The TAC alleges that members of AQI used banking and financial services provided by ARB and that those services helped facilitate the November 9 Attack, along with other terrorist attacks. The TAC alleges that purchases and expenses directly related to the November 9 Attack, including travel and visa costs, were underwritten by funds that moved through ARB.

         The TAC asserts that, without the defendants, AQI and al-Queda would not have had the access to the U.S. financial system that they needed to carry out the November 9 Attack. By continuing to do business with ARB even when they knew of its connections to terrorist organizations, the defendants “allowed AQI . . . the access to the U.S. financial system they needed to carry out their acts of terror, including the November 5, 2009 bombing in Amman.” Over the course of their lengthy relationship, HSBC “provided” nearly $1 billion to ARB. It was not until October 2010 that HBUS closed its banknotes account with ARB.[2]

         The TAC alleges that, in providing services to ARB, HBUS deviated from international and domestic standards which encourage banks to monitor, report, and stop activity associated with terrorist, criminal, or money laundering activity. Such standards include the 1998 Basel Committee standards and guidelines, the Bank Secrecy Act, and standards set by the United States Treasury Department. The United States Senate Permanent Subcommittee on Investigations' 2010 Report, “U.S. Vulnerabilities to Money Laundering, Drugs, and Terrorist Financing” (the “Report”), which was the result of an investigation into HSBC's vulnerabilities to criminal activity, highlighted HBUS's lack of ...

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