Arab Bank operates in one of the most dangerous regions of the world. It has historically received the highest ratings from bank regulators worldwide, an indication of its commitment to integrity and safe and sound banking. The bank recently experienced a tragic loss due to terrorism when one of its largest shareholders, former Prime Minister Rafik Hariri of Lebanon, was killed by a car bomb.
Arab Bank abhors terrorism and takes its responsibilities to combat terrorism very seriously. The bank would never do business with any entities that it knew were terrorists. The U.S. Office of the Comptroller of the Currency ("OCC") recently conducted a thorough review covering years of Arab Bank transactions in the U.S. In its Consent Order with Arab Bank, the agency took note of the bank’s cooperation and did not find that the Bank had processed any transactions that were prohibited by law.
Arab Bank considers suicide bombings an abominable human act. The bank would never process transactions that it knows are intended to encourage or reward suicide bombings, including payments to the families of such terrorists. Moreover, Arab Bank never created, managed, or was aware of any program to provide financing through the bank to the families of suicide bombers.
Arab Bank continues to strengthen its internal procedures to prevent the financing of terrorism. In 2004 the bank completed a lengthy process of implementing procedures globally to filter all wire transfers outside the U.S. against the U.S. government designated list of terrorists, in addition to the lists maintained by the applicable countries — even though no such requirement exists. In addition, the bank has changed its policies on the filing of Suspicious Activity Reports (SARs). This action is consistent with the rest of the banking industry, and will increase the number of reports and information available to law enforcement.
Still, efforts to shut down the financing of terrorism must be a partnership between financial institutions and law enforcement authorities. One serious problem beyond the reach of the banking industry today is the fact that many suspected terrorists and suspected terrorist organizations are not being designated in a timely way on official lists as known terrorists in the U.S. and elsewhere. Law enforcement authorities, not banks, have the responsibility to make these designations and keep these lists up-to-date. Financial institutions must rely on these lists and use special software to block transactions with all parties that appear on them. It is unrealistic to expect banks to identify and block these transactions with suspect parties at a time when law enforcement itself has not designated those executing the transfers as terrorists.
We strongly encourage governments and the private sector to continue to work together to strengthen the system to prevent the financing of terrorism, and we pledge to do our part.