Officials tell Arab Bank to stop wire transfers
By Elliot Blair Smith, USA TODAY, Feb 28, 2005
Arab Bank's New York branch office was implicated Friday by U.S. regulators in a money-laundering investigation into "suspicious" transfers of substantial sums of money by the Middle Eastern bank involving "high risk" customers.
The Treasury's Office of the Comptroller of the Currency ordered Arab Bank, which is based in Jordan, to immediately halt wire transfers from its Madison Avenue office, preserve its records, including documents related to its Grand Cayman Island branch, and to begin an "orderly winding down" of all bank operations in this country.
It also must provide the OCC's deputy comptroller for special supervision with daily updates.
The unusually harsh regulatory action comes after several U.S. families of terror violence in Israel filed lawsuits in this country accusing Arab Bank of funding the violence. The civil lawsuits draw on Arab Bank's own records as evidence.
It neither admitted nor denied wrongdoing under the OCC order.
But the OCC's investigative findings were referred to Treasury's Financial Crimes Enforcement Network and the Justice Department.
Dallas attorney Mark Werbner, who represents several victims of terrorist violence in Israel, called the OCC order "a major blow to stop terror financing" but said regulators should have acted earlier "before so many lives were lost."
Dianne Miller, of Lakeville, Mass., whose sister Janis Ruth Coulter was one of five Americans killed at the Hebrew University bombing in Israel in July 2002, said, "I think this is a great first step. It shows that the OCC is taking a closer look at Arab Bank and realizing it doesn't look 100% right what they did."
Earlier this month, the bank told its chief regulator, Jordan's central bank, that it planned to withdraw from the U.S. market. It did so after the OCC secretly issued an interim order to the bank to preserve its assets and restrict wire transfers.
In a statement, Arab Bank's chief U.S. officer, Shukry Bishara, pledged to "strengthen our internal controls" and to provide customers and regulators with "even more confidence" in the institution.
Arab Bank, which has $424.8 million in assets in this country, also immediately must double its cash reserves to fund the liquidation of all loans. The New York office can apply to resume its traditional business of financing trade in the Middle East but is barred from doing so without U.S. regulatory permission.