So Banks are Terrorists Now? The Misuse of the Civil Suit Provision of the Anti-Terrorism Act

This article argues that the Anti-Terrorism Act (ATA) has been misused, violating both the intent of Congress and the statute's clear language.Congress created the ATA to allow victims of overseas terrorism to bring suits against their terrorist attackers. That same Congress also recognized that the ATA would be used only rarely to collect damages, because few terrorists have assets in the U.S. In fact, the Senate sponsor of the ATA bill began his opening statement by explicitly announcing that, "this legislation is, in part, symbolic, I confess." Congressional testimony emphasized that, "there are not very many circumstances in which the law can be employed."For the first decade of its existence, reality matched these expectations. Not a single reported decision so much as referenced the ATA's civil suit provision. However, just one decade later, there are over one hundred reported decisions citing to the ATA.This enormous sea-change has occurred because courts, sympathetic to victims of terrorism, creatively interpreted the ATA to permit suits to proceed against non-terrorists, such as financial institutions. These suits claim that the banks have committed "international terrorism" by processing transactions that allegedly reached a terrorist entity. (This is equivalent to suing a bank as a murderer because somebody withdrew money from an ATM, bought a gun, and then killed people.) The perverse result is that the "Anti-Terrorism Act" is primarily used in suits against non-terrorist businesses.This expansive interpretation of the ATA not only violates congressional intent, it also violates the statute's clear language. The ATA's definition of "international terrorism" is, "violent acts or acts dangerous to human life." Financial transactions are neither "violent" nor "dangerous." The entire basis for describing banking transactions as "dangerous" originated with a single unsupported analogy in which financial transfers were compared to giving a loaded gun to a child. This untethered analogy treats money, a neutral object, equivalently to a loaded gun, a dangerous object. Moreover, courts applying the ATA to financial transactions have had to claim that the ATA "incorporates by reference" statutes passed half a decade after the ATA, even though these statutes make no reference to the ATA -- and in fact appear to avoid referencing the ATA.The misuse of the ATA creates severe public policy problems. In many of the ATA suits against banks, the alleged "terrorist" holding the bank account is not on any government terrorist watch-list. In other words, the bank is threatened with crippling litigation for failing to identify terrorists more quickly than the U.S. government's own intelligence agencies. Furthermore, the ironic result of allowing ATA suits to proceed against financial institutions is that by turning banks into the financial guarantors of terrorists, the terrorists are effectively immunized from liability. Adding to the irony is that the ATA "punishes" terrorists -- who are interested in wreaking destruction upon the societies they target -- by inflicting financial destruction upon a third-party business within the targeted society. If a bank financially collapsed under the weight of ATA litigation, terrorists may very well consider this to be a success as great as any individual terrorist attack. Even the steps that banks may take in response to ATA litigation are undesirable. Banks may avoid customer relationships with individuals of "suspect" ethnicity, religion, or national origin; thus effectively institutionalizing discrimination based on race, religion, and nationality.The goal of financially compensating victims of international terrorism can be better accomplished through a compensation fund. In fact, the September 11th Victim Compensation Fund was created in part to avoid inefficient and destructive litigation against third-party businesses, (such as airlines), for the acts of terrorists. Such a fund accomplishes the goal of compensating victims without economically destroying non-terrorist third-parties.