In a major decision that will affect the high-profile Arab Bank terrorism finance case in the US and the future of terrorism financing cases, the US government has told the US Supreme Court that it supports the case going to trial, but potentially undermined the case’s strength (emphasis added).

The decision late Tuesday came in the context of the Arab Bank’s interim June 2013 appeal to the Supreme Court to reverse an April 2013 and earlier lower US court decisions that could seriously hurt the bank’s chances of winning the trial.

The case itself, which has been featured on the CBS News Sunday Morning news magazine, involves allegations that the bank facilitated massive transfers of funds to Hamas leaders and institutions, as well as to the families of imprisoned Hamas members and suicide bombers via Saudi Arabia and Hezbollah’s al-Shahid Foundation, mostly between 1998 and 2004.

A remarkable extended battle ensued within the US government, with the Justice, State and Treasury departments fighting over what the government’s stance should be.

The Justice Department pushed to uphold the lower court ruling and sanction Arab Bank in the case, concerned foremost about progress the department has made in breaching bank secrecy laws worldwide to fight terrorism financing and money laundering.

The State Department pushed to overturn the lower court ruling, concerned that the case will undermine Jordanian counterterrorist cooperation with the US and possibly undermine the Jordanian economy sufficiently to aid Islamic radicals in gaining power in the country.

The Treasury Department had reportedly sided with the Justice Department, but in the US government’s written legal response to the Supreme Court, it appeared that the Treasury either had taken State’s side or had taken a more neutral position.

The government’s ultimate position was that while the Supreme Court should not intervene on the issue pretrial (a win for the plaintiffs), it harshly criticized the lower court for not fully considering the foreign policy consequences of disregarding Jordanian sovereign interests in the case.

It opened the door to supporting throwing out the case post-trial if those interests continue to be ignored.

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