Online Financial Service Companies: The Anti-Terrorism Act’s Next Frontier

The emergence of online, non-traditional financial service platforms creates additional avenues for terrorist groups to receive and transfer funds outside of the traditional banking system. 

One consequence of this trend is the potential for increased litigation against these providers under U.S. statutes that create civil liability for provision of material support to terrorists: the Anti-Terrorism Act (the “ATA”), 18 U.S.C. § 2333(a), and the Justice Against Sponsors of Terrorism Act (“JASTA”), 18 U.S.C. § 2333(d)(2).

Civil claims for damages under the ATA and JASTA have historically been brought against large banks for providing financial services to entities with alleged terrorist links.  Typically in such cases, victims of a terrorist attack and/or their family members allege that the bank supported the attack by processing U.S. dollar denominated transactions to an entity with links to terrorism (often through a chain of intermediaries).  In recent years, the range of entities against which ATA and JASTA claims have been brought has increasingly expanded to include companies outside of the banking sector, such as pharmaceutical companies, government contractors, and social media platforms.  As terrorist groups increase their use of non-traditional financial service platforms, cryptocurrency exchanges, decentralized fintech platforms, and other similar businesses may begin to face ATA and JASTA claims.

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