Wildman v. Deutsche Bank – The Second Circuit Crystallises a “Culpable-Nexus” Requirement for Bank Liability under JASTA

1. Introduction

In Wildman v. Deutsche Bank, Docket No. 23-132 (2d Cir. Jul. 21, 2025), the United States Court of Appeals for the Second Circuit addressed the outer limits of aiding-and-abetting liability for financial institutions under the Anti-Terrorism Act (ATA) as amended by the Justice Against Sponsors of Terrorism Act (JASTA). The plaintiffs—U.S. soldiers, civilians, and family members injured or killed in Afghanistan between 2011-2016—sued three global banks (Deutsche Bank, Standard Chartered Bank, and Danske Bank) alleging that everyday banking services, money-laundering activity, and trade-finance transactions ultimately helped a terrorist “Syndicate” (Al-Qaeda, the Taliban, and the Haqqani Network) procure funds and materials for improvised explosive devices.

The district court dismissed the 600-plus page complaint. On appeal, and after the Supreme Court’s landmark decision in Twitter, Inc. v. Taamneh, 598 U.S. 471 (2023), the Second Circuit affirmed, elaborating a rigorous “culpable-nexus” test: a bank’s routine or even negligent provision of services does not translate into JASTA liability unless the bank consciously and culpably participates in a specific act of international terrorism or provides systemic support so pervasive that it can fairly be said to adopt every foreseeable attack.

2. Summary of the Judgment

• General Awareness Met—But Not Enough: The court assumed Standard Chartered became generally aware that its services to two Pakistani fertilizer companies were indirectly linked to IED attacks once U.S. military officials warned the bank.
• No Knowing & Substantial Assistance: Mere continuation of neutral banking services—even after a warning—was deemed “passive nonfeasance,” insufficient under Twitter. The banks rendered no “special treatment,” violated no sanctions, and did not purposefully conceal transactions.
• Fungibility Theory Rejected: Allegations that money is fungible and therefore some laundered funds must have ended up with terrorists could not establish the requisite scienter or causal nexus (following Honickman & Siegel).
• “Campaign” Liability Barred: JASTA requires aiding a specific act of international terrorism, not a decades-long “Taliban-al-Qaeda Campaign.”
• Leave to Amend Denied: After two sprawling pleadings, further amendment was deemed futile.

3. Analytical Discussion

3.1 Precedents Cited & Their Influence

1. Halberstam v. Welch, 705 F.2d 472 (D.C. Cir. 1983) – Congress codified Halberstam’s three-part test (wrongful act, general awareness, knowing & substantial assistance) and six “substantiality” factors. Wildman continues to use Halberstam as the analytic spine.
2. Twitter, Inc. v. Taamneh, 598 U.S. 471 (2023) – The Supreme Court’s insistence on “conscious and culpable participation” and rejection of liability for “passive nonfeasance” directly controlled Wildman. The panel treated Twitter as raising the bar for secondary liability.
3. Kaplan v. Lebanese Canadian Bank, 999 F.3d 842 (2d Cir. 2021) – Plaintiffs relied heavily on Kaplan’s finding of liability where a bank granted special, clandestine services to customers publicly tied to Hizbollah. Wildman distinguished Kaplan, emphasising the absence of bespoke, sanction-evading conduct here.
4. Siegel v. HSBC (2019) & Honickman v. BLOM Bank (2021) – Both applied the “general awareness + nexus” framework to banks; Wildman reinforced those holdings and extended them post-Twitter.
5. Direct Sales Co. v. United States, 319 U.S. 703 (1943) – Offered by plaintiffs for the “dangerous wares” theory. The panel explained why upstream banks differ materially from a supplier selling narcotics directly to an illicit distributor.
6. Smith & Wesson Brands, Inc. v. México, 145 S. Ct. 1556 (2025) – Recently reiterated that failure to police a distribution chain is “passive nonfeasance”; the panel borrowed that reasoning to bar liability for inaction.

3.2 Court’s Legal Reasoning

The decision proceeds in three thematic steps:

1. Define the Requisite Mens Rea: Citing Twitter, the court held that knowledge of a risk or mere continuation of routine services, even after notice, does not equal “purposeful, culpable participation.” Scienter must be evidenced by special treatment, sanction-busting, concealment, or other affirmative conduct.
2. Demand a “Culpable Nexus”: Assistance must be closely linked to the specific attack (or, at most, a tight subset of attacks) that injured plaintiffs. Attenuated chains—customer ➔ intermediary ➔ smuggler ➔ bomber—break the chain of liability.
3. Reject “Enterprise” or “Campaign” Theories: JASTA’s focus on an “act” of terrorism forecloses claims that a defendant aided an amorphous campaign or racketeering pattern. The statute contemplates tort-by-tort liability, not enterprise-wide liability absent conspiracy allegations.

3.3 Likely Impact of the Judgment

• Higher Pleading Bar for Financial-Institution Cases: Plaintiffs must now show both knowledge and deliberate assistance with a tight causal chain. Generic allegations of lax compliance cultures or routine trade-finance services will not survive.
• “Dangerous Wares” Exception Narrowed: Merely funding a company that makes dual-use goods (fertiliser, chemicals, firearms) will not trigger liability unless the bank tailors services to promote the illicit use.
• Fungibility Doctrine Confined to §2339B: Wildman reinforces that for JASTA secondary liability, fungibility of money is not enough; plaintiffs must connect the dollars to the bombs with plausible factual bridges.
• No “Campaign” Short-cuts: Litigants must tie assistance to discrete attacks, not to decades-long conflicts.
• Compliance Implications: Large banks will point to Wildman to resist expansive discovery fishing expeditions absent specific red-flag facts. Regulators, however, may use the opinion to justify sanctions enforcement where banks grant special accommodations.

4. Simplifying Key Legal Concepts

ATA (18 U.S.C. §2333)

Allows U.S. nationals injured by acts of international terrorism to recover treble damages from the primary perpetrator.

JASTA (2016 amendment)

Adds secondary liability: anyone who “aids and abets, by knowingly providing substantial assistance” to a person who commits an act of international terrorism can be sued.

Halberstam Test

1. Wrongful act caused injury;
2. Defendant was generally aware of its role in overall illegal activity;
3. Defendant knowingly and substantially assisted.

Substantiality factors: nature, amount, presence, relationship, state of mind, and duration of assistance.

Passive Nonfeasance

Failure to act (e.g., to terminate a customer) without additional wrongful conduct; not usually enough for aiding-and-abetting liability.

Fungibility Theory

Argument that “money is money, so any funds could finance terror.” Accepted under material-support statute (§2339B) but rejected for JASTA secondary liability after Wildman.

“Culpable-Nexus”

A shorthand from Wildman: plaintiffs must show a direct or intentionally cultivated link between the defendant’s assistance and the specific terror attack.

5. Conclusion

Wildman v. Deutsche Bank cements a stringent standard for holding banks secondarily liable under JASTA. The Second Circuit, synthesising Twitter, its own line of cases, and fresh Supreme Court guidance in Smith & Wesson, insists on a “culpable nexus” between the bank’s assistance and the terrorist act. Banks that perform ordinary services—even foolishly or negligently—will escape ATA/JASTA liability unless plaintiffs plausibly allege tailored, clandestine, or sanction-evading conduct undertaken with conscious intent to advance terrorism. By rejecting “fungibility” and “campaign” theories, the court prevents JASTA from morphing into a sweeping vicarious-liability regime and preserves a meaningful distinction between primary material-support offences and secondary civil aiding-and-abetting claims.

For practitioners, Wildman underscores the need for granular, attack-specific facts at the pleading stage and offers defence counsel a robust roadmap for motions to dismiss overbroad theories tethered only loosely to the horrors of international terrorism.