A US federal judge ruled last week that the suit, making claims on behalf of 15 families of Americans wounded in 10 attacks between March 2002 and August 2003, could proceed.

The case against NatWest, a unit of the Royal Bank of Scotland, suggests that foreign banks may now be open to lawsuits in the United States by a victim of a terror attack if it can be shown that an account holder was linked to an organization that the United States believes to be linked to the attack, lawyers said.

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It could also create a whole new set of terrorism-related risks and burdens for European banks that operate in the United States and other foreign jurisdictions.

"This is scary for any foreign bank," said Ellen Zimiles, a former US federal prosecutor who heads Daylight Forensic and Advisory, a US company advising banks on compliance issues.

"It means any bank with activities outside the United States can be sued in the United States under US law," she said in London.

"It's a petrifying situation for foreign financial jurisdictions.

"This is about an account in the United Kingdom and I don't know if the UK had anything on whether this organization had a link to terror activity."

The families, which filed suit in January in a federal court in Brooklyn, New York, allege that NatWest knowingly maintained accounts for a charity called Interpal and transferred money between those accounts and Hamas front organizations, court documents show.

Hamas said it was responsibile for nearly all the 10 attacks. The US government declared in August 2003 that Interpal was a terrorist organization, several days after the last of the bloody suicide bomb attacks cited in the suit.

Israel had branded Interpal a terrorist organization in 1998. NatWest said that Interpal - or the Palestinian Relief and Development Fund - was cleared by Britain's Charities Commission, which regulates charities in England.

"We are disappointed by the court's ruling and are discussing the position with our legal advisers," said a NatWest spokeswoman.

"This is only the first stage of proceedings and we will continue to vigorously defend our case." REUTERS