Families of U.S. citizens killed or hurt in terrorist attacks in Israel filed an $875 million lawsuit against Arab Bank (search), accusing it of channeling money to Palestinian terrorist groups and making insurance payments to beneficiaries of suicide bombers.

The lawsuit, filed Friday in federal court, claims the Jordan-based bank's New York branch laundered Saudi aid to terrorists.

The branch first converted the money into dollars and then sent it to local branches in the West Bank and Gaza Strip where it was paid out to terrorists and terrorist organizations, the suit alleges.

The bank also worked with Hamas (search) and the Palestinian Islamic Jihad (search) to distribute insurance money to beneficiaries of suicide bombers, including their families and those wounded or captured by Israeli security forces, the lawsuit alleges.

"We have a mountain of evidence that will prove that the bank not only knows about the terror financing, but is actively involved and using its New York branch to launder the money," Mark Werbner, the lead attorney for the families, said in a statement Tuesday.

Officials with Arab Bank, which is based in Amman, Jordan, said in a statement issued from New York that they had not seen the complaint but that allegations they transferred funds inappropriately from Saudi Arabia to terrorists or their families are "completely false and totally irresponsible."

Arab Bank has "a deserved reputation for sound, ethical operations," the statement said.

Plaintiffs in the lawsuit, Linde v. Arab Bank, are six U.S. families whose members have died or been hurt in attacks in Israel.

Among them is Courtney Linde, the widow of John Linde Jr., a security guard from Missouri who died when a bomb tore apart a vehicle in a U.S. diplomatic convoy in the Gaza Strip last October.

"John was a wonderful and gentle person, but he was also a Marine, and I know he would have wanted me to fight for him," Courtney Linde said in statement Tuesday.

Arab Bank has 30 branches across the Middle East, Europe, the United States, Australia and North Africa.