Shurat Ha Din-Israel Law Center filed the suit on behalf of five families of students who died in an attack on the Mercaz Harav Yeshiva in Jerusalem March 6, 2008, in which eight students died.
The suit alleges the Bank of China intentionally provided banking services to Hamas through its New York branch and "knowingly assisted the Islamic group ... with the full approval of the Chinese government," the firm's news release said.
The lawsuit, filed in State Supreme Court, seeks compensatory and punitive damages.
"In this suit, we were able to make use of laws allowing non-Americans to also sue in U.S. courts in the case of terrorism," firm director Nitsana Darshan-Leitner said.
The suit asserts in 2003, the Chinese bank executed dozens of wire transfers totaling millions of dollars to Hamas initiated by the terror group's leadership in Syria and Iran. The transfers were processed by Bank of China branches in the United States and sent to an account in China operated by a senior militant. From there the funds were transferred to Hamas and other terror groups in the Gaza Strip, the suit alleges.
In 2005, Israeli counter terrorism officials met with Chinese officials from the Ministry of Public Security and China's Central Bank and demanded they stop the wire transfers.
"Despite these warnings, the state-owned bank, with Beijing's approval, continued to wire funds for terrorism, all while declaring they did not consider Hamas a terrorist group," Darshan-Leitner said.
Most of the transfers were made to an account at the Bank of China branch in Guangzhou, in the name of S.Z.R. al-Shurafa, the owner of the account and a senior operative for Hamas and the Islamic Jihad, the firm said.
Hamas was designated a terrorist organization by the United States in 1997 and as "specially designated global terrorists" in 2001, Darshan-Leitner said, making Hamas subject to strict economic sanctions.