UPDATE 1-U.S. veterans sue banks, claim they should pay for Iraq attacks

(Adds background on lawsuit)

By Alison Frankel

NEW YORK, Nov 10 (Reuters) - Wounded U.S. veterans andfamily members of U.S. soldiers killed in Iraq sued fiveEuropean banks on Monday, seeking to hold them responsible forshootings and roadside bombings because they allegedly processedIranian money that paid for the attacks.

The lawsuit filed in U.S. District Court in Brooklyn, NewYork, named Barclays Plc, Credit Suisse Group AG, HSBC Holdings Plc, Standard Chartered and Royal Bank of Scotland Group Plc.

The banks did not immediately respond to requests forcomment.

The lawsuit was brought under the U.S. Anti-Terrorism Act, a1992 law that permits victims to bring private suits againstalleged financiers of militant operations.

Brought on behalf of more than 200 veterans and familymembers, the lawsuit alleges the banks conspired with Iranianbanks to mask wire transactions in order to evade U.S.sanctions.

The Iranian banks then funneled more than $100 million tomilitant groups that operated in Iraq at Iran's direction,according to the suit.

Since 2009, the five banks have agreed to pay about $3.2billion to the U.S. government to resolve allegations that theyhandled money in violation of sanctions against nations such asIran, Libya and Cuba. All the banks signed deferred prosecutionagreements with the U.S. Justice Department in addition tosettlements with U.S. banking regulators. (Reporting by Alison Frankel; Editing by David Ingram and RossColvin)