About 80 families of US soldiers killed in Iraq together with several surviving military veterans who were wounded in roadside bombings are suing five European banks for damages on grounds that they allegedly siphoned money to Iran that was then used to finance the attacks.

More than 200 individuals are pressing claims that have been consolidated into one complaint lodged with the US district court in Brooklyn, New York, on Monday. The five defendant banks are Barclays plc, Credit Suisse Group AG, HSBC Holdings plc, Standard Chartered and Royal Bank of Scotland Group plc.

The lawsuit has been brought under the 1992 US Anti-Terrorism Act and alleges that the banks breached international sanctions imposed on the Iranian regime by disguising the movement of money wired through the US to Iran. It then claims that about $100m of that money was channelled separately by Iranian banks to insurgent groups in Iraq who mounted attacks against US soldiers.

Gary Osen, the New Jersey-based lawyer for the plaintiffs, said the specific claims vary according to each individual case. Running through the lawsuit is the allegation that “Iran funded, trained and armed a number of ‘special groups’ among the Shia militia that perpetrated attacks on US forces.”

Among the plaintiffs are relatives of Brian Freeman, a US soldier who was abducted and killed on 20 January 2007 in an insurgent attack on his unit in Karbala, south of Baghdad. The complaint says that his captors came from the group Asa’ib Ahl al-Haq, which they say was armed, funded and trained by the Qods force of Iran’s Islamic revolutionary guard.

Brian Freeman’s wife, Charlotte, told Reuters that she had joined the lawsuit together with her mother-in-law in order to send a message. “I never suspected these big banks would turn a blind eye. Even if the case doesn’t get that far, at least the story is told. It needs to be exposed.”

None of the banks have yet commented on Monday’s lawsuit. Their official responses to the allegations are not expected to be filed with the courts for several weeks if not months. It is likely to take years for the case to get close to trial, assuming that federal judges allow it to proceed.

Osen said that much of the information contained in the complaint was drawn from the records of previous US Department of Justice investigations into the same five banks after they were alleged to have bypassed sanctions rules by funnelling money to Iran as well as other proscribed regimes such as Cuba and Libya. The banks agreed to pay more than $3bn to the US government to settle the case in a “deferred prosecution agreement” that avoided an indictment, though there was no suggestion in those legal actions that any of the funds were used to back terrorist activities.

Osen told the Guardian that the lawsuit was designed to tell a “largely untold story” of Iran’s involvement through proxies in Iraq “to kill large numbers of coalition forces”. The complaint makes only an indirect link between the action of the banks and the Iraqi attacks, but Osen said it was brought with the intention of challenging the assumption that breaching sanctions was a “victimless crime, a function of paperwork or inadequate filing that harmed no one. We wanted to draw attention to the very real human consequences when you provide Iran access to hundreds of billions of dollars without transparency.”