(Reuters) - A U.S. magistrate judge in Brooklyn has recommended that more than 200 former U.S. soldiers or their survivors be allowed to proceed with allegations that six global financial institutions – HSBC, Credit Suisse, Barclays, Standard Chartered, Royal Bank of Scotland and Commerzbank – conspired with Iran and its proxies to provide material support for terrorism against U.S. armed forces during the Iraq War.

In a 153-page report and recommendation issued on July 27, Judge Cheryl Pollak found the military veterans adequately alleged their two primary theories of liability: that the banks provided material support for Iran-sponsored bombings and attacks under the Antiterrorism Act and that the banks aided and abetted Iran-backed operations under the 2016 Justice Against Sponsors of Terrorism Act.

Judge Pollak’s recommendation in Freeman v. HSBC must still be reviewed by the trial court overseeing the four-year-old case, presided over by U.S. District Judge Dora Irizarry. In a joint letter last week, the European banks and Iran’s Bank Saderat, a codefendant, asked for additional time to file their objections to the magistrate’s report. So clearly, they’re not ready to concede on their arguments that the ex-soldiers’ case must be dismissed.

But the magistrate’s painstaking analysis is a big preliminary win for the plaintiffs and their lead counsel, Gary Osen of the eponymous Osen firm – not least because the magistrate rejected the banks’ argument that a big appellate loss for the Osen firm in Linde v. Arab Bank doomed this case as well.

In the Linde case, you may recall, Osen and co-counsel from Motley Rice and Sayles Werbner (among others) won a 2014 jury verdict holding Jordan-based Arab Bank liable for plaintiffs’ injuries and deaths in two dozen Hamas attacks in Israel and the Palestinian territories in 2002 and 2003. The bank reached a settlement to preclude a damages trial, with the size of the payout contingent on the outcome of its appeal of the liability verdict.

Last February, the 2nd U.S. Circuit Court of Appeals vacated the jury verdict, holding that the trial judge erroneously instructed jurors on the relationship between material support for a terrorist organization and liability under the Antiterrorism Act. The judge, U.S. District Judge Brian Cogan of Brooklyn, told jurors that if they found Arab Bank had provided material support to Hamas, that finding was sufficient to hold the bank responsible for committing an act of terror. The 2nd Circuit said that was a mistake.

Instead, according to the appeals court, ATA plaintiffs suing financial institutions must prove to jurors that the banks’ actions themselves satisfy the statutory definition of terrorism. Crucially, the opinion said banks aren’t responsible unless they are generally aware that they’re supporting violent, life-endangering actions, not just lending material support to terror groups. “Providing financial services to a known terrorist organization may afford material support to the organization even if the services do not involve violence or endanger life and do not manifest the apparent intent required by (the Antiterrorism Act),” the 2nd Circuit said.

The Europe-based bank defendants in the case before Judge Pollak argued in their joint dismissal motion that plaintiffs couldn’t show their actions were linked to any act of terror. “The complaint does not identify a single transaction through which funds or goods of any type were transferred, directly or indirectly, to a terrorist group, nor does it allege that the U.S. origin goods for which the letters of credit were issued caused or in any way facilitated any of the 92 attacks listed in the complaint,” the motion said. The banks contended they’re not responsible for routine banking transactions, under the ATA or under JASTA, which imposes liability on entities that aid or abet terror groups.

Magistrate Judge Pollak refused to read the 2nd Circuit’s Linde precedent broadly to shield financial institutions. “To the extent that defendants argue that the provision of routine financial services can never be sufficient to support a claim under the ATA, the 2nd in Linde held that this was a question for the jury,” she wrote. It’s true, the judge admitted, that the appeals court drew a distinction between providing routine financial services to terror groups and “providing a loaded gun to a child.” But Linde precedent did not preclude claims against terror groups’ banks as a matter of law, the magistrate said. The 2nd Circuit held that it’s up to fact-finders to decide, she ruled.

I should point out that Judge Pollak also cast doubt on the banks’ contention that they were merely supplying routine banking services to Iran and its proxies. (All of the European banks have entered agreements with the U.S. government to resolve allegations of improper transactions with Iran or proxies.) The magistrate described in considerable detail the complaint’s allegations of “stripping financial transactions, disguising payment sources, transferring funds to sanctioned entities and manually altering payment information,” and said there are “serious questions” about “whether the conduct of the defendants in this case in working with the Iranian entities to develop sophisticated means to evade detection and avoid U.S. sanctions could be considered ‘routine banking services.’”

It’s easy to get lost in the deep weeds of Judge Pollak’s opinion, which analyzes pleading standards under the ATA material support statutes, JASTA and a couple of other laws plaintiffs cite in ancillary theories of liability. And, as I mentioned, the banks intend to argue against the magistrate’s recommendations.

But at least for now, international banks are on notice: If you provide financial services to designated terror groups, you may well have to defend yourself before an American jury.

I emailed lawyers for each of the bank defendants: Mayer Brown for HSBC, Sullivan & Cromwell for Standard Chartered and Barclays; Cleary Gottlieb Steen & Hamilton for Commerzbank; Clifford Chance for RBS and Pepper Hamilton for Bank Saderat – but didn’t hear back. Credit Suisse counsel Cravath, Swaine & Moore referred me to a bank spokeswoman. She declined to comment.