The Bank of China (BOC) denied Thursday reported allegations that it helped funnel millions of dollars to Palestinian group Hamas.

"The Bank of China has always strictly followed the UN's anti-money laundering and anti-terrorist financing requirements and regulations in China and other judicial areas where we operate," the bank said on its website.

"We strictly ban any financial service for any terrorist organisation."

The Wall Street Journal reported that five families of eight Israeli high school students who died in a shooting in Jerusalem in March 2008 filed a lawsuit Tuesday against the bank seeking $1 billion in damages and compensation.

According to the report, the civil lawsuit was filed in New York state court and alleges that the Hamas leadership processed transfers worth several million dollars from 2003 via BOC's branches in the United States.

The suit claims the money was sent to a BOC account in China linked to Hamas and Palestine Islamic Jihad before being forwarded to Hamas and other groups in the West Bank and Gaza Strip and used for terror attacks, the newspaper reported.

"The Bank of China has noted relevant reports in the press," the BOC statement said. "The accusations in the reports cited are groundless."

The Wall Street Journal, citing an Israeli law center representing the families, said that the students died when an alleged member of an Islamic terrorist organisation opened fire on the grounds of a Jewish educational institute in Jerusalem.

Scrutiny of alleged links between international banks and terror groups and states that are accused of sponsoring them has been increasing.

Britain-based banking giant Standard Chartered was plunged into crisis in August when a US regulator accused the bank of hiding $250 billion in transactions with Iran.

The bank -- which derives 90 percent of its profits across Africa, Asia and the Middle East -- denied the allegations but paid $340 million to settle the dispute.