Photo illustration by John Lyman

World News


Is Hezbollah Still Laundering Money Through Lebanese Banks?

The Lebanese banking sector has been witnessing swift changes, particularly in its leadership, largely due to the daring efforts of investigators who took significant risks to uncover the corruption that precipitated the country’s economic downfall.

But in the wake of the Hamas atrocities in Israel and the subsequent hardline Israeli response, Hezbollah finds itself on the brink of armed conflict once again. And for such an effort, the Iran-backed criminal gang will need financial resources traditionally provided by now-exposed bankers.

The critical question persists: With Riad Salameh’s exit as the enduring governor of Banque du Liban, Lebanon’s central bank, and the struggles facing Antoun Sehnaoui, the chairman of SGBL Group—which encompasses Société Générale de Banque au Liban, its Jordanian counterpart, and Fidus Wealth Management—will Hezbollah encounter a shift in circumstances? Or is it probable that obscure figures within the organization will devise new strategies to funnel funds into Hezbollah’s military arm?

It is widely known that Iran has over the past few decades provided billions of dollars to both Hezbollah and Hamas for their political and military operations. Many Lebanese bankers have been accused of assisting Iran’s goals by providing “services” to the Ayatollah’s front groups.

Iran even two decades ago was providing Hezbollah with $200 million a year in cash and weaponry, and millions more via purportedly private charities and front groups.

But it’s important to note that Hezbollah has brought in billions more via a variety of criminal enterprises at home and in far-away African and South American nations.

Lebanese Shia expatriates have engaged in narcotics, cigarette, and blood diamond smuggling and scams ranging from stealing and reselling baby formula to stolen grocery coupons, welfare claims, credit cards, cigarettes, and unlicensed tee shirts. Hezbollah-run Western Union offices clandestinely transfer millions through Lebanese banks to Hamas and other terror groups.

For example, in 2011, the Lebanese Canadian Bank (LCB) was accused by the Obama administration of laundering money for an international cocaine ring with ties to Hezbollah. LCB’s ledgers were opened to reveal several methods that fund Hezbollah’s misdeeds.

According to New York Times reporter Jo Becker, LCB and Hezbollah used an intricate global money laundering apparatus to move huge sums of money into the legitimate financial system to avoid existing sanctions. The “Gambino’s on steroids” were laundering so much money, that bankers like Salameh and Sehnaoui felt no compunction in siphoning off huge sums for personal use.

Despite Sehnaoui’s promises that SGBL bought “only the clean” assets of the disgraced bank and none of the “even slightly questionable clients,” the fact is that SGBL and Sehnaoui became liable for LCB’s earlier misdeeds. As head of BDL, Salameh had a big role in the LCB sale.

Salameh’s latest round of troubles began with an investigation into the central bank’s role in crashing the Lebanese economy. One notable case, recently unraveled by Lebanese prosecutors, targeted Salameh, Sehnaoui, and four of Lebanon’s main exchangers for “money laundering crimes resulting from currency trading operations with the intent of exposure to the national currency.”

In 2019, Salameh’s bank went on a spending binge that pushed up the national debt and caused a near-total collapse of the Lebanese economy, leaving four-fifths of the nation in poverty. Despite a BDL selloff of dollars at a preferential exchange rate, the effort to support the Lebanese pound yielded no tangible results and people began wondering where the money went.

A collective of Lebanese lawyers, operating under the moniker ‘United for Lebanon,’ filed lawsuits against Salameh, Sehnaoui, and four Lebanese currency exchange operators on charges of money laundering. Subsequently, prosecutors formulated criminal indictments against Salameh and associates. As expected, the accused bankers have been actively delaying the legal process. However, they are also facing intense scrutiny from European regulatory bodies.

Take Michel Mecattaf’s money transfer service as a case in point: it was implicated in the illicit laundering of billions of dollars, purportedly as a component of the financial network orchestrated by Salameh and Sehnaoui. Reports suggest that from 2002 to 2015, Salameh, along with his circle, funneled approximately $330 million out of the central bank to acquire opulent properties and various assets across Europe. It is believed that the portion allocated to Hezbollah was significantly larger.

All in all, Salameh oversaw Lebanese financial losses of over $72 billion – more than three times the nation’s gross domestic product in 2021. While he is still facing money laundering, illicit enrichment, and corruption charges in Lebanon and at least five European countries, the Lebanese government refuses to extradite him to face his accusers. Instead, the 73-year-old was allowed to quietly resign as bank governor in July.

But clearly, Hezbollah’s need for laundered money has not diminished.

In 2020, the hacking group SpiderZ hacked the al-Qard al-Hasan Association (AQAH), the financial arm of Hezbollah, and found account information for about 400,000 individuals, exposing expatriates, Hezbollah cadres and institutions; so-called “major depositors,” Iranian entities, and most importantly, the Lebanese banks that service AQAH.

Back in 2007, the U.S. Treasury Department had sanctioned AQAH for allowing Hezbollah to gain “access to the international banking system.” The SpiderZ documents revealed that major Hezbollah financiers held AQAH accounts.
Lebanese banks ultimately knew that AQAH employees used their accounts to enable Hezbollah to launder money.

And there is no reason not to believe, despite the downfall of two leading Lebanese bankers, that Lebanese banks continue to enable Hezbollah to launder money to support its criminal and military enterprises.

U.S. policymakers had long hailed Lebanese banks as responsible stakeholders and claimed that tougher measures might break the backbone of the Lebanese economy. Their hands-off policy prevented neither Hezbollah’s access to the banks nor Lebanon’s financial collapse.

The misdeeds of the now-absorbed Lebanese Canadian Bank are a major reason why Sehnaoui and SGBL are the targets of an ongoing civil lawsuit, filed in the United States by families of victims at the hands of Hezbollah in coordination with Iran’s Revolutionary Guard from 2004 through 2013.

What is most notable in this ongoing civil lawsuit is the long list of other banks accused of collusion with Hezbollah in their money laundering and military operations.

Besides SGBL and Sehnaoui, defendants include the MEAB Bank, BLOM Bank, Byblos Bank, Bank Audi, the Bank of Beirut, Lebanon & Gulf Bank, Banque Libano-Française, the Bank of Beirut and the Arab Countries, and Fenicia Bank.

Yet, pivotal queries linger—have investigations into these banks reached the same depth as those into SGBL and BDL?

Is Hezbollah currently utilizing these financial institutions? Moreover, what measures is the U.S. government taking to hinder Hezbollah’s efforts to fortify its military capabilities in preparation for an extended conflict?