US Treasury Shuts Down Hezbollah Money Laundering

Lebanese exchange houses accused of money laundering from used car dealerships and illicit drug trade going to terror group are frozen.



NEW YORK – The US Treasury Department on Tuesday listed two Lebanese exchange houses as institutions of “primary money laundering concern” for their work with Hezbollah, invoking Section 311 of the USA PATRIOT Act to effectively shut them out of the American economy.

HEZBOLLAH SUPPORTERS march through the streets of Beirut last year.

HEZBOLLAH SUPPORTERS march through the streets of Beirut last year. Photo: Khalil Hassan/Reuters

In a declassified statement of their case, the US claims that the Rmeiti Exchange and Halawi Exchange have consistently complied in a scheme that comingles money from used car dealerships in the US and drugs from South America into significant funding for the Lebanese terrorist organization.

The public move puts significant pressure on the Lebanese government to act on its own against the financial houses.

“It wouldn’t be in the overall interest of the Lebanese government to have more of its banks under scrutiny,” says Bessma Momani, a senior fellow at the Brookings Institution.

“But there’s a lot of fear within the government of Hezbollah – there would be fear of literal assassinations.”

The move – which marks the first time Treasury has enacted Section 311 against a non-bank financial institution – may also be a direct and intentional message to the European Union, as the US government continues its efforts to persuade European officials to list Hezbollah as a terrorist organization.

A chart made available by the Financial Crimes Enforcement Network shows how US and South American drugs and cars are channeled through Africa, where the profits are then transferred. It highlights Hezbollah’s abuse of illicit drug sales throughout the European continent.

“Drugs are sold in Europe [from Africa],” the chart reads.

“Proceeds are mixed with legitimate used car sale profits in Africa and sent to Lebanese banks through exchange houses. Some money is diverted to Hezbollah.”

Jonathan Schanzer, vice president for research for the Foundation for Defense of Democracies, says exchange houses have been used more frequently in recent years by the Islamic Republic in Iran to fund its nuclear program, as sanctions have increasingly restricted its access to resources.

“It’s not insignificant that Europe is identified as a place where Hezbollah is apparently selling drugs,” Schanzer said.

A spokesman for the US Drug Enforcement Administration told The Jerusalem Post that many participants in the scheme here in the United States aren’t even aware that, only three or four hands down, their transactions lead to banks in Lebanon.

“When we find evidence of terror activities that are being funded by drug trafficking, that’s a national security concern,” says the DEA’s Lawrence Payne. “Used cars are just one of the many trade-based industries that launderers try to wash their funds in. It’s pretty elaborate. Hezbollah behaves exactly like a drug kingpin.”

Experts say that Hezbollah’s asymmetric fund-raising campaign has kicked in to high gear as the regime of Bashar Assad in Syria has lost ground in its war against his fellow countrymen. The Assad regime, and the Ayatollah regime in Iran, are Hezbollah’s primary patrons.

Today’s move follows actions against the Lebanese Canadian Bank in 2011 for its participation in the scheme. The Rmeiti Exchange and Halawi Exchange apparently picked up where that bank left off its activities.

American financial institutions were ordered to report any information on new or attempted transactions with the exchange houses, effective immediately.

“Exchange houses offer the informality – it doesn’t have the same international governing structure of a bank, and that’s elusive, and enticing,” said Momani. “Internationally, they’re becoming an increasing concern.”


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