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U.S. bill targeting Hezbollah won’t affect Lebanese banks

Lebanese Banks Association building in Beirut, Wednesday, July 2, 2014. (The Daily Star/Hasan Shaaban)

BEIRUT: Lebanese banks are confident that a proposed United States law tightening financial sanctions on Hezbollah won’t affect the local banking sector, bankers said Wednesday.

“A delegation from the Association of Banks in Lebanon met recently with U.S. officials and congressional leaders in Washington, and we discussed the bill targeting Hezbollah’s finances. We made some remarks about the bill and asked for some modifications and the Americans complied,” one banker told The Daily Star.

He added that the amendments were necessary to protect the Lebanese banks and economy.

The Hezbollah International Financing Prevention Act of 2014, which was submitted to the U.S. House and Senate in April, aims to curb Hezbollah’s financial activities around the world.

The bill seeks to impose sanctions on individuals or institutions that knowingly do business with Hezbollah, or companies or individuals who have been designated by the U.S. as Hezbollah financiers. Any bank targeted by the act would be forbidden from conducting any financial activities in the U.S.

In the U.S. House, the bill has passed the Foreign Affairs Committee and is awaiting action in the Financial Services Committee. The Senate has referred its draft to the Banking Committee.

The banker explained that the ABL recommended that Lebanese banks should not be responsible for any mistake or oversight made by a correspondent bank.

“We are committed to any decision taken by the United States and European authorities, the banker said. “We have no interest whatsoever in damaging our reputation.”

Every banker who spoke to The Daily Star emphasized that Lebanese banks update their list of individuals and groups believed to be involved in terrorist funding or money laundering.

The list includes the names of Hezbollah members or people close to them.

The new bill does not expand those targeted by the financial sanctions, but increases the penalties and reporting requirements for financial institutions.

“The bill did not mention names. We only comply with the list of names supplied to us by the U.S. authorities. I can’t say for sure if the list will include in the future individuals who have some relationship with the party,” one banker said.

While lawmakers in Washington has expressed hope that the bill will squeeze Hezbollah financially and eventually affect its operations, experts say the resistance party uses other channels to finance its operations in Lebanon.

The bankers said that Lebanese banks were cooperating with the Central Bank, the Banking Control Commission and the Special Investigation Commission in the implementation of all international and local regulatory requirements.

“We implemented FATCA in April. We are the first to do this and this should be clear to all sides,” one banker told The Daily Star, referring to the Foreign Account Tax Compliance Act, a United States federal law that requires U.S. citizens, including individuals who live outside the United States, to report their financial accounts held outside of the country.

The bill also requires foreign financial institutions to report to the Internal Revenue Service about their U.S. clients. Congress enacted FATCA to make it more difficult for U.S. taxpayers to conceal assets held in offshore accounts and shell corporations, and thus to recoup federal tax revenues.

 
A version of this article appeared in the print edition of The Daily Star on July 03, 2014, on page 5.

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Summary

Lebanese banks are confident that a proposed United States law tightening financial sanctions on Hezbollah won't affect the local banking sector, bankers said Wednesday.

The bill seeks to impose sanctions on individuals or institutions that knowingly do business with Hezbollah, or companies or individuals who have been designated by the U.S. as Hezbollah financiers. Any bank targeted by the act would be forbidden from conducting any financial activities in the U.S.

In the U.S. House, the bill has passed the Foreign Affairs Committee and is awaiting action in the Financial Services Committee.

The bill also requires foreign financial institutions to report to the Internal Revenue Service about their U.S. clients.


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