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Bankers: New U.S. Hezbollah sanctions don’t target Lebanon

The Lebanese Canadian Bank in Beirut. (The Daily Star)

BEIRUT: A proposed U.S. legislation that broadens financial sanctions on organizations that help channel money to Hezbollah will have no impact on Lebanon’s banking sector, which is already in full compliance with U.S. and international laws, senior Lebanese banking sources told The Daily Star Wednesday.

The U.S. House of Representatives voted unanimously Tuesday to allow the Treasury Department more power to “relentlessly” pursue foreign banks, including central banks, that do business with Hezbollah.

The U.S. Treasury Department has in the past sanctioned a number of Lebanese-based organizations on charges of laundering drug money, channeling funds and procuring military equipment for Hezbollah, which Washington has designated as a terrorist group since 1995.

“The new proposed legislation practically brings nothing new to efforts by the U.S. Treasury to crackdown on groups financing Hezbollah,” a senior Lebanese banking source told The Daily Star.

Another source added that the law was simply aimed at consolidating the position of the U.S. Treasury Department and widening the scope of sanctions across the world.

The source said that Lebanon’s banking sector would continue to fully implement international compliance standards, including those of the U.S. Treasury Department related to money laundering and fighting terrorism financing.

“Lebanese banks will continue to do due diligence on their customers as before, and thus the proposed U.S. legislation changes nothing and will have no impact on the banking sector,” the source added.

According to House Foreign Affairs Committee Chairman Ed Royce, the proposed legislation builds on the existing sanctions regime by placing Hezbollah’s sources of financing under additional scrutiny, “particularly those resources outside of Lebanon.”

The Senate still needs to pass the legislation before President Barack Obama signs it into law. The bill, which has yet to be placed on the Senate calendar, is not expected to be ratified anytime before September, when Congress returns from a recess that starts Aug. 1.

A third Lebanese banking source said the proposed legislation was mainly targeting Hezbollah’s funding sources in Africa and Latin America.

“Lebanese banks are fully aware and compliant with U.S. and international laws. This new proposed legislation is aimed at sending a message to other financial organizations including central banks across the world, mainly in Africa and Latin America to follow suit,” the source said.

In bid to shield Arab and Lebanese banks from potential negative repercussions as a result of the proposed legislation, a delegation from the Union of Arab banks has met with high-ranking officials of the U.S. Treasury Department in Washington, Lebanon’s National News Agency reported Wednesday.

The delegation headed by the union’s Secretary-General Wissam Fattouh met with Daniel Glaser, the assistant secretary for terrorist financing in the Treasury Department, and IRS officials.

The proposed legislation would label Hezbollah a transnational criminal organization, compelling the administration to take action to counter the group’s engagement in money laundering and trafficking in counterfeit goods.

In recent sanctions slapped on organizations for allegedly dealing with Hezbollah, the U.S. Treasury Department announced sanctions against Beirut-based Stars Holding Group, for acting as “a key Hezbollah procurement network.”

According to the U.S. State Department, Stars Group Holding, with subsidiaries in China and the United Arab Emirates, has covertly purchased sophisticated electronics and other technology from suppliers around the world and supplied them to Hezbollah to enhance its military capabilities.

In 2011, The U.S. Treasury sanctioned the Lebanese Canadian Bank, accusing it of laundering hundreds of millions of dollars from a narcotics network. The bank, which was later dissolved, paid a fine of $102 million to U.S. authorities in 2013 to avoid prosecution.

U.S. law bans American entities from conducting any business with blacklisted entities and requires the freezing of any assets held by them inside the U.S. financial system.

The proposed U.S. legislation calls on the American president to label Hezbollah as a narcotics-trafficking organization.

“We must be focused on some 5,000 Hezbollah fighters in Syria, massive international drug and money laundering operations, and the terrorist organization’s acquisition of advanced missile systems,” Royce said in the hearing Tuesday.

Washington announced last August that it was imposing new sanctions on Hezbollah over its support for the Syrian regime.

Then in September, the United States imposed, in what is seen as a symbolic move, further financial sanctions against Hezbollah leader Sayyed Hasan Nasrallah for giving assistance to Syrian President Bashar Assad.

 
A version of this article appeared in the print edition of The Daily Star on July 24, 2014, on page 5.

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Summary

A proposed U.S. legislation that broadens financial sanctions on organizations that help channel money to Hezbollah will have no impact on Lebanon's banking sector, which is already in full compliance with U.S. and international laws, senior Lebanese banking sources told The Daily Star Wednesday.

The U.S. Treasury Department has in the past sanctioned a number of Lebanese-based organizations on charges of laundering drug money, channeling funds and procuring military equipment for Hezbollah, which Washington has designated as a terrorist group since 1995 .

The source said that Lebanon's banking sector would continue to fully implement international compliance standards, including those of the U.S. Treasury Department related to money laundering and fighting terrorism financing.

In recent sanctions slapped on organizations for allegedly dealing with Hezbollah, the U.S. Treasury Department announced sanctions against Beirut-based Stars Holding Group, for acting as "a key Hezbollah procurement network".

The proposed U.S. legislation calls on the American president to label Hezbollah as a narcotics-trafficking organization.


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