Written By: Kenneth Rijock - International Financial Crime Consultant
Contributed By: Monte Friesner - Financial Intelligence Analyst
Senior Parliament of Lebanon members, affiliated with Hezbollah, unhappy when Beirut's financial institutions, and the country's Central Bank, Banque Du Liban, rushed to comply with the Hezbollah International Financing Prevention Act, by closing over 100 Beirut bank accounts, have stooped to appeals to patriotism, and made threats, in a futile effort to reverse the account closings. Hezbollah spokesmen have stated that the actions are a violation of national sovereignty, and could affect internal stability in Lebanon.
Hezbollah's position is that only specific individuals, or entities, that are designated SDN by OFAC, should suffer account closure, but the US law, which provides for sanctions against anyone who engaged in terrorist financing, is not limited to sanctioned parties. Banks who violate the law could be fined, or, in extreme cases, totally barred from the US banking structure, which would be fatal to the operation of any international bank.
The Central Bank, fearful of being isolated from the international banking structure, has advised Lebanese banks to fully comply, and to promptly close Hezbollah accounts, or those linked to the terrorist organization. This is not sitting well with Hezbollah, though its Secretary-General, Hassan Nasrallah, claimed recently that his organization has no accounts in Lebanon's banks, a statement which now appears to be untrue.
Reportedly, individuals whose accounts are close, pursuant to reputed Hezbollah affiliation, will not be allowed to open any new accounts, at any other Lebanese bank, in any currency.
Hezbollah is thought to use the Syrian financial system as a conduit to receive $400m annually, from Iran, but obviously there are also accounts in Beirut. Rumors are flying that 3000 additional accounts will ultimately be closed, which could seriously disrupt Hezbollah's payments within Lebanon.
Will Hezbollah now act more directly, against local banks, given that the Central Bank has indicated that it will not retreat from its position ? If it does, Beirut banks will be caught in the middle.