Why is the US Treasury threatening Lebanese banks?
Speaking at the 2013 Annual Arab Banking Conference, Daniel Glaser, the US assistant secretary for terrorist financing in the Office of Terrorism and Financial Intelligence, warned local banks against any kind of dealing with Hezbollah and its allies.
In a talk titled “Protecting the Lebanese Financial Sector from Illicit Finance,” Glaser first noted the importance of Lebanon’s financial sector to the region’s economic well-being, remarking, “Lebanon’s ability to retain its position as an important regional and international financial center requires constant vigilance, leaving no stone unturned in our collective efforts to uproot money laundering, terrorist financing, and other forms of illicit finance from the Lebanese financial system.”
“Failing to do so,” he continued in a threatening tone, “would not only represent a missed opportunity to contribute to global efforts to uphold the rule of law and disrupt criminal and illicit groups, but might also allow regulators and financial institutions around the world to draw the conclusion that business with Lebanon comes at too high a risk.”
In particular, Glaser designated finances related to “organized criminal groups, narcotraffickers, terrorist organizations, WMD proliferators, and regimes such as Iran and Syria” as illegal activity that must be closely watched by regulators of the banking system.
The American official explained that the Lebanese banking sector’s “studied neutrality and the guarantee of bank secrecy for all” in the past “is no longer tenable. Moving forward, that professionalism and stability, which have been the hallmark of the Lebanese financial system, can be maintained only through the efforts of both the public and private sectors to ensure a hostile environment for terrorists, criminals, narcotraffickers, and sanctioned regimes such as Iran and Syria. Working together, we can stop the illicit financial activities of groups that seek to destabilize the region such as al-Qaeda and Hezbollah.”
In an attempt to link Washington’s political opponents to criminal activities, Glaser noted, “It is important at the outset to identify the illicit finance threats that Lebanese financial institutions face. Some of the threats, such as narcotics-related money laundering, are universal challenges confronting financial centers around the world. Others, such as terrorist financing and sanctions evasion, while certainly not unique to Lebanon, are amplified by Lebanon's geographic, historic, and political circumstances.”
The target here became abundantly clear as Iran, Syria, and the Lebanese Resistance were placed alongside drug traffickers in order to prevent them from accessing Lebanon’s banks...or else!In a more direct wink in the direction of Hezbollah, he referred to the case of the Lebanese Canadian Bank (LCB), maintaining that the “scheme involved the laundering of hundreds of millions of dollars in narcotics proceeds through the Lebanese financial system using bulk cash shipments and trade-based money laundering involving used car sales and consumer goods.”
Glaser, however, forgot to mention that his administration neglected to pursue the LCB in the courts and instead struck a back-room deal, in which the bank paid $102 million in exchange for the case against them being dropped, after it was accused of laundering money on behalf of Hezbollah.
So after closing the LCB file in Washington, the US Treasury official nevertheless insisted that “this should not be surprising given Hezbollah's involvement in a wide range of illicit activities. These illicit activities, combined with its ties to sanctioned regimes such as Iran and Syria, should call into question all financial relationships with Hezbollah or its agents.”
Glaser took his threats against any financial dealings with the Resistance one step further, saying, “The risks of engaging in such relationships will only increase as more countries apply sanctions on Hezbollah, which continues to engage in destabilizing military activity in Syria and attacks in Europe.”
He also did not fail to warn Lebanon’s banks against the danger of conducting business with Syria and Iran: “Lebanese financial institutions must also be alert to the threat of sanctions evasion. As a nearby regional banking hub, regimes such as Syria and Iran will continue to look to Lebanon as a potential financial access point into the global system. Lebanese financial institutions are therefore an important component of international efforts to isolate these regimes, and Lebanon’s resistance to any attempts to use Lebanese banks as a gateway to the international financial system is essential.”
In his concluding statement, Glaser got to the heart of his message by warning the bank officials present that “the United States is prepared and will continue to take action to protect our financial system from threats when we deem it necessary.”
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