Accused money changers in Lebanon mull court challenge

Accused money changers in Lebanon mull court challenge
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Published April 25th, 2013 - 08:53 GMT via

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Two Lebanese currency exchange firms accused of money laundering by the United States Treasury Department have vehemently denied the allegations, saying they were considering legal action to clear their names.

“Appointing a U.S. attorney and taking every legal action possible will be a top priority for us now ... and we have trust in the American legal processes,” Mahmoud Halawi, owner of Halawi Exchange and a former head of the Lebanese Currency Exchangers Association, told The Daily Star.

The U.S. Treasury Department Tuesday labeled the exchange houses, Kassem Rmeiti and Halawi Exchange, “primary money laundering concerns,” which is likely to cut them off from the U.S. financial system.

The Treasury accused the two firms of helping launder funds for an international drug trafficking ring and financing Hezbollah.

The Treasury and the U.S. Drug Enforcement Administration said tens of millions of dollars in drug proceeds and other illegal funds moved through the exchange houses, which do most of their transactions in cash.

The move is part of a multiyear probe that has exposed what the U.S. government says are tight links between South American drug traffickers and Hezbollah.

The U.S. government first moved against the network in 2011 by designating its alleged leader, Ayman Joumaa, a “drug kingpin,” allowing the government to seize his assets. They said the network was doing as much as $200 million a month in business.

“We have not been warned of any wrongdoing and we completely abide by Lebanese law and Central Bank-issued memorandums,” Halawi said.

The company, which operates branches in Beirut and south Lebanon’s Sidon and Tyre, has undertaken legal dealings with partners globally, but for many years has not processed international transfers, Halawi said.

He stressed that his firm had kept legal records on the names of clients and the sources of funds.

Commercial registry credentials, bills and other documents were also kept by the firm, according to Halawi.

The Central Bank has not taken any action against the company as of Tuesday and for this reason it is still in business,” Halawi said. However, he admitted the U.S. accusations would weigh heavily on the firm.

Kassem Rmeiti, the owner of Tyre-based Rmeiti Exchange, said he was equally surprised by the accusation, challenging the U.S. Treasury to provide hard evidence that he was involved in any illegal activity.

“It is all mere verbal accusations and there is no solid evidence,” Rmeiti said. While less assertive than Halawi, he also suggested he would be willing to go to court.

“The business receives clients from many places, including some based in Africa, and this is the case for all money changers across Lebanon,” Halawi said. “But how is it my responsibility to investigate the sources of the funds beyond asking for legal documentation?”

While distancing himself from Hezbollah, Rmeiti said he believed the charge was part of a politically motivated campaign against Lebanese Shiites. He said that the accusation was probably related to the fact that his company held an account in the now-defunct Lebanese Canadian Bank, adding that that the data from the bank was being used to level accusations against innocent businessmen.

The U.S. government targeted the Lebanese Canadian Bank, the eighth-largest bank in Lebanon, in 2011 for allegedly helping the Joumaa network launder money, and last year seized $150 million of its assets. The Lebanese Canadian Bank was forced to sell its assets in February 2012 to SGBL.

During a news conference Tuesday to announce the Treasury’s action against the two Lebanese exchange firms, U.S. Undersecretary for Terrorism and Financial Intelligence David S. Cohen said, “Following Treasury’s action against the Lebanese Canadian Bank, the Joumaa narcotics network turned to Rmeiti Exchange and Halawi Exchange to handle its money laundering needs,”

Since the Lebanese Canadian Bank scandal emerged, Lebanese money changers have been subjected to tougher scrutiny. In 2011 and 2012 banks closed all of their corporate accounts.

The Central Bank also decided last year to hike the minimum capital required for category A currency exchangers to LL750 million, up by some LL250 million. The capital of category B currency exchangers was hiked to LL500 million, up by some LL400 million.

Analysts viewed the step as aimed at forcing small money exchangers out of business because they are harder to monitor.

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