The recent US measures against Hezbollah will not dramatically affect its financial capabilities since most of the transactions are not conducted through banks and financial institutions, experts said Friday. “I think Hezbollah has stopped dealing with Lebanese banks for the last three to four years to avoid being caught by the U.S. Treasury. It seems that most of the funding from Iran is in the form of cash that is transported across the border or illegal entry points,” an expert told The Daily Star on condition of anonymity.
The US House of Representatives Wednesday unanimously passed a bill to tighten financial sanctions against Hezbollah.
The “Hezbollah International Financing Prevention Act of 2015” was passed by the Senate last month, and will now be sent to President Barack Obama for final approval.
The bill, which had been denounced by Hezbollah as a “crime,” says it prevents the party and “associated entities from gaining access to international financial and other institutions.”
It punishes international financial institutions that knowingly engage in business with Hezbollah and its backers. It also identifies the organization’s satellite and Internet providers, which support its television network Al-Manar.
The expert stressed that Hezbollah realize that Lebanese banks and legitimate financial companies have no choice but to fully comply with the US measures.
“Lebanese banks are not willing to pay the price of any mistake or a short sight . They have clear instructions from the Central Banks to block any deposit or transaction from any group or individual who are labeled as a terrorist by Washington and the European countries,” he explained.
Over the past four years, Lebanese banks have upgraded their methods of anti-money laundering and terrorism funding compliance as they realize that any dealing with Hezbollah or any group which is branded as a terrorist organization could prompt the correspondent banks to stop dealing with local lenders.
In February 2011, the US Treasury Department announced the identification of The Lebanese Canadian Bank SAL together with its subsidiaries as a financial institution of primary money laundering concern under Section 311 of the USA PATRIOT Act (Section 311) for the bank’s role in facilitating the money laundering activities of an international narcotics trafficking and money laundering network.
The expert said that even the transfer of cash across the border or via the airport will become a bit complicated for Hezbollah after the Lebanese Parliament passed a law which instructs any citizen or traveler to declare the amount of cash he or she is carrying.
“Although the authorities will not seize the money declared by the bearer, the officials, however, will write down the names of these individuals and pass it on to financial authorities if these amounts exceed $10,000. These names may end up with the U.S. Treasury Department,” another economist said.
He added that this cash declaration would probably make life more difficult for Hezbollah and this could prompt it to devise other creative ways to smuggle the money without alerting the Lebanese authorities.
All of the experts and economists interviewed by The Daily Star said that Lebanon has to wait for the exact details of the decision by the U.S. Congress.
They added that Hezbollah and other groups would not be able to deposit money in any bank through a third party.
“Banks will run a check on any person who tries to deposit or transfer large sums of money. Banks will apply [the] Know Your Customer rule to ensure that all transactions are clean,” the economist said.
Makram Sader, the secretary-general of the Association of Banks in Lebanon, assured that lenders have been upgrading and improving the compliance measures.
“We have been doing this work for several years. We are also helping the smaller banks to get acquainted with these measures to avoid any backlash from correspondent banks,” Sader said.
By Osama Habib
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