$150 million Hezbollah money laundering scheme disrupted by DEA
Today the Drug Enforcement Administration (DEA) confirmed that they disrupted a Hezbollah $150 million money-laundering front using the now defunct Lebanese Canadian Bank (“LCB”), as well as U.S. financial systems to launder illegal drug trafficking proceeds through West Africa and then back into Lebanon.
The DEA alleges the Société Générale de Banque au Liban (SGBL) agreed to purchase most of the LCB assets, including at least $150 million in funds related to that sale that are now being held at Lebanese bank Banque Libano Française SAL (“BLF”). The DEA further discloses the terrorist organization’s money was seized pursuant to seizure warrants issued last week. However, the DEA quickly pointed out “there are no allegations of wrongdoing against BLF, SGBL, or the U.S. bank that maintains the correspondent accounts.”
“As we alleged last year, the Lebanese Canadian Bank played a key role in facilitating money laundering for Hezbollah controlled organizations across the globe,” DEA Administrator Michele Leonhart said. “Our relentless pursuit of global criminal networks showed that the U.S. banking system was exploited to launder drug trafficking funds through West Africa and into Lebanon. DEA and our partners are attacking these groups and their financial infrastructure, while establishing clear links between drug trafficking proceeds and terrorist funding.”
The Southern District of New York worked closely with DEA’s agents to flush out the Hezbollah money-laundering scheme.
“Money is the lifeblood of terrorist and narcotics organizations, and while banks which launder money for terrorists and narco-traffickers may be located abroad, today’s announcement demonstrates that those banks and their assets are not beyond our reach,” said U.S. Attorney Preet Bharara. “We will use every resource at our disposal to separate terrorists and narco-traffickers, and the banks that work with them, from their illicit funds, even those hidden in foreign accounts.”
The federal government’s Complaint outlines the great lengths terrorists and drug traffickers take to legitimize their illegal profits.
“From approximately January 2007 to early 2011, at least $329 million was transferred by wire from LCB and other financial institutions to the U.S for the purchase of used cars that were then shipped to West Africa. Cash from the sale of the cars, along with the proceeds of narcotics trafficking, were funneled to Lebanon through Hezbollah-controlled money laundering channels. LCB played a key role in these money-laundering channels and conducted business with a number of Hezbollah-related entities. Hezbollah is a U.S. Department of State designated Foreign Terrorist Organization, a Specially Designated Terrorist and a Specially Designated Global Terrorist,” the DEA release explained.
“On February 10, 2011, the U.S. Department of the Treasury, Financial Crimes Enforcement Network (“FinCEN”) issued a finding and proposed rule, pursuant to the USA Patriot Act, that LCB is a financial institution of primary money laundering concern, based on, among other things, FinCEN’s determination that there was reason to believe that LCB had been routinely used by drug traffickers and money launderers operating in various countries in Central and South America, Europe, Africa, and the Middle East. FinCEN also determined that there was reason to believe that LCB managers were complicit in the network’s money laundering activities.”
While breaking up the money laundering schemes terrorists and narco-drug cartels rely on is a good start, it’s worth noting that little to no prosecutions of banking officials remains a huge part of the problem. Instead of jail time, these bankers continue to pay a “small fine” and issue “apologies” for their continued practice of sanitizing profits from illegal activities.
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