Lebanese bank to pay U.S. $102 million in money-laundering case

NEW YORK Tue Jun 25, 2013 3:34pm EDT

A general view of the Lebanese Canadian Bank (LCB) headquarters in Beirut February 11, 2011. Lebanon's central bank governor Riad Salameh expressed support on Friday for Beirut-based Lebanese Canadian Bank (LCB), which faces U.S. Treasury Department accusations of involvement in money laundering. REUTERS/Cynthia Karam

A general view of the Lebanese Canadian Bank (LCB) headquarters in Beirut February 11, 2011. Lebanon's central bank governor Riad Salameh expressed support on Friday for Beirut-based Lebanese Canadian Bank (LCB), which faces U.S. Treasury Department accusations of involvement in money laundering.

Credit: Reuters/Cynthia Karam

NEW YORK (Reuters) - A Lebanese bank accused of being at the center of global money-laundering schemes tied to the militant group Hezbollah has agreed to pay a $102 million settlement, U.S. prosecutors in New York said Tuesday.

The settlement would resolve a 2011 lawsuit that accused Lebanese Canadian Bank of using the U.S. banking system to launder drug-trafficking profits through West Africa back to Lebanon.

"Today's settlement shows that banks laundering money for terrorists and narco-traffickers will face consequences for their actions, wherever they may be located," U.S. Attorney Preet Bharara said in a statement.

Most of the bank's assets were acquired by the Lebanese subsidiary of France's Societe Generale (SOGN.PA) after the U.S. Treasury Department designated Lebanese Canadian Bank as a "primary money-laundering concern" in February 2012.

The $102 million would come out of $150 million previously seized in August 2012 by the U.S. government, the Justice Department said.

The Societe Generale subsidiary, Societe Generale de Banque au Liban, would receive the other $48 million. Lebanese Canadian Bank would pay another $12 million to Societe Generale, the Justice Department said.

Evan Barr, a lawyer for Lebanese Canadian Bank, said the settlement "certainly resolves (the case) for our client." He said the bank is in liquidation in Lebanon following its $580 million purchase by Societe Generale.

Mike Sullivan, a lawyer for Societe Generale, said in an email the bank was pleased the seized funds would be released and that its $90 million claim had been "favorably resolved."

The U.S. Justice Department sued the bank in December 2011 alleging a massive scheme involving two exchange houses linked to Hezbollah, which the U.S. lists as a terrorist organization.

Prosecutors alleged that from January 2007 to early 2011, the bank and other financial institutions transferred at least $329 million to the United States to buy cars subsequently sent to West Africa.

Prosecutors said Lebanese Canadian Bank played a key role in laundering the proceeds of those car sales and profits from narcotics trafficking, enabling the money to arrive back in Lebanon. The lawsuit sought a $230 million from the bank.

The settlement follows an accord reached last week with Hassan Ayash Exchange Company, one of the exchange houses, which agreed to forfeit $720,000.

The case is U.S. v. Lebanese Canadian Bank SAL, et al, U.S. District Court, Southern District of New York, No. 11-9186.

(Reporting by Nate Raymond; Editing by Gerald E. McCormick and David Gregorio)

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Comments (1)
CitizenAbroad wrote:
Hezbollah successfully infiltrated the Lebanese Canadian Bank. Although not on the radar screen for most Americans, a new US law called FATCA is increasing the security risk to Americans abroad. FATCA agreements require that foreign governments or banks build data bases of American citizens with non-US bank accounts. Consider that you are a US citizen living and working in Lebanon, Pakistan, Afghanistan, Algeria, Mali, Somalia, etc. and now, because of FATCA, you are identified in the local bank’s electronic records as an American. A terrorist or mob group infiltrates the band, as Hezbollah did the Lebanese Canadian Bank, and, presto, they have a well-prepared list of Americans living in the country with personal and financial details. The Taliban, Hezbollah, al-Qaeda, al-Shabab, etc. downloads or buys the list and then begin to assassinate or extort Americans abroad using information conveniently gathered for FATCA purposes.

More hostage dramas involving Americans may occur in the future due to this irresponsible law. FATCA needs to be reconsidered.

Jun 25, 2013 5:14pm EDT  --  Report as abuse
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