February 10, 2011 / 6:01 PM / 9 years ago

Treasury: Hezbollah-linked bank money launderer

WASHINGTON (Reuters) - The U.S. Treasury Department on Thursday accused a Beirut-based bank of involvement in an international money-laundering and drug-trafficking operation with ties to the Lebanese group Hezbollah.

The Treasury officially designated Lebanese Canadian Bank as a “primary money laundering concern,” saying this might eventually lead to actions that force U.S. financial institutions to cut off some of their ties with the bank.

“Several individuals involved in this global trafficking and money-laundering network hold or utilize cash deposit accounts at LCB to move hundreds of millions of dollars monthly in cash proceeds from illicit drug sales into the formal financial system,” the Treasury said in a statement.

In a related action in January, the Treasury targeted a Lebanon-based drug-trafficking and money-laundering network suspected of doing as much as $200 million a month in business. At the time, it labeled Ayman Joumaa, as well as nine people and 19 entities connected with his organization, as Specially Designated Narcotics Traffickers.

In Thursday’s announcement, Treasury flagged Joumaa as one of the individuals laundering funds through the privately owned LCB. It said LCB ranked as the eighth largest Lebanese bank, with more than $5 billion in assets, 35 branches in Lebanon and an office in Montreal.

“The Lebanese Canadian Bank for years has participated in a sophisticated money laundering scheme involving used cars purchased in the United States and consumer goods overseas,” said Michele Leonhart, the head of U.S. Drug Enforcement Administration, which worked with Treasury on the case.

At a news briefing, Stuart Levey, the Treasury’s undersecretary for terrorism and financial intelligence, said it proposed cutting off LCB from U.S. banking services.

“This action seeks to protect the U.S. financial system from the illicit proceeds flowing through LCB,” he said.

Levey said some of the alleged illicit drug money from LCB had been transferred to the United States to buy used cars, which then were shipped to West Africa and sold at a profit.

He was asked why the U.S. government did not go after the car dealers but declined comment on the existence of any law enforcement investigations.

Levey also said a Hezbollah envoy in Iran had arranged for contacts between Iranian officials and LCB managers and that a Hezbollah supporter was a part-owner of an LCB subsidiary.

Reporting by Pedro Nicolaci da Costa and James Vicini; Editing by Vicki Allen and Bill Trott

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