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The Edge of Terrorism

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Beirut Bank in Hezbollah Money Laundering Operation

December 15th 2011

Terrorism - lebanese canadian bank

Ledgers from the Lebanese Canadian Bank have revealed the covert operations of terrorist organization Hezbollah, according to a New York Times article. In February, the Obama administration accused the notoriously secretive bank of laundering money on the behalf of an international cocaine ring linked to Shiite militants Hezbollah.

Investigations by the Drug Enforcement Administration have exposed a global operation to conceal the source of illegal gains, with the Lebanese Canadian Bank at the center of activities. The findings appear to confirm the suspicions of  international law enforcement agencies, who believe that Hezbollah’s terrorist operations are funded by overseas loyalists involved in drug trafficking and a range of criminal activities.

A recent announcement by Federal prosecutors in Virginia revealed that a key player in the Lebanese Canadian Bank case had been formally charged with trafficking drugs and laundering money for Columbian cartels and deadly Mexican gang Los Zetas.

The findings of the investigation characterize a transformation in the political and military mechanics of Lebanon and the Middle East. The New York Times reported that as Lebanon’s most notable political and military force, Hezbollah has been subject to economic sanctions aimed at restricting its cash flow. The group, who one agent likened to the Mafia, is believed to have received up to $200 million each year from their principal benefactor, Iran. Support has also been received from Syria though, analysts believe there has been a significant reduction in aid as Iran faces its own sanctions as a result of their nuclear program and Syria struggles with civil unrest.

Following its war with Israel in 2006, Hezbollah’s monetary requirements have increased. Analysts believe that the group’s desire to extend its political and social service projects have made them dependent upon funds from the South American cocaine trade and other criminal activity. Derek Maltz, an overseer of the Drug Enforcement Administration’s investigation into the Lebanese Canadian bank warned, “The ability of terror groups like Hezbollah to tap into the worldwide criminal funding streams is the new post-9/11 challenge.”

Reporting for the New York Times, Jo Becker explained how the inquiry disclosed the involvement of senior bank managers who aided several account holders in the process of laundering drug proceeds, blending the illegal money with revenue from used cars that were bought in the United States and sold in Africa. Officials say that Hezbollah received a share in the profits but were unwilling to provide evidence to support the allegation. Hezbollah says the claims are untrue.

Evidence of a wider laundering program came to light during the purchase of the bank’s legal assets by French banking giant Société Générale’s Beirut-based partner. Auditors examining the books uncovered almost 200 suspicious accounts that could be associated with Hezbollah and displayed tell-tale signs of money laundering.  Hundreds of millions of dollars passed through the suspicious accounts, the holders of which were predominantly Shiite Muslim businessmen located in West African nations where drug smuggling is prevalent.  The businessmen, many of whom were known Hezbollah supporters, traded in a variety of commodities such as rough-cut diamonds, chicken, and cosmetics, apparently covering up the movement of illegal funds by Hezbollah.

The operation allowed Hezbollah to conceal the origins of its fortune and other business dealings such as the purchase of over 740 acres of land in the Chouf region with a price tag of $240 million.

Cutting Edge Correspondent Jude Freeman writes from London.

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