Sanctioned Lebanon-based bank had ties to Hizbullah

Announcing its designation of the Jammal Trust Bank for sanctions on August 29th, the US Treasury Department said the Lebanon-based financial institution had been knowingly providing financial services to Hizbullah.

The US Treasury "is targeting Jammal Trust Bank and its subsidiaries for brazenly enabling Hizbullah's financial activities", Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker said in a statement.

“Corrupt financial institutions like Jammal Trust are a direct threat to the integrity of the Lebanese financial system," she said.

"Jammal Trust provides support and services to Hizbullah’s Executive Council and the Martyrs Foundation, which funnels money to the families of suicide bombers.”

The Treasury designation "highlights how Hizbullah continues to prioritise its interests, and those of its chief sponsor, Iran, over the welfare of Lebanese citizens and Lebanon’s economy", Mandelker added.

"We regret that Hizbullah has brought hardship to the Shia community, in particular, and call upon the Lebanese government to exert every effort to mitigate the impacts on innocent account holders who did not realize Hizbullah was putting their savings at risk," she said.

The US is confident that the Central Bank of Lebanon (BDL) and other Lebanese institutions "will continue to work to protect the stability and soundness of Lebanon’s financial system, which is critical to supporting a stable and prosperous economy", Mandelker said.

Violators will face penalty

In a Tuesday (September 3rd) statement carried by Lebanese media, BDL governor Riad Salameh said he continues to follow the "developments related to the bank’s case".

"All deposits at the bank that are lawful -- based on Lebanese law and BDL-issued circulars -- are secure and guaranteed at their maturity dates," he said.

The US Treasury's report detailed the violations of Jammal Trust Bank and its subsidiaries, which include providing funds and technological support to Hizbullah, Lebanese economist Jassim Ajaka told Al-Mashareq.

The designation is confirmation that any individual or entity that violates US and international anti-money laundering and combating the financing of terrorism (AML/CFT) rules and regulations will face penalty, Ajaka said.

Jammal Trust Bank provided financial services for the Hizbullah Executive Council, the Martyrs Foundation and other party-affiliated institutions, he said.

"The bank was punished for engaging in activities designated on the US sanctions list, and is the second bank after the Lebanese Canadian Bank to be included on the sanctions list," he said.

BDL monitored transactions

The US designation of Jammal Trust Bank "was not surprising, as it was learned five months ago that suspect transactions are taking place inside the bank", said political analyst George Shahin.

There were worrying signs of a relationship between the bank’s management and Hizbullah officials, he told Al-Mashareq.

Available information "indicated that the bank was the subject of an evaluation by relevant US authorities, which monitored suspect transactions that were being probed by BDL", he said.

Shahin pointed to the daily co-ordination that takes place between the BDL's Banking Control Commission, intermediary US banks and the US Treasury.

The bank had been under surveillance, he said, and its management had been issued several warnings, but did not comply with them.

BDL "has stopped numerous suspect financial transactions without making announcements about them, which in most cases culminated in the closure of some of the involved bank accounts", he said.

"Money laundering operations by Hizbullah will undoubtedly continue, but they will surely be uncovered, because the Lebanese banking sector is adhering to all the provisions of international laws on AML/CFT," Shahin said.

Banks under close scrutiny

Lebanon "is under close scrutiny by the international community, specifically the US Treasury, which is directly involved in regulating the international financial activity of banks that deal in dollars", said political analyst Elias al-Zoghbi.

Based on this monitoring activity, the US Treasury added Jammal Trust Bank to the sanctions list after it was proven that some of its transactions "can be termed as money laundering for Hizbullah", he told Al-Mashareq.

Hizbullah has been facing a cash shortage due to the sanctions imposed on it and on Iran, he said, and "is resorting to laundering money through a number of Lebanese banks, some of which were exposed".

But the BDL governor and the Association of Banks in Lebanon have the situation in hand, he said, and are able to take measures to mitigate the effects of sanctions on the Lebanese financial sector.