NEW YORK – The US Treasury Department on Tuesday listed two Lebanese exchange
houses as institutions of “primary money laundering concern” for their work with
Hezbollah, invoking Section 311 of the USA PATRIOT Act to effectively shut them
out of the American economy.
In a declassified statement of their case,
the US claims that the Rmeiti Exchange and Halawi Exchange have consistently
complied in a scheme that comingles money from used car dealerships in the US
and drugs from South America into significant funding for the Lebanese terrorist
The public move puts significant pressure on the Lebanese
government to act on its own against the financial houses.
be in the overall interest of the Lebanese government to have more of its banks
under scrutiny,” says Bessma Momani, a senior fellow at the Brookings
“But there’s a lot of fear within the government of
Hezbollah – there would be fear of literal assassinations.”
The move –
which marks the first time Treasury has enacted Section 311 against a non-bank
financial institution – may also be a direct and intentional message to the
European Union, as the US government continues its efforts to persuade European
officials to list Hezbollah as a terrorist organization.
A chart made
available by the Financial Crimes Enforcement Network shows how US and South
American drugs and cars are channeled through Africa, where the profits are then
transferred. It highlights Hezbollah’s abuse of illicit drug sales throughout
the European continent.
“Drugs are sold in Europe [from Africa],” the
“Proceeds are mixed with legitimate used car sale profits in
Africa and sent to Lebanese banks through exchange houses. Some money is
diverted to Hezbollah.”
Jonathan Schanzer, vice president for research
for the Foundation for Defense of Democracies, says exchange houses have been
used more frequently in recent years by the Islamic Republic in Iran to fund its
nuclear program, as sanctions have increasingly restricted its access to
“It’s not insignificant that Europe is identified as a place
where Hezbollah is apparently selling drugs,” Schanzer said.
A spokesman for
the US Drug Enforcement Administration told The Jerusalem Post that many
participants in the scheme here in the United States aren’t even aware that,
only three or four hands down, their transactions lead to banks in
“When we find evidence of terror activities that are being
funded by drug trafficking, that’s a national security concern,” says the DEA’s
Lawrence Payne. “Used cars are just one of the many trade-based industries that
launderers try to wash their funds in. It’s pretty elaborate. Hezbollah
behaves exactly like a drug kingpin.”
Experts say that Hezbollah’s
asymmetric fund-raising campaign has kicked in to high gear as the regime of
Bashar Assad in Syria has lost ground in its war against his fellow countrymen.
The Assad regime, and the Ayatollah regime in Iran, are Hezbollah’s primary
Today’s move follows actions against the Lebanese Canadian Bank
in 2011 for its participation in the scheme. The Rmeiti Exchange and Halawi
Exchange apparently picked up where that bank left off its
American financial institutions were ordered to report any
information on new or attempted transactions with the exchange houses, effective
“Exchange houses offer the informality – it doesn’t have the
same international governing structure of a bank, and that’s elusive, and
enticing,” said Momani. “Internationally, they’re becoming an increasing
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