By Olivia Hampton – WASHINGTON
The United States accused a Lebanese bank Thursday of laundering hundreds of millions of dollars in drug proceeds from a cocaine trafficker with ties to the militant group Hezbollah.
The Treasury said it was seeking to bar US financial institutions from doing business with the Beirut-based Lebanese Canadian Bank, designating it a “primary money laundering concern” for allegedly helping Ayman Joumaa’s international syndicate launder as much as $200 million a month.
The move “seeks to protect the US financial system from illicit proceeds flowing through LCB and to deprive this international narcotics trafficking network of its preferred access point to the formal financial system,” Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey told reporters.
He blamed LCB’s “management complicity, failure of internal controls, lack of application of banking standards,” and pointed to “vulnerabilities” in the Lebanese financial system, such as the lack of cash reporting requirements for funds coming in and out of the country.
Over the course of their five-year joint investigation, the Treasury and the Drug Enforcement Administration (DEA) found that Hezbollah, a US-designated terror group, “derived financial support” from the alleged cocaine trafficker’s network.
A DEA official said Joumaa’s syndicate used LCB to launder funds for at least three years.
The group is said to have sold multi-tonne shipments of cocaine from South America, laundering the proceeds in Europe and the Middle East via West Africa by trading consumer goods worldwide, including through US used car dealerships. Ultimately, the funds reached Lebanon in LCB or exchange houses.
The Treasury accused bank managers of being complicit in the fraud and said at least one person involved in the drug trafficking and money laundering network worked directly with LCB managers for the transactions.
Levey said Hezbollah’s Tehran-based envoy, Abdallah Safieddine, helped Iranian officials access LCB and its key managers. The bank’s other Hezbollah links include include LCB’s Gambia-based subsidiary Prime Bank, which is partially owned by a known Lebanese supporter of Hezbollah.
But LCB denied the allegations, saying it has no knowledge of “any involvement in any manner whatsoever in illicit transactions or wrong doing” and “regrets the information reported by international and domestic news agencies” about the bank’s Hezbollah ties.
It vowed to “fully cooperate” with the authorities.
Two weeks ago, Washington levied sanctions against Joumaa and at least nine other people and 19 entities, forbidding US citizens and businesses from trading with the group, and freezing its US assets.
The Treasury moves came as a Hezbollah-backed billionaire businessman, prime-minister-designate Najib Mikati, attempts to form a new government in deeply divided Lebanon.
Washington has warned that any greater role for Hezbollah in the Lebanese government could harm longstanding ties with Beirut.
LCB, which reported assets of $6.1 billion for 2010, operates 35 branches in Lebanon and, despite its name, only has a representative office in Canada — in Montreal.
Among other subsidiaries covered by the designation issued under the USA Patriot Act are Dubai-based Tabadul for Shares and Bonds LLC, LCB Investments SAL, LCB Finance SAL, LCB Estates SAL and LCB Insurance Brokerage House SAL.