Now, in the wake of the bank’s exposure and arranged sale, its ledgers have been opened to reveal deeper secrets: a glimpse at the clandestine methods that Hezbollah — a terrorist organization in American eyes that has evolved into Lebanon’s pre-eminent military and political power — uses to finance its operations. The books offer evidence of an intricate global money-laundering apparatus that, with the bank as its hub, appeared to let Hezbollah move huge sums of money into the legitimate financial system, despite sanctions aimed at cutting off its economic lifeblood.Despite efforts to crack down and track such money laundering and trafficking operations, Hizbullah has thrived and expanded its drug and money laundering business. It is less dependent on Iran than in previous years, and that makes the group even more dangerous. While it still relies on Syria and Iran for arms shipments, the ability to raise money through its own channels allows it to expand its tentacles into other areas of Lebanese politics and it remains an existential threat to Israel.
At the same time, the investigation that led the United States to the bank, the Lebanese Canadian Bank, provides new insights into the murky sources of Hezbollah’s money. While law enforcement agencies around the world have long believed that Hezbollah is a passive beneficiary of contributions from loyalists abroad involved in drug trafficking and a grab bag of other criminal enterprises, intelligence from several countries points to the direct involvement of high-level Hezbollah officials in the South American cocaine trade.
One agent involved in the investigation compared Hezbollah to the Mafia, saying, “They operate like the Gambinos on steroids.”
On Tuesday, federal prosecutors in Virginia announced the indictment of the man at the center of the Lebanese Canadian Bank case, charging that he had trafficked drugs and laundered money not only for Colombian cartels, but also for the murderous Mexican gang Los Zetas.
The revelations about Hezbollah and the Lebanese Canadian Bank reflect the changing political and military dynamics of Lebanon and the Middle East. American intelligence analysts believe that for years Hezbollah received as much as $200 million annually from its primary patron, Iran, along with additional aid from Syria. But that support has diminished, the analysts say, as Iran’s economy buckles under international sanctions over its nuclear program and Syria’s government battles rising popular unrest.
Yet, if anything, Hezbollah’s financial needs have grown alongside its increasing legitimacy here, as it seeks to rebuild after its 2006 war with Israel and expand its portfolio of political and social service activities. The result, analysts believe, has been a deeper reliance on criminal enterprises — especially the South American cocaine trade — and on a mechanism to move its ill-gotten cash around the world.
“The ability of terror groups like Hezbollah to tap into the worldwide criminal funding streams is the new post-9/11 challenge,” said Derek Maltz, the Drug Enforcement Administration official who oversaw the agency’s investigation into the Lebanese Canadian Bank.
In that inquiry, American Treasury officials said senior bank managers had assisted a handful of account holders in running a scheme to wash drug money by mixing it with the proceeds of used cars bought in the United States and sold in Africa. A cut of the profits, officials said, went to Hezbollah, a link the organization disputes.
The money laundering allows Hizbullah to make significant land purchases in Lebanon that it would not be otherwise capable of doing. Much of those land purchases are in militarily strategic areas and can fortify Hizbullah's position within the fragmented Lebanese society. That further destabilizes the Lebanese political situation, which remains in flux.
Hizbullah operates with impunity in Southern Lebanon, despite UN SCR 1701 that calls for all militia groups to be disarmed. Neither UNIFIL nor the Lebanese military has the ability to disarm the terror group, and Hizbullah forced itself into the Lebanese government and has therefore thwarted further efforts to stop the group's ongoing militarization in Southern Lebanon.