A Lebanese bank was accused by the U.S. government Thursday of laundering hundreds of millions of dollars in drug profits for a smuggling organization with ties to Hezbollah, the militant Lebanese group the U.S. has labeled a terrorist organization.
The Treasury Department and Drug Enforcement Administration announced that Beirut-based Lebanese Canadian Bank SAL has been designated a "primary money laundering concern" for allegedly helping a Lebanese-based drug trafficking organization launder as much as $200 million a month in drug profits. The designation was made under the USA Patriot Act.
The agencies said the smuggling ring is run by alleged drug kingpin Ayman Joumaa and has provided financial support for Hezbollah, which the State Department designated a terrorist organization in 2001.
Federal officials said the drug group laundered proceeds obtained by smuggling drugs from South America to Europe and the Middle East via West Africa. The government said the group also laundered money through trading consumer goods throughout the world, including through U.S. used car dealerships.
"The Lebanese Canadian Bank for years has participated in a sophisticated money laundering scheme involving used cars purchased in the United States and consumer goods overseas. Thanks to DEA-led operations, as well as today's Treasury action, we are exposing and disrupting this money laundering network and its connections to global drug trafficking and Hezbollah," DEA Administrator Michele M. Leonhart said in a statement.
In addition, the Treasury Department proposed restrictions on how U.S. banks do business with Lebanese Canadian Bank, which also has a representative office in Montreal. The formal designation of the bank is intended to warn other banks and financial institutions around the world.
The U.S. actions are designed "to protect the U.S. financial system from the illicit proceeds flowing through LCB and to deprive this international narcotics trafficking and money laundering network of its preferred access point into the formal financial system," said the Treasury's undersecretary for terrorism and financial intelligence, Stuart Levey. "Any financial institution that collaborates in illicit conduct on this scale risks losing its access to the United States."
As of 2009, the bank had assets of more than $5 billion, officials said.
Treasury and DEA officials attributed the bank's involvement in the money laundering to a failure to control vulnerable transactions, including cash deposits and cross-border wire transfers, and lack of due diligence on high-risk customers such as currency exchange houses.
The U.S. also accused some bank managers, whom they did not name, of complicity in the money laundering and said at least one person involved in the drug trafficking and money laundering network worked directly with bank managers.
Joumaa, along with nine people and 19 entities, was identified last month by the Treasury Department as specially designated narcotics traffickers under the Foreign Narcotics Kingpin Designation Act. He was specifically named on Thursday as having laundered money with the bank.
Authorities also said Hezbollah's Tehran, Iran-based envoy, Abdallah Safieddine, helped Iranian officials get access to Lebanese Canadian Bank and key bank managers.
The Lebanese Canadian Bank's subsidiaries covered by the designation include Dubai-based Tabadul for Shares and Bonds LLC and Prime Bank Limited of Gambia.