The Laundry Man by Kenneth Rijock ( Penguin/Random House UK)

Saturday, March 26, 2016


No less a person than the Finance Minister of Lebanon, Ali Hasan Khalil, is lobbying the United States to delay enforcement of the Hezbollah International Financing Prevention Act. This legislation, which was signed into law by President Obama in December, prescribes severe, and possibly fatal, economic consequences for Lebanese financial institutions that are assisting Hezbollah, in any way, when discovered.

Compliance officers should immediately recognize this news as confirmation that many Lebanese financial institutions are presently providing material support to Hezbollah, a Specially Designated Global Terrorist organization, to the point where that country's government fears serious disruption of its banking structure, when US law enforcement agencies begin blocking their banks' access to the US financial structure. Lebanese banks who are shut out of the United States cannot compete, and will eventually fail, due to their inability to consummate international trade transactions.

In short, notwithstanding the many claims, by Beirut's bankers, that they do not do business with Hezbollah, this action by the Minister of Finance, means that they most certainly do facilitate Hezbollah's most powerful terrorist group. Any Lebanese bank that your clients choose to do business with could now, without notice, be blocked, and substantial financial losses could occur, both for your bank clients, and for your bank itself.

Given the situation, any new financial exposure, with any Lebanese bank, NBFI, or commercial entity, could result in unexpected, and total, loss of funds, if the relevant entity is found to be in bed with Hezbollah. Existing relationships with Lebanese banks, and unpaid debt, could be placed in jeopardy at any time. The smart compliance move here is to advise immediate disengagement from Lebanese banks, lest you, or your clients, get burned. 

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