Federal authorities Monday seized $150 million in connection with a civil money laundering and forfeiture complaint charging that a massive, international scheme in which entities linked to Hezbollah, including the now-defunct Lebanese Canadian Bank, used the U.S. financial system to launder narcotics trafficking and other criminal proceeds through West Africa and back into Lebanon.
Drug Enforcement Administration Administrator Michele M. Leonhart and U.S. Attorney Preet Bharara in New York said that from January 2007 to early 2011, at least $329 million was transferred by wire from the Lebanese Canadian Bank (LCB) and other financial institutions to the United States for the purchase of used cars that were then shipped to West Africa. Cash from the sale of the cars and proceeds of narcotics trafficking were funneled to Lebanon through Hezbollah-controlled money laundering channels.
They said LCB played a key role in the money laundering channels and conducted business with a number of Hezbollah-related entities. Hezbollah is a State Department-designated Foreign Terrorist Organization, a Specially Designated Terrorist and a Specially Designated Global Terrorist.
“The Lebanese Canadian Bank played a key role in facilitating money laundering for Hezbollah-controlled organizations across the globe,” Ms. Leonhart said. “Our relentless pursuit of global criminal networks showed that the U.S. banking system was exploited to launder drug trafficking funds through West Africa and into Lebanon. DEA and our partners are attacking these groups and their financial infrastructure while establishing clear links between drug trafficking proceeds and terrorist funding.”
Mr. Bharara described the cash as “the lifeblood of terrorist and narcotics organizations,” adding that while banks that launder money for terrorists and narco-traffickers may be located abroad, the LCB seizure “demonstrates that those banks and their assets are not beyond our reach.” He said, “We will use every resource at our disposal to separate terrorists and narco-traffickers, and the banks that work with them, from their illicit funds, even those hidden in foreign accounts.”
According to a criminal complaint filed in the case, Societe Generale de Banque au Liban agreed in September 2011 to purchase most of the assets of LCB, and at least $150 million in purchase price funds related to that sale are being held in escrow in Lebanon at the Banque Libano-Francaise SAL. The complaint said the seized funds are substitutes for the money in the LCB escrow account and came from an account at a U.S. bank that was used to conduct U.S. currency transactions. It said the funds were seized pursuant to seizure warrants issued Wednesday. There are no allegations of wrongdoing against Societe Generale de Banque au Liban, Banque Libano-Francaise SAL or the American bank that maintained the U.S. account.
The complaint said that Feb. 10, 2011, the Treasury Department’s Financial Crimes Enforcement Network ruled under the USA Patriot Act that LCB was a financial institution of primary money laundering concern, based on, among other things, a determination that there was reason to believe that LCB had been routinely used by drug traffickers and money launderers operating in various countries in Central and South America, Europe, Africa, and the Middle East. The Financial Crimes Enforcement Network also ruled there was reason to believe that LCB managers were complicit in the network’s money laundering activities.
After the Financial Crimes Enforcement Network’s action, Ms. Leonhart said Societe Generale de Banque au Liban acquired the assets and liabilities of LCB for $580 million, $150 million of which was being held in an escrow account at Banque Libano-Francaise SAL. Because LCB escrow funds are traceable to the assets of LCB, she said they are also subject to forfeiture, but since they are in an account in Lebanon, the U.S. was unable to seize the LCB escrow funds directly.
But in accordance with American law, she said the U.S. can seize funds located in a bank’s correspondent accounts in this country and the seizure warrants were executed.