The U.S. Treasury Department recently asked Lebanon’s central bank to prohibit Hezbollah’s financial activities, implicitly targeting the operations of the Al-Qard Al-Hasan Association and Joud Foundation. This request specifically meant the suspension of operations by these two entities, which Washington views as key components of Hezbollah's financial network. Central bank sources reported that Governor Karim Souaid presented a draft decision to the government for discussion on April 30, but the session concluded without any debate on the matter. No decisive action was taken between these two accounts. Central bank sources stated, "The committee drafted a decision banning the operations of any association or company engaged in what is known as “para-banking” activities without a license." The issue of Hezbollah's financial activities has returned to focus following a new development involving the government and the group's financing, drawing renewed attention to events on April 30.
U.S. Treasury's Financial Request
The U.S. Treasury's request to prohibit certain financial activities aims to improve Lebanon's standing with international financial regulators. The proposed measures, if implemented, would address Lebanon's status on the Financial Action Task Force (FATF) grey list. Financial sources indicate that such a move is seen as key for preventing the country from potentially slipping onto the FATF blacklist. Addressing concerns related to financial transparency and illicit financial flows is a key component of Lebanon's efforts to secure international financial assistance and maintain its access to global markets. This objective shows the broader implications of the Treasury's request beyond specific entities, as avoiding the FATF blacklist is critical for the nation's economic stability and international financial relations. Washington’s dissatisfaction with Lebanon’s approach to financial regulation is not limited to the Lebanese authorities; the International Monetary Fund (IMF), various donor countries, and Gulf states reportedly share similar concerns regarding the country's financial integrity and its capacity to combat illicit financial flows.
Internal Committee's Response
Sources at the central bank indicate that an internal committee has been formed to address the issue, comprising Deputy Prime Minister Tarek Mitri, Finance Minister Yassine Jaber, and central bank Governor Karim Souaid. This committee drafted a decision banning the operations of any association or company engaged in what is known as “para-banking” activities without a license. Central bank sources confirmed, "The committee drafted a decision banning the operations of any association or company engaged in what is known as “para-banking” activities without a license." The draft decision itself did not specifically mention either the Al-Qard Al-Hasan Association or the Joud Foundation by name. Instead, it focused on the broader regulatory framework for entities conducting financial activities without proper licensing, aiming for a more general application of financial regulations. This approach suggests an attempt to address the underlying regulatory gaps rather than directly naming specific organizations, potentially to diffuse political tensions while still responding to international pressure.
Conflicting Accounts Emerge
The issue of Hezbollah's financial activities has returned to focus following a new development involving the government and the group's financing, drawing renewed attention to events on April 30. Government sources offer a different account of the April 30 session, stating that central bank Governor Karim Souaid did not present a decision for discussion. Instead, these sources indicated, "Souaid did not present a decision, but rather a report outlining the risks of allowing such associations to continue operating, and that he did not request discussion of the matter." This perspective contrasts with earlier reports of a draft decision being presented for debate. Washington's dissatisfaction with Lebanon's approach to financial regulation extends beyond the Lebanese authorities, as the International Monetary Fund (IMF), various donor countries, and Gulf states reportedly share similar concerns about the country's financial oversight. The divergence in accounts notes the sensitive political landscape surrounding Hezbollah's financial activities and the challenges Lebanon faces in complying with international financial regulations.
