U.S. Seizes $150 Million in Alleged Hezbollah-Linked Cash

August 21, 2012

The Wall Street Journal on August 20, 2012 released the following:

“By Samuel Rubenfeld

U.S. officials said Monday they seized $150 million connected to a scheme in which entities linked to Hezbollah allegedly used the U.S. financial system to launder money through West Africa and back to the group’s base of Lebanon.

The seizure stems from a civil lawsuit filed last year by federal prosecutors in Manhattan against defunct Lebanese Canadian Bank, or LCB, and two Lebanese exchange houses seeking more than $480 million in funds allegedly derived from drug trafficking and other criminal activity passing through the U.S. financial system.

The seizure was reported by The Wall Street Journal, and there’s more here.

Hezbollah is a U.S.-designated foreign terrorist organization. The group’s leadership has denied engaging in money laundering to finance its activity.

Prosecutors said Monday they seized $150 million from a New York correspondent account of Lebanon’s Banque Libano Francaise SAL, or BLF. Société Générale de Banque au Liban, which bought LCB in September 2011 for $580 million, paid for part of the transaction through BLF. The seized funds are substitutes for the money in the LCB account in escrow at BLF, prosecutors said.

The warrants to seize the funds were issued August 15, but made public Monday. Neither BLF nor Société Générale de Banque au Liban were accused of wrongdoing, prosecutors said.

“Money is the lifeblood of terrorist and narcotics organizations, and while banks which launder money for terrorists and narco-traffickers may be located abroad, today’s announcement demonstrates that those banks and their assets are not beyond our reach,” said Manhattan U.S. Attorney Preet Bharara in a statement.

A lawyer for LCB declined to comment to the Journal.

The U.S. Treasury Department designated LCB as a “primary money-laundering concern” under the Patriot Act in February 2011, accusing it at the time of facilitating money laundering by a network of drug traffickers spanning South America, Europe, the Middle East and West Africa.

Société Générale de Banque au Liban acquired LCB’s assets and liabilities following the Treasury’s finding.

According to the civil complaint filed last year, the alleged scheme involved cash sent from Lebanon to the U.S. between January 2007 and early 2011 to buy used cars that were later sold in West Africa for cash.

The money from from the car sales was then allegedly transferred back to Lebanon with proceeds from narcotics trafficking and other crimes, prosecutors said in the complaint.

Correction: The seized funds came from the New York correspondent account of Lebanon’s Banque Libano Francaise SAL, not from a U.S. account at Société Générale de Banque au Liban.”


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Written Testimony of Under Secretary for Terrorism and Financial Intelligence David Cohen before the House Committee on Foreign Affairs

October 14, 2011

U.S. Department of the Treasury on October 14, 2011 released the following:

“Chairman Ros-Lehtinen, Ranking Member Berman, and distinguished members of the Committee: Thank you for the opportunity to appear before you today to discuss the Treasury Department’s efforts to implement and enforce Iran and Syria sanctions.

The focus of my testimony today will be the progress we are making in our financial strategies to increase pressure on the Iranian and the Syrian regimes. But first, I would like to say a few words about this week’s revelation that we disrupted an Iran Qods Force plot to assassinate the Saudi Ambassador here in Washington.

This is a dramatic reminder that the urgent and serious threat we face from Iran is not limited to Iran’s nuclear ambitions. We have been working for several years to address the full spectrum of Iranian illicit conduct, including nuclear and missile proliferation, human rights abuses, misuse of the international financial system and support for terrorist groups worldwide.

This week is no different. On Tuesday, Treasury imposed financial sanctions against five individuals, including the Commander of the Qods Force and three other senior Qods Force officers connected to the assassination plot. In taking this action, Treasury exposed the Iranian government’s involvement in the plot through the Qods Force, Iran’s primary arm for exporting terror.

And Wednesday, we took another action targeting Qods Force involvement in terrorist activities, this time by imposing sanctions on Mahan Air – Iran’s second largest airline – which was secretly ferrying operatives, weapons and funds on its flights for the Qods Force.

Actions like these, along with a raft of additional sanctions we have imposed on Iran over the past several months and years, have put increasing financial pressure on Iran in recent years.

CISADA has markedly amplified this effect. As we have explained to banks and governments in nearly 50 countries around the world, CISADA offers a clear choice: a foreign bank can have access to the largest and most important financial sector in the world – the United States – or it can do business with sanctioned Iranian banks, but it cannot do both. For the overwhelming majority of foreign banks, the choice has been a simple one. Those with potentially sanctionable relationships quickly elected to stop that business. And where we learn of potentially sanctionable activity under CISADA, we have actively investigated it.

Our efforts are paying off. Iran is now facing unprecedented levels of financial and commercial isolation. The number and quality of foreign banks willing to transact with designated Iranian financial institutions has dropped precipitously over the last year. Iran’s shrinking access to financial services and trade finance has made it extremely difficult for Iran to pay for imports and receive payment for exports. Iran’s Central Bank has been unable to halt the steady erosion in the value of its currency. And Iran has been increasingly unable to attract foreign investment, especially in its oil fields, leading to a projected loss of $14 billion a year in oil revenues through 2016.

Our efforts in Syria are also yielding results. Since the uprising in Syria began in March, President Obama has issued three new Executive Orders to establish sanction programs that have systematically escalated the financial pressure on the Asad regime. These U.S. sanctions – which target human rights abusers, block the assets of the Government of Syria, impose a import ban on Syrian petroleum products, and prohibit new investment in Syria – are intended to pressure Asad to relinquish power. Our efforts have been echoed by our European partners, who have established an embargo on Syrian oil and imposed financial sanctions targeting officials responsible for Syrian repression.

Echoing action that we have taken, just this morning the EU announced sanctions on the Commercial Bank of Syria, by far the largest bank in Syria, and its key link to the international financial system.

As a result of these sanctions, the Asad regime is struggling to find buyers for its oil, to access foreign currency, and to maintain economic stability. The IMF has revised its projections for the Syrian economy this year — from three percent growth to a two percent contraction – and predicts increasing pressure on Syria’s foreign currency reserves and ability to finance imports.

We are making progress, but there is still much to be done to prevent Iran and Syria from evading sanctions already in place and to take new steps to increase the pressure on these regimes. In the case of Iran, we continue to focus on the Central Bank of Iran (“the CBI”). Although U.S. financial institutions are already generally prohibited from doing business with any bank in Iran – including the CBI – further U.S. action against the CBI, if it attained multilateral support, could further isolate the CBI, with a potentially powerful impact on Iran. I can assure the Committee, as Secretary Geithner said in his letter of August 29, “All options to increase the financial pressure on Iran are on the table, including the possibility of imposing additional sanctions against the CBI.” We will also continue to work with governments in Europe, the Gulf, and elsewhere to impose financial measures that will ratchet up the pressure on Asad to step down.

If the Iranian and Syrian regimes continue to choose the path of defiance, we will continue to develop new and innovative ways to impose additional costs on them. I look forward to continuing our work with Congress to advance our national interests.”

To find additional global criminal news, please read The Global Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.