The Silent Battle Against Iran’s Terror Financing: A Global Tug of War

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As the war in Gaza dominates global headlines, another conflict—less visible but equally significant—continues to unfold behind closed doors. This is the quiet war waged over cutting off Hezbollah, the powerful Shiite militia, from the lifeblood that sustains its operations: Iranian petrodollars. 

 

While the world’s gaze is fixed on Gaza and the escalating skirmishes between Israel and Lebanon’s Hezbollah, diplomats are increasingly alarmed that this tension could spark a wider conflict. Simultaneously, a battle over Iranian terror financing has been simmering in the shadows, poised to reach a critical juncture in the coming weeks. This conflict, involving several Arab nations, Europe, and the U.S., centers on whether Lebanon will be penalized for its role in facilitating Hezbollah’s financial operations. This pivotal decision lies in the hands of the Financial Action Task Force (FATF), the global body dedicated to combating money laundering.

 

Founded by the G7 in 1989, FATF has grown to include numerous member countries worldwide. While FATF lacks formal enforcement power, its evaluations carry significant weight in international finance, potentially crippling a nation’s ability to operate within the global financial system. As FATF prepares to place Lebanon on its “gray list” of jurisdictions with weak anti-money laundering measures, the world is watching closely. Lebanon could face severe consequences if it fails to implement necessary reforms, potentially moving from the gray list to the dreaded “blacklist,” a designation that would further isolate the country financially.

 

The recent Hamas attacks on Israel on October 7 served as a harsh reminder of the dangers posed by unchecked financial flows to terrorist organizations. Israel, the U.S., and other Western governments have previously tolerated the millions of dollars flowing to groups like Hamas from Qatar and Iran, believing that such funds would help stabilize Gaza. However, this strategy has backfired, prompting Western security officials to push for a more stringent approach to combating money laundering and terror financing in Lebanon, particularly those involving Hezbollah-affiliated entities.

 

Sources familiar with FATF’s investigation suggest that the case against Lebanon is straightforward, given the overwhelming evidence of money laundering and terror financing within the country. However, the situation is complicated by Hezbollah’s deep-rooted influence over Lebanon’s institutions, which hampers the government’s ability to enforce international financial norms. Adding to the complexity, several regional players, including Bahrain and Libya, have aligned themselves with Lebanon, resisting international efforts to crack down on Hezbollah’s illicit financial activities.

 

FATF’s current deliberations are not focused on whether Lebanon should be placed on the gray list but rather on the conditions Lebanon must meet to be removed from the list after a two-year review period. Central to this discussion is the role of Hezbollah in Lebanon’s banking system, which poses significant challenges to reform efforts.

 

Hezbollah’s financial operations are heavily supported by Iran, a relationship that dates back to the 1980s. Iran’s financial backing has enabled Hezbollah to establish a powerful “state within a state” in Lebanon, positioning the group as a formidable adversary to Israel. Despite Hezbollah’s dominance in Lebanon’s political and economic landscape, the organization remains heavily reliant on Iranian funding. A significant portion of this funding is funneled through a Hezbollah-controlled financial entity known as the al-Qard al-Hasan Association (AQAH).

 

AQAH functions like a bank, despite lacking a banking license and operating outside of regulatory oversight. It is a vital instrument for Hezbollah, enabling the group to pay its fighters and officials and provide financial services to local communities. Amid the political and economic turmoil that has plagued Lebanon in recent years, AQAH has expanded its operations, becoming one of the country’s largest financial institutions, with deposits reportedly reaching billions of dollars.

 

What sets AQAH apart from other Lebanese banks is its designation as a non-profit organization by the Lebanese government. This status exempts AQAH from paying taxes, further entrenching its role in Hezbollah’s financial ecosystem. The U.S. government, which sanctioned AQAH in 2007, describes the organization as “a cover to manage [Hezbollah’s] financial activities and gain access to the international financial system.”

 

Despite these sanctions, AQAH has continued to thrive, conducting its operations with little difficulty in Lebanon and across the broader Middle East. In fact, AQAH’s cross-border activities may become even easier following the Arab League’s decision in June to stop labeling Hezbollah as a terrorist organization. This shift in the Arab League’s stance has sparked controversy, particularly within FATF, where the question of Hezbollah’s terror designation remains a contentious issue.

 

The debate over Hezbollah’s classification contributed to a significant delay in FATF’s report on Lebanon, which was finally published in December. Instead of directly naming Hezbollah, the report referred to the group as “a major local paramilitary organization with a well-documented track record of committing terrorist acts.” The report urged Lebanon to assess the risks of money laundering and terror financing associated with this organization and to implement measures to mitigate these risks.

 

Hezbollah has been responsible for numerous terrorist attacks since the 1980s, including car bombings, suicide attacks, and drone strikes that have claimed hundreds of lives, including those of Americans, Israelis, and other civilians. Today, Hezbollah is considered one of the world’s largest private armies, with an estimated 50,000 fighters. The U.S., the European Union, and numerous other countries have designated Hezbollah as a terrorist organization, largely due to its ties to Iran.

 

Western diplomats argue that a strong stance by FATF is essential to curbing Hezbollah’s financial activities. Without such a stance, Lebanon is unlikely to crack down on AQAH, allowing Iranian funds to continue flowing to Hezbollah unchecked. Moreover, these diplomats contend that a tougher evaluation by FATF could serve as a catalyst for reform within Lebanon, potentially attracting the foreign investment the country desperately needs. However, without assurances that Lebanon is not a haven for money laundering and terror financing, international investors are likely to stay away.

 

One Western diplomat emphasized the potential benefits of a rigorous evaluation, stating, “A tough evaluation would actually help the Lebanese get out of this situation.” This sentiment reflects the broader hope among Western diplomats that FATF’s actions could help stabilize Lebanon’s economy by curbing Hezbollah’s influence and restoring confidence in the country’s financial system.

 

As the global community awaits FATF’s decision, the outcome will have far-reaching implications not only for Lebanon but for the broader Middle East. The battle against Iran’s terror financing is not just a regional issue; it is a global one, with stakes that extend far beyond the borders of Lebanon. The decisions made in the coming weeks could either tighten the financial noose around Hezbollah or allow the group to continue its operations unabated, with consequences that could reverberate across the region and beyond.

 

Credit: Politico 2024-08-27

 

 

 

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[Stargeezr]

Well I heard that Iran was a nice country years ago. The past will not change with the

currant governing body in place.  Sadly.

[nobodysfriend]

It is NOT the Iranian people that are evil !

It is their islamic , extremist government .

I am sure the average Iranian ( woman ) , dreams of getting rid of that ...

[mdr224]

12 minutes ago, nobodysfriend said:

It is NOT the Iranian people that are evil !

It is their islamic , extremist government .

I am sure the average Iranian ( woman ) , dreams of getting rid of that ...

Im pretty sure the average iranian hates america. Perhaps not their fault they think that way, but its true nonetheless

[spidermike007]

I've known a lot of Iranian people over the years and I find most of them to be rather cool, nice people, so it's definitely not the people that we have a problem with. It's their heinous government, the Ayatollah, and the religious Council, the hackers and the Qud forces. These guys know nothing of spirituality, they know nothing of a higher calling, all they know is death, destruction, hatred, division, oppression, and how to strip their people of joy and prosperity.

 

A pox on their houses.

[AustinRacing]

One man’s terrorist is another man’s freedom fighter. Behavior of Israel and its western friends in the region goes beyond terrorism. Ethnic cleansing and genocide come to mind.