In emailed responses to Euromoney, Royce, who has been Chairman of the US House Committee on Foreign Affairs since 2013, said the Lebanese banking sector was making progress in fighting Hezbollah. But he appeared keen to maintain pressure on the banks.
“Progress has been made,” Royce said. “Many Lebanese private banks are doing the right thing and taking significant steps to crack down on money laundering. That said, financial institutions will have to remain vigilant and proactive.”
In June, a bomb exploded outside the Beirut headquarters of Blom Bank, an attack not claimed by Hezbollah but widely interpreted as a warning shot from the group to the banking sector. Hezbollah, which is designated a terrorist group by the US but has a strong political presence in Lebanon, views HIFPA as a breach of sovereignty.
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Ed Royce US Congress |
Asked whether he had expected HIFPA to lead to such tension in Lebanon, Royce said: “The source of instability in Lebanon is Iran’s proxy Hizbollah. Today this terrorist organization is propping up the murderous Assad regime in Syria, while aiming more than 100,000 missiles at Israel. The law is designed to limit Hizbollah’s ability to finance these terror activities that are a primary source of tension and conflict throughout the Middle East.”
The tension following the implementation of the US bill in Lebanon partly derived from people’s perception that Lebanese banks were overzealously applying HIFPA, cancelling accounts beyond those on the US lists, including, by some accounts, of hospitals linked to Hezbollah and of family of Hezbollah members.
Royce did not condemn this reading of the law. Rather, he said that Lebanese banks were right to be “proactive”, and would have to remain that way to avoid US sanctions.
“Lebanese banks should do everything in their power to avoid transactions with any individual or entity tied to Hizbollah,” Royce said. “Terrorists and their financiers go to great lengths to try to hide or disguise transactions. That’s why it’s so important that Lebanese banks remain vigilant and proactive.
“If a Lebanese bank carried out a transaction it should have known was prohibited, it would be subject to sanctions from the United States. Most Lebanese banks appear to have made the sensible decision that being caught working with Hizballah isn’t worth the risk.”
Though Hezbollah is a Lebanese group, it has reportedly set up operations abroad as well. For that reason, Royce appeared to be contemplating expanding the financial fight against Hezbollah. “I am very concerned that other jurisdictions — particularly in Africa and Latin America — remain vulnerable to Hizballah’s exploitation. Additionally, full implementation of this law means that Iranian persons or entities financing Hizballah must also be targeted.”