The U.S. Administration Must Pressure the Lebanese Government to Shut Down Hezbollah’s Shadow Bank

By: Sarit Zehavi and Yaakov Lappin.

The Al-Qard Al-Hassan financial association, operating as Hezbollah’s de facto bank, constitutes a direct challenge to Lebanon’s sovereignty and international stability. This financial institution supports the parallel economy led by Hezbollah, funds terrorist activities, and deepens Hezbollah’s influence over the Shiite community in Lebanon. In light of Israel’s recent airstrikes against Al-Qard Al-Hassan branches, the international community must take advantage of the momentum and pressure the Lebanese government to dismantle the bank.

Failure to act by the Lebanese government should result in sanctions on Lebanon, emphasizing that the Lebanese state cannot allow the existence of such an entity without consequences.

Al-Qard Al-Hassan was established in 1981 and functions as the financial backbone of Hezbollah, bypassing Lebanon’s official banking system and international financial mechanisms like SWIFT. The bank serves approximately 300,000 Lebanese Shiites, providing loans, deposit services, and funding for programs managed by Hezbollah, such as parallel healthcare and education systems.

According to Israeli intelligence assessments, Al-Qard Al-Hassan also holds most of Hezbollah’s funds, including civilian deposits that the organization relies on during wartime for armament and funding military terrorist activities.

The Al-Qard Al-Hassan bank also plays a central role in Hezbollah’s post-war reconstruction efforts. It funds the rebuilding of homes that were destroyed – where Hezbollah missiles and rockets were stored. In this manner, Hezbollah preserves the principle of the human shields and rebuilds homes so the structures can once again serve as weapons warehouses in the future.

While Al-Qard Al-Hassan appears to function as a conventional bank, its true purpose is to support Hezbollah’s terrorist apparatus. Managing over half a billion dollars a year and utilizing tons of gold, Al-Qard Al-Hassan promotes money laundering and bypasses sanctions imposed on Hezbollah operatives. This financial pipeline is critical to maintaining the ‘Hezbollah state,’ which is funded by Iran, undermining Lebanon’s official institutions, and deepening the country’s economic crisis.

Lebanon is mired in one of the worst economic crises of the past century, exacerbated by war, systemic corruption, and Hezbollah’s parallel economy. The Al-Qard Al-Hassan bank plays a significant role in this crisis, as its activities divert resources from Lebanon’s official banking system and grant Hezbollah control over the Shi’ite population.

Hezbollah’s reliance on Al-Qard Al-Hassan extends beyond local operations. Iranian funding for Hezbollah flows through the bank, often in physical cash. Until the collapse of the Syrian regime, when these funds were also converted from Syrian oil revenues (around $50 million per month came from Syria). The funds enabled Hezbollah to pay salaries, purchase weapons, and maintain its infrastructure.

A 2021 data leak revealing customer accounts at the bank, linked to Hezbollah operatives under sanctions, exposed how central the bank has become to money laundering.

These practices not only continue to support Hezbollah’s terrorist activities but also further isolate Lebanon from the global financial system.

To address the bank’s destructive role, the international community must pressure Lebanon to close it. There are precedents for such action, such as the closure of the Lebanese Canadian Bank (LCB), which merged with another bank and was sold following U.S. Treasury sanctions. The LCB was involved in money laundering from Hezbollah’s drug networks, leading to international intervention that forced its closure.

Similar pressure can and must be applied to Al-Qard Al-Hassan. The Lebanese government should be given a clear ultimatum: shut down the bank by a set deadline or face targeted sanctions. These sanctions could include restrictions on Lebanon’s access to international financial systems or limitations on foreign aid, sending a strong message that acceptance of Hezbollah’s financial activities is unacceptable.

On October 21, 2024, the Israeli Air Force carried out targeted strikes against Al-Qard Al-Hassan branches to disrupt Hezbollah’s financial network. These strikes were part of a broader effort to weaken Hezbollah’s military capabilities and its grip on the Lebanese population. Israeli officials highlighted the bank’s centrality to Hezbollah’s operations, emphasizing its role in paying operatives, maintaining Hezbollah’s military sites, and facilitating rearmament after the war.

While these strikes caused significant damage, the complete dismantling of the bank requires sustained pressure from both Israel and the international community. Lebanon’s government must not be allowed to harbor Al-Qard Al-Hassan or similar institutions under the pretense that they serve civilian needs.

Dismantling Al-Qard Al-Hassan is not just a security imperative; it is a test of Lebanon’s ability to demonstrate sovereignty and break free from Hezbollah and Iran’s economic stranglehold, which has devastated Lebanon. The international community must make clear that tolerance for Al-Qard Al-Hassan’s activities will result in severe consequences. Focusing efforts against Al-Qard Al-Hassan would deal a critical blow to Hezbollah’s terror infrastructure and aid in the rehabilitation of the Lebanese state and Lebanon’s financial stability.

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