COMMENTARY
This story is not surprising ... banks do as much as they can to satisfy rich clients, so this story should not be a surprise.

My interest in this story relates to my understanding of the business role of the expatriate Lebanese in places like West Africa, and it is no surprise that there is a relatively powerful international bank based in Lebanon.
Peter Burgess

Lebanese Canadian Bank Linked To Drugs, Terror Group

The Lebanese Canadian Bank SAL facilitated money laundering by an international drug- trafficking network and has ties to the terrorist organization Hezbollah, according to the U.S.

The Beirut, Lebanon-based bank, through management complicity and failure of its internal controls, has been used “extensively” by people associated with the network to move as much as $200 million a month in proceeds from illicit drug deals, according to a Treasury Department statement today. The department filed a notice proposing banning U.S. financial institutions from opening or maintaining certain accounts for the closely held bank, known as LCB.

The U.S. today designated the bank as being of “primary money laundering concern,” bringing its conduct to the attention of the financial community and limiting its ability to be used for criminal purposes, according to the Treasury Department.

The U.S. is seeking “to protect the U.S. financial system from the illicit proceeds flowing through LCB and to deprive this international narcotics trafficking and money laundering network of its preferred access point into the formal financial system,” said Stuart Levey, the Treasury Department’s undersecretary for terrorism and financial intelligence, at a news conference in Washington.

Bank Chairman Georges Zard Abou Jaoude didn’t immediately return a call to his office seeking comment.

$5 Billion in Assets

The bank, which had assets of more than $5 billion in 2009, maintains correspondent accounts with banks worldwide, including in the U.S., according to the Treasury Department. Correspondent accounts opened at American banks are used by financial institutions in other countries to gain access to the U.S. banking system and conduct transactions in dollars.

Ayman Joumaa, a “drug kingpin,” along with his Lebanon- based network and other individuals, have used LCB to launder narcotics proceeds, according to the Treasury Department. Hezbollah, designated as a terrorist organization by the U.S., received financial support from Joumaa’s network and bank managers are linked to officials of the terror group, according to the department.

The network moves drugs from South America to Europe and the Middle East via West Africa and other locations, according to the Treasury Department. The money is laundered through LCB and through used car dealerships in the United States, according to the Treasury Department.

Joumaa’s alleged network has been under investigation for several years by the Drug Enforcement Administration, said Rusty Payne, an agency spokesman.

The bank has 35 branches in Lebanon and an office in Montreal, according to the U.S. The bank was a subsidiary of the Royal Bank of Canada Middle East from 1968 to 1988, according to the Treasury Department statement.

To contact the reporter on this story: Justin Blum in Washington at jblum4@bloomberg.net
To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net