The US Treasury has imposed sanctions on a Lebanese bank that only a year ago partnered with Washington’s largest international development agency on a financial inclusion scheme.
The administration said that it had placed the curbs on Jammal Trust Bank because the lender was supporting Hizbollah, the Iran-backed Lebanese paramilitary group and political party.
The sanctions, the first imposed on a Lebanese lender since 2011, are part of escalating economic pressure on Tehran and its regional proxies such as Hizbollah, which the US accuses of destabilising the Middle East.
But last year, JTB partnered with development agency USAID on a financial inclusion scheme, which included an initiative to promote savings. The Lebanese bank also organised a promotional lunch for dignitaries, including the US charge d’affaires. JTB’s latest accounts were also joint-audited by PwC, one of the so-called Big Four global accounting firms.
Sigal Mandelker, US under secretary for terrorism and financial intelligence, said that JTB was “brazenly enabling Hizbollah’s financial activities” by providing “support and services to Hizbollah’s Executive Council and the Martyrs Foundation, which funnels money to the families of suicide bombers”. Hizbollah says it provides financial support to families of fighters who have died in its service.
JTB on Friday denied “each and every allegation” made by the US Treasury and said it would appeal against the decision “to clear its good name”.
Hassan Khalil, a former banker and Lebanese economic commentator, said the US was “throwing a grenade into a parking lot. The bank size is not that big but people will panic when they hear the noise”.
The measure comes at a fragile time for Lebanon, which is facing a long-brewing economic crisis and crippling public debt. There are fears that alarm about the stability of the Lebanese finance sector could trigger an outflow of cash from bank accounts, possibly tipping the country towards a financial crash.
The US-Iran face-off has raised tensions across the region. Washington is trying to restrict Tehran’s regional influence with a “maximum pressure” policy of financial sanctions. It is pushing the fractious Lebanese government to curb Hizbollah’s power in Lebanon, from where it can threaten US ally Israel on Lebanon’s southern border.
Hizbollah is funded by Iran, a transnational business network, and, according to the US, a globe-spanning crime network. But it also enjoys domestic support from Shia communities who view it as a resistance movement.
The movement controls key ministries in the Lebanese government, with its allies winning more than half the seats in last year’s parliamentary elections. The west is split over whether or not to classify Hizbollah’s political arm as a terrorist organisation, as the US and UK do.
Backed by the Iranian Revolutionary Guard Corps’ overseas arm, Hizbollah swelled from a resistance to Israel’s occupation of southern Lebanon in the 1980s to a multi-institutional organisation. Hizbollah’s militia fights for the Syrian regime of Bashar al-Assad in the neighbouring country’s bitter eight-year civil war.
JTB, established in 1963, is a small and privately owned bank with 25 outlets in Lebanon, as well as representative branches in the UK, Nigeria and the Ivory Coast.
In Lebanon it is known for microfinance products targeting marginalised communities, who are disproportionately Shia.
“This is one of the steps that the US would take to put pressure not only on Hizbollah but also the community that Hizbollah is in,” said a Lebanese banker who requested anonymity because of sectarian sensitivities.
The group is majority owned and controlled by Anwar Jammal, its chairman and general manager, via a British Virgin Islands incorporated holding entity. Its 2017 profits before income tax, the latest available, were L£9.3bn ($6.2m).
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