Who is Hassan Moukalled and what impact will US Hezbollah-targeted sanctions have on him?

Sanctions have put Lebanon's central bank under further scrutiny

Hezbollah leader Hassan Nasrallah addresses supporters in Beirut via video. Reuters

Sanctions imposed on Tuesday by the US Department of the Treasury’s Office of Foreign Assets Control on a prominent Lebanese economist have further exposed the extent to which Hezbollah has entrenched itself in the country’s financial and political system.

The new measures have also put Lebanon's central bank under further scrutiny.

Here's what you need to know.

Who is Hassan Moukalled?

Hassan Moukalled is at “the centre” of a network that “plays a key role in enabling Hezbollah to continue to exploit and exacerbate Lebanon’s economic crisis”, according to the US Treasury.

The department announced sanctions on economist Mr Moukalled and his business, as well as his sons Rayyan and Rani, for enabling financial activities “in support of Hezbollah”.

The elder Mr Moukalled frequently appears on Lebanese television as an economy commentator. He is also the owner of a large money service business, CTEX — licensed by Lebanon’s central bank — which the US Treasury has referred to as a financial front company established on behalf of Hezbollah.

The US Treasury accuses Mr Moukalled of engaging in financial engineering for Hezbollah in support of the Iran-backed party’s interests “at the expense of the Lebanese people and economy”, according to Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson.

What are the implications of the sanctions?

The wording of the US Treasury statement is reminiscent of the criticism lobbed at Banque du Liban Governor Riad Salameh, who is under domestic and international investigation for money laundering and embezzlement, among other financial crimes.

The central bank governor has been accused of financially engineering a scheme which for decades propped up the country's economy before a liquidity shortage caused it to come crashing down in 2019 — causing what the World Bank has called one of the worst economic crises in modern history.

The central bank is mentioned several times in the US Treasury statement announcing sanctions on Mr Moukalled and his sons. It also highlights Mr Moukalled’s role as an intermediary between Hezbollah and the central bank and emphasises the bank’s licensing of his money exchange company.

Within a year of licensing CTEX, “the company had obtained significant market share within Lebanon’s currency transfer sector and was reportedly collecting millions of US dollars for the central bank of Lebanon,” the US Treasury statement said. It added that the company was simultaneously providing money to Hezbollah institutions.

Experts say the US Treasury’s calling out of the central bank’s role in profiting from CTEX operations is a warning to Mr Salameh that he will no longer be shielded by political cover.

Karim Bitar, a professor of international relations at the University of Saint Joseph in Beirut, said it is no coincidence the US Treasury chose that phrasing while announcing the sanctions on Mr Moukalled and his sons.

“They used it to send a message to both Hezbollah and the central bank,” he told The National.

“Before, whenever he faced accusations of embezzlement, money laundering, mismanagement and creating a Ponzi scheme, Riad Salameh would always present himself as a victim of a conspiracy orchestrated by Hezbollah and its allies.”

Mr Salameh’s defence strategy of claiming to be a scapegoat “because he resisted Hezbollah’s attempts at controlling the banking system” has been undermined by the issuance of the sanctions, which confirm the central bank’s involvement in enriching the party, Mr Bitar said.

“He can no longer claim he’s being scapegoated as a result of not kowtowing to Hezbollah’s desires.”

Still, according to Mr Bitar, it is unlikely that the central bank’s proximity to CTEX will result in sanctions against the financial institution or its head.

Will the sanctions hurt Hezbollah?

The Iran-backed paramilitary group has been designated as a terrorist organisation by the US and a number of western countries. But Hezbollah is also a political party that represents Lebanon’s Shiite Muslims and is allied with a number of Lebanon’s political parties.

It operates within Lebanon’s economy by finding loopholes to circumvent international sanctions — such as using money transfer businesses like CTEX.

“Hezbollah has a foot in the traditional economic banking system,” Mr Bitar said, “and it also has most of their money outside the system in their own underground parallel economy.”

It also has its own financial institutions, such as Qard El Hassan — a loan institution sanctioned by the US and which Ofac maintains is used by Hezbollah as a cover for its financial activities.

The group has so far managed to continue operations unabated despite US sanctions on a number of affiliated institutions and people.

In December, the US Treasury sanctioned two accountants and two companies in Lebanon for providing Hezbollah with financial services.