Lebanon’s banks have been banned from dealing with financial networks linked to Hezbollah, according to a document seen by The National.
The Hezbollah-affiliated institutions include Al-Qard Al-Hasan Association, which has been providing compensation to residents affected by the latest war with Israel. Others are Tashilat SARL, Yousser Company and Bayt al-Mal.
The decision, made by Lebanon's Central Bank, comes as Hezbollah, once a formidable militia and influential political party in Lebanon, is weakened significantly by months of conflict with Israel that destroyed much of its leadership and arsenal.
Hezbollah is now under unprecedented pressure to disarm after the war ended in a November ceasefire brokered by the US and France. Its disarmament, once a taboo, is now on the table.
US special envoy Thomas Barrack said in a post on X on Tuesday that the ban was a “step in the right direction”. Mr Barrack visited Beirut last week, where was handed Lebanon’s reply to a US plan aimed at disarming Hezbollah.
According to a central bank circular, all financial institutions licensed by it - as well as brokers - are banned from conducting any transactions, directly or indirectly, with unlicensed institutions including Al Qard Al Hassan.
Failure to comply with the decision could result in legal action, such as suspension or revocation of licences, freezing of accounts and assets, or referral to the Special Investigation Commission, the memo said.
All the financial companies cited in the document are under US sanctions, accused of providing financial support to Hezbollah’s network.
Tashilat SARL was the latest to be added to the US Treasury’s sanctions list in early July. The organisation and seven senior officials were listed over their association with Al Qard Al Hassan. Last year, the Financial Action Task Force (FATF) added Lebanon to its "grey list" of jurisdictions under enhanced scrutiny.
Founded in 1983 and registered as a non-governmental organisation in Lebanon, Al Qard Al Hassan has grown to become the country’s largest microcredit provider, particularly serving the Shiite community.
Before the war, it was running more than 30 branches across Lebanon, including 15 in Beirut and its suburbs. Israel destroyed and damaged several of its branches during last year’s conflict with Hezbollah.
Lebanese banker Jean Riachi told The National that nothing has changed for the banks. “Banks, in principle, do not work with sanctioned entities,” he said.
“There’s certainly a symbolic element to naming Al Qard Al Hassan directly. It’s unusual to single out a specific entity in a central bank circular, that’s generally not done."
He explained that previous circulars did not explicitly ban institutions other than banks, such as money transfer agencies and e-payment platforms, from dealing with Al Qard Al Hassan and linked agencies.
“Banks already avoided these entities under the cover of compliance requirements from foreign correspondent banks,” Mr Riachi said. "But other financial entities don’t have correspondents abroad anyway, so technically they weren’t affected."
He added that the move was a positive step towards improving compliance, while not addressing the core of the issue, that these Hezbollah-affiliated institutions are not licensed with Lebanon's Central Bank.
“It’s a good step but no one has dared to go further and declare what they’re doing as illegal. Because technically, to operate as a bank, you need a licence from the Central Bank of Lebanon. They don't go further because this is still a highly political issue."
