The US on Tuesday sanctioned a Lebanese money exchange firm for alleged ties to Hezbollah.
CTEX and its founder Hassan Moukalled were sanctioned by the Treasury Department, which said the firm allows Hezbollah to carry out financial exchanges.
The Treasury also sanctioned Mr Moukalled’s sons.
“Today, the Treasury Department is taking action against a corrupt money exchanger, whose financial engineering actively supports and enables Hezbollah and its interests at the expense of the Lebanese people and economy,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson.
Mr Moukalled serves as a financial advisor to Hezbollah and has worked in close co-ordination with senior Hezbollah officials, the treasury said.
It accused him of carrying out business deals across the Middle East on behalf of the group.
"Hassan Moukalled works in close co-ordination with sanctioned senior Hezballah financial official Muhammad Qasir and represents Hezballah in negotiations with potential investors, partners, and even foreign government officials," it said.
The Lebanon-based economist, who has a wide social media following and often appears on Lebanese TV, has also facilitated Hezbollah deals with Russia and assisted in procuring weapons for the group, the department added.
Rayyan and Rani Moukalled are accused of enabling their father's work and having links to the militant group.
CTEX is owned by Lebanon's Central Bank, according to the Treasury.
Mr Moukalled reportedly set up the exchange in 2021 as a front company, aided by Mr Qasir and his deputy Muhammad Qasim Al Bazzal.
It collected millions for Lebanon's Central Bank and Hezbollah, the treasury said, also recruiting money exchangers loyal to the Shiite movement.
Earlier this month, Washington appealed for information on two Lebanese men accused of being financiers for Hezbollah.
The Rewards for Justice programme is offering up to $10 million for information on businessmen Ali Saade and Ibrahim Taher, who “use their businesses to help finance the Hezbollah terrorist organisation”.
In December, the US sanctioned Lebanese-based individuals and companies it said provide financial services and weapons abilities to the group.
Hezbollah, founded by Iran's Islamic Revolutionary Guard Corps in 1982, has been designated as a terrorist group by the US and other western nations.
It grew stronger after joining the Syrian war in 2012, with the support of Syrian President Bashar Al Assad, and holds significant sway in many parts of Lebanon.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
