May 20, 2015 | Policy Brief

New Hezbollah Legislation In A New Sanctions Environment

May 20, 2015 | Policy Brief

New Hezbollah Legislation In A New Sanctions Environment

The House of Representatives last week passed H.R. 2297, the “Hezbollah International Financing Prevention Act of 2015,” tightening sanctions on the Iranian-sponsored terrorist group. With the aim of curtailing Hezbollah’s funding of its domestic and international activities, the measure imposes sanctions not just on the group but also on any foreign financial institution doing business with designated Hezbollah entities.

Fittingly, the legislation approaches Hezbollah not just as a terrorist group, but also as a criminal organization. H.R. 2297 requires the president to report to Congress on whether Hezbollah meets the criteria for designation as a significant foreign narcotics trafficker and transnational criminal organization. Moreover, it requires the White House to submit a report listing countries that support Hezbollah or that allow the group to conduct financing, fundraising or money laundering activities.

Hezbollah’s involvement in the drug trade is well-established. It is a significant narcotics trafficker from Latin America to Europe via West Africa. It is also a major money laundering and counterfeiting organization. While this criminal enterprise spans the globe, the group’s base in Lebanon remains central to its operations.

In recent years, Hezbollah’s use of the Lebanese Canadian Bank for money laundering has made headlines. But the group allegedly exploits other areas of the Lebanese economy for laundering drug money, such as the real estate sector. Moreover, Iran and Hezbollah run facilities in Lebanon that produce first-rate counterfeit foreign currencies. 

Hezbollah also runs a counterfeit pharmaceuticals business in Lebanon, especially locally produced amphetamine pills. With its massive military apparatus, Hezbollah holds Lebanese security hostage, which essentially grants the group impunity in the pursuit of its illicit businesses. This power also enables it to use the official sea port of Beirut to run many of its operations.

While there are numerous designations that may be prompted by this new legislation, its principal purpose is to target Hezbollah’s state patron, Iran. The bill coincided with the passage of the Iran nuclear agreement review bill, which did not include any amendments addressing Iran’s sponsorship of terrorist groups like Hezbollah. H.R. 2297 therefore offers another means to target Tehran and its proxies, and to require the administration to report on Hezbollah’s primary backer – Iran.

The fact that Iran is set to receive tens of billions of dollars upon signing a possible nuclear deal next month makes the bill all the more timely. Following the announcement of the framework agreement with Iran in Lausanne last month, Hezbollah Secretary General Hassan Nasrallah boasted that with such a windfall, “a rich and strong Iran will be able to stand by its allies and friends … more than in any time in the past.” 

Tony Badran is a research fellow at Foundation for Defense of Democracies. Find him on Twitter: @Acrossthebay