The UK Sanctions Hezbollah’s Shadow Bank. Lebanon Should Shut It Down.

The United Kingdom has put Hezbollah’s shadow bank in its crosshairs. On September 8, British Foreign Secretary Ed Miliband announced sanctions on “Lebanese Hezbollah’s financing arm, al-Qard al-Hassan (AQAH).” Britain joins the United States and six Gulf states, which jointly designated AQAH through the Terrorist Financing Targeting Center in June.

The new UK listing names AQAH alone, leaving known affiliates and officials undesignated by Britain, though the designation also reaches entities AQAH owns or controls even if unlisted. By contrast, the U.S. Department of the Treasury specifically sanctioned Jood SARL in February for operating under AQAH’s supervision and converting Hezbollah’s gold reserves into usable funds. Treasury specifically sanctioned Tashilat SARL in June for providing loans on Hezbollah’s behalf and serving as an integral part of AQAH and Bayt al-Mal operations.

London Closes a Significant Financial Door for Hezbollah

Britain already proscribed — outlawed — Hezbollah in its entirety in 2019. Separately designating AQAH now subjects the financing institution itself to an asset freeze and records London’s finding that it provides financial services and funds for terrorism specifically to Hezbollah. British nationals and UK companies worldwide must freeze AQAH funds and economic resources they control, cannot make assets available to it, and must report covered holdings. Naming AQAH directly also removes the need for British institutions to first determine whether AQAH is covered through Hezbollah.

An asset freeze locks property rather than confiscates it. It covers cash, bank accounts, property, precious metals, securities, crypto-assets, and other resources convertible into money, goods, or services. British banks cannot permit withdrawals or transfers, regulated firms must freeze and report identified assets, and violations can trigger financial penalties or criminal prosecution. Because the rules bind British nationals and companies worldwide, they also cover transactions abroad involving a UK person or institution.

The Gap Between Lebanon’s Words and Deeds

The June trilateral framework between the United States, Israel, and Lebanon commits Beirut to disarm nonstate armed groups and, with Washington, prevent funds from flowing to their affiliates. Lebanon has tightened Hezbollah’s access to the regulated financial system without dismantling AQAH itself. Banque du Liban’s July 2025 Circular 170 barred banks and other regulated institutions from dealing with AQAH and related sanctioned, unlicensed entities. Yet AQAH continued operating after Israeli strikes. In June, Lebanese Justice Minister Adel Nassar referred AQAH and Jood to the public prosecutor for investigation. By July 21, An-Nahar reported that the file had not moved, with prosecutors awaiting documents from Banque du Liban that they had not requested.

Banque du Liban also ordered regulated nonbank financial institutions in May to identify customers and report cash transactions of $1,000 or more. But those rules bind only licensed institutions. Informal hawala networks — brokers who settle matching payments across borders without moving the underlying money through a bank — can operate outside that perimeter. On September 1, the central bank itself said that its powers over sanctioned entities were limited and that responsibility also rests with the state and relevant ministries.

U.S. Should Close the Gaps

Washington could tie further economic and financial support to measurable Lebanese enforcement against AQAH: asset freezes, prosecutions, and disruption of replacement entities and financial facilitators. It could simultaneously press partners, especially France, to replicate Britain’s move. French law already authorizes renewable national asset freezes against entities financing terrorism. Paris could apply that authority to AQAH and support adding it to the EU terrorist list. Washington could also urge other European governments to target Hezbollah-linked financial and ostensibly civilian entities according to their conduct rather than leave them outside sanctions solely because the European Union still formally lists only Hezbollah’s military wing.

David Daoud is a senior fellow at the Foundation for Defense of Democracies (FDD) focused on Israel, Hezbollah, and Lebanon affairs. Ahmad Sharawi is a senior research analyst at FDD focused on Syria and Iranian intervention in Arab affairs and the Levant. For more analysis from the authors and FDD, please subscribe HERE. Follow FDD on X @FDD. Follow David on X @DavidADaoud. Follow Ahmad on X @AhmadA_Sharawi. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.