The United States is stepping up efforts to track alternative financing channels used by Hezbollah as tighter sanctions threaten its traditional sources of funding, particularly Iranian money that has long underpinned the group’s military and security capabilities and political influence in Lebanon.
Washington’s campaign extends beyond restricting Iranian transfers to tracing foreign funding networks and cross-border commercial activities that Hezbollah could use to compensate for any decline in Tehran’s support.
A Reuters report last week that Hezbollah had received $200 million in cash from Iran the previous month to assist tens of thousands of families displaced by the war prompted a response from the US State Department.
The department expressed doubt that the money had reached Hezbollah but reaffirmed its commitment to maintaining pressure on the group’s funding sources through sanctions, while supporting the legitimate Lebanese government’s efforts to rebuild southern Lebanon.
New round of sanctions
Sami Nader, director of the Middle East Institute for Strategic Affairs, described the measures as part of a new round of US sanctions aimed at tightening financial pressure on Iran and its regional affiliates.
“The issue is not specifically Hezbollah, but primarily Iran,” Nader told Asharq Al-Awsat, pointing to a recent US announcement describing Hezbollah as an integral part of Iran’s Revolutionary Guard Corps.
Nader said Tehran had developed alternative channels to circumvent financial restrictions, particularly through gold and cryptocurrencies.
He described an expanding network of such activities across the region, with links to Iran and Hezbollah.
The latest sanctions are designed to target these alternative mechanisms, he explained.
Nader added that if cryptocurrency offices linked to these networks are found to exist, Lebanese authorities would likely be asked to shut them down and take action against them, while also tightening oversight of gold transactions.
Four sources of financing
Hezbollah has long relied on multiple funding sources, particularly under previous Lebanese administrations that turned a blind eye to billions of dollars reaching the group, including through official border crossings.
Economist Antoine Farah identified four principal sources of financing: The first was direct Iranian support, provided through regular transfers from Tehran. The second involved illicit activities, particularly drug smuggling and the Captagon trade, which Farah said Hezbollah had engaged in both inside Lebanon and abroad, notably in several Latin American countries. The third consisted of substantial donations from Shiite financiers and supporters around the world. The fourth was a network of front businesses established to generate additional revenue, launder money and conceal the origins and destinations of funds.
Farah told Asharq Al-Awsat that Hezbollah’s ability to draw on most of these sources had declined considerably, while the group faced mounting pressure from legislative and regulatory measures being strengthened in Lebanon.
Stricter financial oversight
Farah highlighted amendments being introduced to Law No. 44 on combating money laundering and terrorist financing, particularly provisions requiring the identification of the ultimate beneficial owners of companies and commercial enterprises.
Identifying who ultimately benefits from commercial activities, while tracing the origins and destinations of funds, would help restrict the operations of front businesses established by Hezbollah, he explained.
Farah also pointed to measures being taken by Banque du Liban, Lebanon’s central bank, to regulate currency exchange dealers and money transfer companies.
He said the measures were making it increasingly difficult to exploit these sectors to transfer money and channel financing to Hezbollah.
