Lebanese Canadian Bank agreed to pay $102 million to settle a U.S. government lawsuit alleging it took part in a scheme to launder drug-trafficking money and other funds for terrorists, prosecutors said.
The now-defunct Beirut-based bank will forfeit the funds to the U.S. under an agreement approved today by a federal judge, according to a statement from the office of Manhattan U.S. Attorney Preet Bharara. The U.S. claimed the bank helped launder at least $329 million through a scheme linked to Hezbollah, which is designated a foreign terrorist organization by the U.S. State Department.
“Today’s settlement shows that banks laundering money for terrorists and narco-traffickers will face consequences for their actions, wherever they may be located,” Bharara said in the statement.
The scheme, carried out from January 2007 to early 2011, involved the purchase of used cars in the U.S. that were resold in West Africa, according to prosecutors. Cash from the car sales, along with proceeds of drug trafficking, were funneled to Lebanon through Hezbollah-controlled money-laundering channels, in which the bank played a key role, the U.S. said.
In August, the U.S. seized $150 million from the proceeds of the sale of the bank’s assets to Societe Generale de Banque au Liban. The U.S. will keep $102 million of the funds under the settlement approved today. The rest of the money plus an additional $12 million will go to Societe Generale de Banque au Liban, prosecutors said.
“Drug trafficking profits and terror financing often grow and flow together,” Michele M. Leonhart of the U.S. Drug Enforcement Administration said in the statement. “One of the DEA’s highest priorities will always be to promote U.S. and global security by disrupting these narco-terror schemes and protecting the systems they abuse.”
The bank is satisfied with the way the settlement was reached, according to a statement forwarded by a New York-based attorney, Evan Barr.
Lebanese Canadian Bank “has resolved the civil forfeiture based on consistent denial of allegations of wrongdoing or management complicity or involvement in terrorist or money laundering activities,” the bank said. By reaching the deal, it “marked its disassociation with terrorist and money laundering activities,” the bank said.
No claims have been asserted against any of the bank’s shareholders, board members, its chairman or general manager, the bank said.
The case is U.S. v. Lebanese Canadian Bank SAL, 1:11-cv-09186, U.S. District Court, Southern District of New York (Manhattan).