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The Israelis who Chased Hezbollah's Cash Before Obama's on-and-off Fight

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December 20, 2017

Before, during and after the US government went after Hezbollah’s financing, Shurat Hadin was down in the same trenches.

 

Long before the US ramped up the pressure against Hezbollah’s financial network in 2006, and then dialed it down in 2009-2010, the Mossad and an Israeli NGO were going after the terror group’s monetary oxygen.

In fact, even when the US returned to taking a backseat, Shurat Hadin – Israel Law Center – kept going after a major Hezbollah allied Lebanese bank and connected banks, winning a major US court decision in 2012.

With Politico’s story on Monday presenting new evidence that the Obama administration backed-off from its pursuit of Hezbollah’s financial network due to a combination of intelligence and diplomacy concerns – notably preserving the Iran nuclear deal – it is worth looking at this other unreported angle to the story.

Former Israeli government sources have told the Jerusalem Post that both their intelligence operations as well as lawsuits by Shurat Hadin and others “dramatically impacted Hezbollah’s budget and ability.”

Shurat Hadin Director Nitsana Darshan-Leitner’s October-released book, Harpoon, gives significant and vivid details about pursuing Hezbollah’s financial network long before the US got interested in fall 2006.

But this part of the book has been under-reported and, along with other details Shurat Hadin explained to the Jerusalem Post on Tuesday, shed new light on the new Politico story about the US’s Operation Cassandra – an up-and-down fight against Hezbollah’s financial networks.

Darshan-Leitner had been filing anti-terror cases even before the Israeli Harpoon intelligence outfit approached her in 2004.

But after Harpoon agents approached her and provided her with information to assist going after the money of terrorists like Hezbollah, Shurat Hadin kicked into high gear.

Some of this was in parallel to the US more comprehensively using its resources to go after Hezbollah from 2006-2008.

Yet, as Politico explained Monday, the US rolled back those efforts during the Obama administration already in 2009-2010 and even further in 2012, culminating with virtually halting efforts in 2014 as the Iran nuclear deal started to crystallize.

It is important to note that spokespeople for Obama have said that tacking terrorists’ finances is not always the whole picture. They said that some of the breaks put on going after Hezbollah’s money could have related to preserving undercover intelligence operations and concerns about Lebanon’s overall stability, not merely preserving the Iran deal.

But the bottom line is that before, during and after the US went after Hezbollah’s financing, Shurat Hadin was down in the same trenches.

Possibly the most important decision Shurat Hadin won to cripple aspects of Hezbollah’s financing was a November 2012 decision against the Lebanese Canadian Bank, USA, who had used American Express Bank as its correspondent bank in the US.

The decision put new pressures on American and international banks not to risk doing business with shady entities if they presented even the possibility of being terrorism-related.

The New York State Court of Appeals decision created much higher risk for terror groups to carry out transactions in US dollars.

The New York court issued the ruling in favor of victims of Hezbollah rocket attacks from the Second Lebanon War in 2006 who were citizens of the US, Canada and Israel.

Until that decision, terror financing could avoid scrutiny in the US by making fund transfers through American correspondent banks.

A correspondent bank essentially serves as a middle bank for fund transfers for banks that do not have local US branches.

Avoiding having US branches had meant not having to worry about US banking licenses or regulations that were tough on oversight and emphasized revealing funds involved in terror financing.

As long as the terrorist-affiliated banks had no local branch in the US, they were insulated from any legal consequences and the correspondent bank could plead ignorance regarding the transactions.

However, using a new interpretation of an existing law, the appeals court ruled that correspondent banks would now be held liable for civil damages under anti-terror financing laws if it was found that they facilitated transactions that ultimately could be traced back to terrorist groups.

This placed the onus on correspondent banks to do more careful policing of where fund transfers were eventually going and to investigate what could sometimes be many layers of straw companies set up to hide the fact that terrorists were receiving the money.

Most importantly, the 2012 decision pressured many correspondent banks to cease being involved in any transactions where they had doubts about a possible terror connection in order to avoid even the possibility of heavy civil liability and bad press.

The lawsuit was filed in 2008 and had mostly been in federal court, but came to state court when the Second Circuit Federal Appeals court asked the New York Court of Appeals to decide how to interpret a New York law on the issue.

Lebanese Canadian Bank, USA made and received transfers from an organization that was a front for Hezbollah and used American Express Bank as its doorway to much of the financial world in dollars.

Hezbollah is defined by the US as a terrorist organization and any financing of Hezbollah can subject an entity to having its assets seized.

Essentially, Hezbollah and Lebanese Canadian Bank, USA, were using American Express Bank and countless other correspondent banks to get around anti-terror financing laws in the US.

Although technically the terrorists could try to avoid the US entirely, the fact was that banks worldwide often preferred and were more able to use US dollars for global transactions.

Shurat Hadin’s litigation against the Lebanese Canadian Bank regarding other issues continues into the present, but it confirmed Tuesday that the 2012 decision “is in full force and has been relied on many times,” including being cited by 31 different courts to date.

Darshan-Leitner said, “It was the Israeli intelligence task force… Harpoon” which first targeted “Hezbollah by going after its international drug trafficking business… It was only after the difficult 2006 war in Lebanon that Israel finally convinced American law enforcement… to target Hezbollah’s illegal enterprises and financing.”

“Eventually, the US was extremely active in this fight until the Obama Administration decided that it was going to sign a deal with Iran… At that point the intelligence operations targeting Hezbollah’s drug trafficking were shamefully thrown under the bus,” to protect the deal, she said.

Looking into the future, she stated, “One can only hope that under the new Washington White House the battle against Hezbollah’s funding will be reinstated by the US and it’ll work with Israel in killing the terrorists’ funding.”

Several of the main US veterans of Operation Cassandra interviewed in the Politico story also expressed high interest in helping the Trump administration reenter the fray of pursuing Hezbollah financing.