By targeting the offices of Bank Al-Qard Al-Hassan (AQAH), Israel sought to sever the main financial weapon in its hands Hezbollah. But the “empire” he built to keep the money flowing is much broader. The organization’s treasurer in Syria also died.
It is worth observing how the group – which began as a resistance movement and evolved into a terrorist organization with the most powerful arsenal ever held by a non-state entity, but also a political party with the most powerful influence on governance and society Lebanese – became rich at a time when the country experienced an explosion of unemployment and poverty and serious bankruptcy.
THE AQAH
Amidst the political and economic turmoil that has plagued Lebanon in recent years, AQAH has effectively emerged as Lebanon’s most powerful financial institution.
Founded in 1983, it describes itself as a “charitable institution” that provides loans to people in accordance with Islamic principles, which prohibit interest. It has more than 30 branches, most of which are located in Shia areas of Beirut, southern Lebanon and the Bekaa Valley. It operates under a charitable organization license granted by the Lebanese government and not under a banking license and is therefore not subject to any supervision, nor does it pay taxes.
Many people in Hezbollah’s Shia constituency were financed by Al-Qard Al-Hassan, taking out loans in hard currency, with flexible terms, but offering gold (mainly in the form of jewelry and pounds) as collateral. Its role expanded as Lebanon plunged into an acute financial crisis that began in 2019. Hezbollah encouraged Lebanese, regardless of their religious and political affiliation, to turn to AQAH loans.
The US Treasury has blacklisted the organization since 2007, highlighting that it is Hezbollah’s “vehicle” for access to the international financial system. “Although AQAH is supposed to serve the Lebanese people, in practice it moves illicit funds through fictitious accounts and intermediaries, exposing Lebanese financial institutions to possible sanctions,” he highlighted in a 2021 report.
Hassan Nasrallah, a leader of the organization who was killed in an Israeli airstrike on September 27, has spoken often about AQAH. In 2020, after a hacker attack and the publication of the names of his clients, Nasrallah said that foreign powers wanted to scare citizens and cause the institution to collapse. He urged Hezbollah supporters to respond by increasing their deposits to him.
Given Lebanon’s current liquidity crisis and lack of loans, AQAH has become an important source of money for the Lebanese and a powerful player in the country’s economy. In 2021, many of its branches began installing ATMs that dispense large amounts of Lebanese pounds and US dollars. Borrowers can make unlimited withdrawals and renew loans indefinitely as long as they provide gold as collateral.
Drug trafficking and money laundering
Hezbollah’s vast overseas operations, which reportedly include drug trafficking, money laundering and smuggling of “blood” diamonds, generate enormous amounts of money every year. Through AQAH, Hezbollah uses much of this money to inject, even if only by trickle, liquidity into the struggling Lebanese economy, allowing it to expand its political influence.
Hezbollah handles cocaine shipments and distribution on behalf of major drug cartels. It also launders revenue through complex commercial schemes. The Ayman Joumaa network – which came to light in 2011 and a year later was revealed to be linked to Hezbollah – laundered up to 200 million dollars per month (!) on behalf of Mexican and Colombian cartels. He received a commission of 8% to 14% for his services and was therefore responsible for 2/3 of Hezbollah’s revenues from “external activities”. And although it was eventually shut down, its complex drug revenue laundering scheme continued through other “vehicles.”
Hezbollah’s annual drug revenue is estimated at $400 million. And this is a “conservative estimate” from the US Department of Justice.
Hezbollah plays an important role in the illicit economy of the Triple Border region between Argentina, Brazil and Paraguay, also helps the Venezuelan regime to launder money through multiple channels and has a strong presence in West Africa. US authorities, for example, seized $50 million in 2019 from convicted Hezbollah financier Kasim Tajuddin as part of an indictment against him for money laundering on behalf of Hezbollah. In Latin America and Africa it has infiltrated institutions at all levels – police, customs, border guards, port officials, the judiciary and elected officials.
Gold smuggling
Hezbollah is also involved in international gold smuggling with the Iranian government. In 2020, evidence indicated that Hezbollah controlled several gold mines in southeastern Venezuela. In May 2022, Israeli intelligence discovered that dozens of kilograms of Venezuelan gold were sent to Tehran on an Iranian Mahan Air flight in exchange for oil, the proceeds of which were later transferred to Hezbollah. Iran has become more willing to pay huge sums of money for gold amid efforts to increase its reserves in response to continued pressure from US sanctions. Tehran’s efforts to accumulate gold have gone so far as to include executing citizens accused of hoarding gold (Mehr News, September 3, 2023; Times of Israel, November 14, 2018).
Hezbollah’s role as an intermediary in international gold smuggling likely stems from its ability to infiltrate various Lebanese diaspora groups in South America and West Africa, according to the Times of Israel and the Jerusalem Post. By facilitating the smuggling of gold from Iran in exchange for cash, Hezbollah can lend that money to Lebanese citizens in exchange for its own gold.