U.S. Treasury says bank with Canadian ties is a money laundering concern

By Christine Duhaime | February 10th, 2011

The US Department of the Treasury today announced that it has designated the Lebanese Canadian Bank SAL and its subsidiaries as a “primary money laundering concern” under the Patriot Act, because it facilitates the laundering of money from drug trafficking and trade-based money laundering. The bank has an office in Montreal and maintains extensive correspondent accounts with banks worldwide.

The designation requires U.S. financial institutions to take special measures against the bank pursuant to rules implemented by FinCEN.

FinCEN has issued a proposed rule that would prohibit financial institutions from opening and maintaining correspondent accounts for the Lebanese Canadian Bank. A correspondent account is one that is set up to receive deposits from, or make payments or other disbursements on behalf of, a foreign bank, or handle other financial transactions related to a foreign bank. Most banking relationships between Canadian banks and foreign banks are set up as correspondent accounts.

Alleged Lebanese drug kingpin Ayman Joumaa and his associates are accused of using the bank to launder as much as US$200 million per month in narcotics proceeds by various classical money laundering techniques including bulk cash smuggling and currency exchanges.

On January 26, 2011, the US Department of the Treasury’s Office of Foreign Assets Control designated Ayman Joumaa, nine other individuals and 19 entities as “specially designated narcotics traffickers” under the U.S. Foreign Narcotics Kingpin Designation Act.

The Kingpin Act blocks all property and interests in property owned or controlled by foreign nationals who are believed to be significant narcotics traffickers. US persons are prohibited from engaging in any transaction or dealing in property or interests in the property of a designated kingpin. A person who violates the Kingpin Act by engaging in a transaction with a kingpin is liable to a fine of US$5 million and a term of imprisonment of up to 30 years.

The US Department of the Treasury also announced that, according to its information, Hizballah derived financial support from the criminal activities of Joumaa’s network. Hizballah is a listed terrorist group in several countries, including Canada and the US.

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