FinCEN Urges Financial Firms to Watch Out for Hezbollah Activity

In addition to receiving hundreds of millions of dollars a year from Iran, Hezbollah, also spelled Hizballah, generates revenue from a wide range of ventures, including oil smuggling, money laundering, black market money exchange, counterfeiting and illegal weapons procurement.

As part of the Treasury Department’s “campaign against Hizballah’s financing over the past two decades, and in light of Hizballah’s ongoing and significant terrorist activities, FinCEN urges financial institutions to remain vigilant in identifying suspicious activity relating to the financing of Hizballah, and to report such activity to FinCEN,” the alert says.

FinCEN said financial firms should look out for the following red flags when vetting transactions:

• A customer conducting transactions with entities and people that the Office of Foreign Assets Control has designated for their connection with Hezbollah.
• A customer conducting transactions that contain a nexus to identifiers listed for OFAC-designated entities and people affiliated with Hezbollah, including email or physical addresses, passport or phone numbers, or convertible virtual currency addresses.
• A customer using the services of foreign financial institutions that have been identified as being of “primary money laundering concern” under section 311 of the USA PATRIOT Act for their ties to Hezbollah.
• A customer conducting transactions with a money services business or other financial institution that operates in jurisdictions at high risk for Hezbollah terrorist financing activity and has opaque ownership or whose beneficial owners are Hezbollah associates.
• A customer conducting transactions that involve entities that are known or suspected front companies or other companies whose beneficial ownership information indicates they may have a nexus with Hezbollah. Indicators of possible front companies include opaque ownership structures or business addresses that are residential or co-located with other companies.
• Invoices seem to over- or under-charge the recipient, particularly for electronics shipped from the U.S. to the tri-border region of South America or China, or used cars shipped from the U.S. to West Africa.
• Transactions and wire transfers refer to underlying commercial activity that involves bills of lading with no consignees or involves vessels that have been previously linked to suspicious financial activities or registered to sanctioned entities connected with Hezbollah, the Houthis, the IRGC-QF, or the Syrian regime.
• Documentation, such as bills of lading and shipping invoices, appears to be falsified or omits key information, or there are inconsistencies between shipping-related documents and maritime database entries.
• A customer with businesses in the real estate, import/export, construction, diamonds and precious stones, or high-value art sectors with numerous international counterparties in high-risk jurisdictions for Hezbollah financing, making an unusually high number of cash deposits in business accounts, transferring funds from business to personal accounts or vice versa, or using personal accounts or personal credit cards to make business payments.

The red flags are in addition to those FinCEN included in an advisory in May to counter the financing of Iran-backed terrorist organizations (see 2405090014).