(BILLINGCODE: 4810-02P) 

DEPARTMENT OF THE TREASURY 

Finding that the Lebanese Canadian Bank SAL is a Financial Institution of Primary 

Money Laundering Concern 

AGENCY: Financial Crimes Enforcement Network, Treasury (“FinCEN”), Treasury. 

ACTION: Notice of finding. 

SUMMARY: Pursuant to the authority contained in 31 U.S.C. 5318A, the Secretary of 

the Treasury, through his delegate, the Director of FinCEN, finds that reasonable grounds 

exist for concluding that the Lebanese Canadian Bank SAL (“LCB”) is a financial 

institution of primary money laundering concern. 

DATES: The finding made in this notice is effective as of [INSERT DATE OF 

PUBLICATION OF THIS DOCUMENT IN THE FEDERAL REGISTER]. 

FOR FURTHER INFORMATION CONTACT: Regulatory Policy and Programs 

Division, FinCEN, (800) 949-2732. 

SUPPLMENTARY INFORMATION: 

I. Background 

A. Statutory Provisions

On October 26, 2001, the President signed into law the Uniting and Strengthening 

America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism 

Act of 2001 (the “USA PATRIOT Act”), Public Law 107-56. Title III of the USA 

PATRIOT Act amended the anti-money laundering provisions of the Bank Secrecy Act 

(“BSA”), codified at 12 U.S.C. 1829b, 12 U.S.C 1951-1959, and 31 U.S.C. 5311-5314 

and 5316-5332, to promote the prevention, detection, and prosecution of international 

money laundering and the financing of terrorism. Regulations implementing the BSA 
appear at 31 CFR Part 103. The authority of the Secretary of the Treasury (the 

“Secretary”) to administer the BSA and its implementing regulations has been delegated 

to the Director of FinCEN.1

Section 311 of the USA PATRIOT Act (“section 311”) added section 5318A to 

the BSA, granting the Secretary the authority, upon finding that reasonable grounds exist 

for concluding that a foreign jurisdiction, institution, class of transaction, or type of 

account is of “primary money laundering concern,” to require domestic financial 

institutions and financial agencies to take certain “special measures” against the primary 

money laundering concern. Section 311, as amended, identifies factors for the Secretary 

to consider and Federal agencies to consult before the Secretary may conclude that a 

jurisdiction, institution, class of transaction, or type of account is of primary money 

laundering concern. The statute also provides similar procedures, i.e., factors and 

consultation requirements, for selecting the specific special measures to be imposed 

against the primary money laundering concern. 

Taken as a whole, section 311 provides the Secretary with a range of options that 

can be adapted to target specific money laundering and terrorist financing concerns most 

effectively. These options give the Secretary the authority to bring additional pressure on 

those jurisdictions and institutions that pose money laundering threats. Through the 

imposition of various special measures, the Secretary can gain more information about 

the jurisdictions, institutions, transactions, or accounts of concern; can more effectively 

monitor the respective jurisdictions, institutions, transactions, or accounts; or can protect 

 

1

 Therefore, references to the authority of the Secretary of the Treasury under section 311 of the USA 

PATRIOT Act apply equally to the Director of FinCEN. 

2 
U.S. financial institutions from involvement with jurisdictions, institutions, transactions, 

or accounts that are of money laundering concern. 

Before making a finding that reasonable grounds exist for concluding that a 

foreign financial institution is of primary money laundering concern, the Secretary is 

required to consult with the both the Secretary of State and the Attorney General. The 

Secretary is also required by section 311 to consider ‘‘such information as the Secretary 

determines to be relevant, including the following potentially relevant factors”: 

 The extent to which such financial institution is used to facilitate or 

promote money laundering in or through the jurisdiction; 

 The extent to which such financial institution is used for legitimate 

business purposes in the jurisdiction; and 

 The extent to which the finding that the institution is of primary money 

laundering concern is sufficient to ensure, with respect to transactions 

involving the institution operating in the jurisdiction, that the purposes of 

the BSA continue to be fulfilled, and to guard against international money 

laundering and other financial crimes. 

If the Secretary determines that reasonable grounds exist for concluding that a 

foreign financial institution is of primary money laundering concern, the Secretary must 

determine the appropriate special measure(s) to address the specific money laundering 

risks. Section 311 provides a range of special measures that can be imposed individually, 

jointly, in any combination, and in any sequence.2

 The Secretary’s imposition of special 

 

2

 Available special measures include requiring: (1) recordkeeping and reporting of certain financial 

transactions; (2) collection of information relating to beneficial ownership; (3) collection of information 

relating to certain payable-through accounts; (4) collection of information relating to certain correspondent 

accounts; and (5) prohibition or conditions on the opening or maintaining of correspondent or payable 

3 
measures requires additional consultations to be made and factors to be considered. The 

statute requires the Secretary to consult with appropriate federal agencies and other 

interested parties3 and to consider the following specific factors: 

 Whether similar action has been or is being taken by other nations or 

multilateral groups; 

 Whether the imposition of any particular special measures would create a 

significant competitive disadvantage, including any undue cost or burden 

associated with compliance, for financial institutions organized or licensed 

in the United States; 

 The extent to which the action or the timing of the action would have a 

significant adverse systemic impact on the international payment, 

clearance, and settlement system, or on legitimate business activities 

involving the particular institution; and 

 The effect of the action on the United States national security and foreign 

policy.4

 through accounts. 31 U.S.C. 5318A(b)(l)-(5). For a complete discussion of the range of possible 

countermeasures, see 68 FR 18917 (April 17, 2003) (proposing special measures against Nauru). 3

 Section 5318A(a)(4)(A) requires the Secretary to consult with the Chairman of the Board of Governors of 

the Federal Reserve System, any other appropriate Federal banking agency, the Secretary of State, the 

Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the 

National Credit Union Administration (NCUA), and, in the sole discretion of the Secretary, “such other 

agencies and interested parties as the Secretary may find to be appropriate.” The consultation process must 

also include the Attorney General if the Secretary is considering prohibiting or imposing conditions on 

domestic financial institutions opening or maintaining correspondent account relationships with the 

designated jurisdiction. 

4

 Classified information used in support of a section 311 finding and measure(s) may be submitted by 

Treasury to a reviewing court ex parte and in camera. See section 376 of the Intelligence Authorization Act 

for fiscal year 2004, Pub. L. 108–177 (amending 31 U.S.C. 5318A by adding new paragraph (f)). 

4 
B. The Lebanese Canadian Bank SAL

The Lebanese Canadian Bank SAL (“LCB”) is based in Beirut, Lebanon, and 

maintains a network of 35 branches in Lebanon and a representative office in Montreal, 

Canada. The bank is eighth largest among Lebanese banks in assets and has over 600 

employees. Originally established in 1960 as Banque des Activities Economiques SAL, 

it operated as a subsidiary of the Royal Bank of Canada Middle East (1968-1988) and is 

now a privately owned bank. LCB offers a broad range of corporate, retail, and 

investment products, and maintains extensive correspondent accounts with banks 

worldwide, including several U.S. financial institutions. As of 2009 LCB’s total assets 

were worth over $5 billion.5

 

LCB has a controlling financial interest in a number of subsidiaries, including 

LCB Investments (Holding) SAL, LCB Finance SAL, LCB Estates SAL, LCB Insurance 

Brokerage House SAL, and Dubai-based Tabadul for Shares and Bonds LLC. 

Additionally, LCB is the majority shareholder of Prime Bank Limited, a private 

commercial bank and the LCB subsidiary located in Serrekunda, Gambia.6 LCB owns 

51% of Prime Bank while the remaining shares are held by local and Lebanese partners. 

LCB apparently serves as the sole correspondent bank for Prime Bank.7

 For purposes of 

this document and unless expressly stated otherwise, references to LCB include the 

aforementioned subsidiaries. 

 

5

 Lebanese Canadian Bank, 2009 Annual Report. 

6

 Id. 

7

 http://primebankgambia.gm/index 

5 
C. Lebanon

Lebanon is a financial hub for banking activities in the Middle East and eastern 

Mediterranean and has one of the more sophisticated banking sectors in the region. 

There are 66 banks incorporated in Lebanon8

, and all major banks have correspondent 

relationships with U.S. financial institutions. The five largest commercial banks account 

for roughly 60% of total banking assets, estimated at $125 billion.9

 According to 

Treasury information, strong economic growth and a steady flow of diaspora deposits in 

recent years have helped the Lebanese banking system to maintain relatively robust 

lending, improve asset quality, and maintain adequate liquidity and capitalization 

positions. However, banks remain highly exposed to the heavily indebted sovereign, 

carry significant currency risk on their balance sheets, and operate in a volatile political 

security environment. 

Lebanon also faces money laundering and terrorist financing vulnerabilities, 

according to the International Narcotics Control Strategy Report (“INCSR”) published in 

March 2010 by the U.S. Department of State.10 Of particular relevance is the possibility 

that a portion of the substantial flow of remittances from the Lebanese diaspora, 

estimated at $7 billion—21% of GDP—in 2009, according to the World Bank,11 could be 

associated with underground finance and Trade-Based Money Laundering (“TBML”) 

activities. Laundered criminal proceeds come primarily from Lebanese criminal activity 

and organized crime.12 

 

8

 “Complete List of Operating Banks in Lebanon,” Banque du Liban (www.bdl.gov.lb). 9 2010 Index of Economic Freedom, The Heritage Foundation (www.heritage.org/index/country/lebanon). 10 The 2010 International Narcotics Control Strategy Report (“INCSR”), Lebanon, pp 151-154 

(www.state.gov/g/inl/rls/nrcrpt/2010/vol2/137212.htm). 11 The Daily Star, “2009 Remittances to Lebanon Reach $7 Billion,” November 10, 2009. 12 2010 INCSR. 

6 
Lebanon’s Customs Authority (“Customs”) supervises two free trade zones 

operating in the country. However, high levels of corruption within Customs create 

vulnerabilities for TBML and other threats. Moreover, Lebanon has no cross-border 

currency reporting requirements, resulting in a significant cash-smuggling vulnerability. 

Finally, Lebanon has not acceded to the UN Convention for the Suppression of the 

Financing of Terrorism, though it has adopted laws domestically criminalizing any funds 

resulting from the financing or contribution to the financing of terrorism.13 However, 

such laws do not apply to Hizballah, which Lebanon considers to be a legitimate political 

party and resistance organization, and it is not subject to Lebanese anti-terrorist financing 

laws. The United States Government (“USG”) designated Hizballah as a Foreign 

Terrorist Organization on October 8, 1997. Additionally, on October 31, 2001, Hizballah 

was designated by the USG as a Specially Designated Global Terrorist under Executive 

Order 13224.14 

II. Analysis of Factors 

Based upon a review and analysis of the administrative record in this matter, 

consultations with relevant Federal agencies and departments, and after consideration of 

the factors enumerated in section 311, the Director of FinCEN has determined that LCB 

is a financial institution of primary money laundering concern. FinCEN has reason to 

believe that LCB has been routinely used by drug traffickers and money launderers 

operating in various countries in Central and South America, Europe, Africa, and the 

 

13 For additional information about Lebanon’s legal framework and special mechanisms for anti-money 

laundering and terrorist financing measures, see The Middle East and North Africa Financial Task Force 

(MENAFATF) Mutual Evaluation Report, Lebanese Republic, November 10, 2009 (www.menafatf.org). 14 Hizballah is a Lebanon-based terrorist group. Until September 11, 2001, Hizballah was responsible for 

more American deaths than any other terrorist organization. 

7 
Middle East; that Hizballah derived financial support from the criminal activities of this 

network; and that LCB managers are complicit in the network’s money laundering 

activities. A discussion of the factors relevant to this finding follows: 

1. The Extent to Which LCB Has Been Used to Facilitate or Promote Money 

Laundering In or Through the Jurisdiction 

The USG has information through law enforcement and other sources indicating 

that LCB—through management complicity, failure of internal controls, and lack of 

application of prudent banking standards—has been used extensively by persons 

associated with international drug trafficking and money laundering. According to this 

information, this international drug trafficking and money laundering network generally 

moves illegal drugs from South America to Europe and the Middle East via West Africa, 

with proceeds laundered through the Lebanese financial system, as well as through 

TBML involving used cars and consumer goods.15 Specifically, individuals mentioned 

below16 (with the assistance of close family members who are key participants in the 

global drug trafficking and money laundering network) are known to hold or utilize cash 

deposit accounts at LCB to move hundreds of millions of dollars monthly in cash 

proceeds from illicit drug sales into the formal financial system, as well as to coordinate 

the laundering of these funds through key foreign nodes of the network using LCB 

accounts. The bank’s involvement in money laundering is attributable to failure to 

adequately control transactions that are highly vulnerable to criminal exploitation, 

including cash deposits and cross-border wire transfers, inadequate due diligence on 

 

15 For more information on Trade-Based Money Laundering, see “Advisory to Financial Institutions on 

Filing Suspicious Activity Reports regarding Trade-Based Money Laundering,” Financial Crimes 

Enforcement Network, FIN02010-A001, February 18, 2010. 

www.fincen.gov/financial_institutions/advisory.html. 

16 These individuals are referred to by name and/or solely by letter reference (i.e., Individual A, B, C, etc.) 

depending on the sensitivity of the source. 

8 
high-risk customers like exchange houses, and, in some cases, complicity in the 

laundering activity by LCB managers. 

For example, in this global narco-money laundering network, U.S.-designated 

Ayman Joumaa17 has coordinated the transportation, distribution, and sale of multi-ton 

bulk shipments of cocaine from South America, and laundered the proceeds—as much as 

$200 million per month—from the sale of cocaine in Europe and the Middle East. In this 

criminal scheme, the proceeds have been laundered through various methods, including 

bulk cash smuggling operations and use of several Lebanese exchange houses that utilize 

accounts at LCB branches managed by family members of other participants in the global 

money laundering network. Specifically, Ayman Joumaa deposits bulk cash into 

multiple exchange houses, including the one that he owns, which then deposit the 

currency into their LCB accounts. He or the exchange houses then instruct LCB to 

perform wire transfers in furtherance of one of two TBML schemes. For example, some 

of the funds move to LCB’s U.S. correspondent accounts via suspiciously structured 

electronic wire transfers to multiple U.S.-based used car dealerships—some of which are 

operated by individuals who have been separately identified in drug-related 

investigations. The recipients use the funds to purchase vehicles in the United States, 

which are then shipped to West Africa and/or other overseas destinations, with the 

proceeds ultimately repatriated back to Lebanon. Other funds are sent through LCB’s 

U.S. correspondent accounts to pay Asian suppliers of consumer goods, which are 

 

17 On January 26, 2011, the U.S. Department of the Treasury’s Office of Foreign Assets Control designated 

members and connected entities of the Ayman Joumaa drug trafficking and money laundering network, as 

Specially Designated Narcotics Traffickers due to their significant roles in international narcotics 

trafficking. This action, pursuant to the Foreign Narcotics Kingpin Designations Act (Kingpin Act), 

prohibits U.S. persons from conducting financial or commercial transactions with these entities and 

individuals and freezes any assets the designees may have under U.S. jurisdiction. 

9 
shipped to Latin America and sold and the proceeds are laundered through a scheme 

known as the Black Market Peso Exchange, in each case through other individuals 

referred to in this finding or via companies owned or controlled by them. According to 

USG information, Hizballah derived financial support from the criminal activities of 

Joumaa’s network. 

 With respect to the exchanges and companies related to Ayman Joumaa, 

numerous instances indicate that substantial amounts of illicit funds may have passed 

through LCB. Since January 2006, hundreds of records with a cumulative equivalent 

value of $66.4 million identified a Lebanese bank that originated the transfer; 

approximately half of those were originated by LCB, for a cumulative equivalent value of 

$66.2 million, or 94%, thus, indicating that LCB probably is the favored bank for these 

exchange houses, particularly in the context of illicit banking activity. Similarly, a 

review of all dollar-denominated wire transfers with the two primary exchange houses 

either as sender or receiver between January 2004 and December 2008 showed 72% 

originated by one of the exchange houses through LCB. 

 Individual A, who owns a wide network of companies manufacturing or procuring 

consumer goods in Asia, Europe, and the Middle East, the Caribbean, and Lebanon, 

participates in this money laundering scheme by providing the consumer goods that are 

used for TBML, as described above. Despite his business being based in Asia, he is 

believed to have centralized his banking operations in Lebanon, particularly through the 

use of over 30 accounts at LCB. USG information shows Individual A receiving funds in 

his accounts from Ayman Joumaa, and exchanging funds with Latin American members 

10 
of the network discussed below. Individual A is known to be in near daily 

communication with the bank from his professional base in Southeast Asia. 

 Individual B, based in Latin America, is part of a Lebanese drug trafficking 

organization that moves large quantities of drugs from Latin America to destinations 

throughout Africa, Europe, and the Middle East. For over a decade, Individual B and his 

family have been involved in a variety of TBML schemes with Latin American drug 

traffickers and Lebanese money launderers. In the criminal schemes, the individuals 

deposit the local currency proceeds from the sale of imported consumer goods to the 

accounts of local banks and convert them to hard currency. This completes the Latin 

America-based Black Market Peso Exchange money laundering cycle, and allows for the 

repatriation of proceeds for the Latin American drug producers. Individual B then uses 

accounts at LCB to exchange the funds—usually in suspiciously structured amounts—

with previously mentioned individuals and other suspected criminals as part of the global 

money laundering network. Information available to the USG suggests that Individual B 

and his family members are supporters of Hizballah. 

 Additionally, USG information indicates that Individual C, connected to both 

drug trafficking and money laundering, has established a money exchange house in the 

same building as a key LCB branch. This exchange uses its LCB accounts to deposit 

bulk cash proceeds of drug sales and then wires the proceeds to U.S.-based used car 

dealers. Individuals managing this and another LCB branch—each of which houses key 

accounts accepting bulk cash from exchange houses or wiring funds for the TBML 

schemes described above—are family members of one of the aforementioned individuals 

running Asia-based TBML activities. 

11 
At least one of these individuals has family relationships and personal contact 

with key LCB managers, in some cases working directly with those managers to conduct 

his transactions. The USG has information indicating that a minority owner of the bank, 

who concurrently serves as General Manager, his deputy, and the managers of key 

branches are in frequent—in some cases even daily—communication with various 

members of the aforementioned drug trafficking and money laundering network, and they 

personally process transactions on the network’s behalf. Additionally, LCB managers are 

linked to Hizballah officials outside Lebanon. For example, Hizballah’s Tehran-based 

envoy Abdallah Safieddine is involved in Iranian officials’ access to LCB and key LCB 

managers, who provide them banking services. 

 Finally, information available to the U.S. Government indicates that LCB’s 

subsidiary, Gambia-based Prime Bank, is partially owned by a Lebanese individual 

known to be a supporter of Hizballah. In addition to Gambian nationals, Prime Bank 

serves Iranian and Lebanese clientele throughout West Africa. 

2. The Extent to Which LCB is Used for Legitimate Business Purposes in the 

Jurisdiction 

 LCB is one of 49 mostly private Lebanese banks that make up Lebanon’s 

financial sector. LCB has maintained modest but steady growth since 2000, with total 

assets of more than $5 billion in 2009. 18 LCB also appears to be aware of the risk posed 

by money laundering, as noted in its Anti-Money Laundering Policy Statement.19 A 

publicly available source also indicates that U.S. financial institutions maintain 

correspondent relationships with LCB,20 and it is likely that a high volume of those 

 

18 Lebanese Canadian Bank, 2009 Annual Report. 

19 Lebanese Canadian Bank, AML Policy Statement, www.lebcanbank.com 

20 Bankers Almanac, Lebanese Canadian Bank SAL, June 22, 2010 (http://www.bankersalmanac.com). 

12 
transactions through those accounts is legitimate. However, numerous instances have 

been identified where substantial volumes of illicit funds have passed through LCB. 

Thus, any legitimate use of LCB is significantly outweighed by the apparent use of LCB 

to promote or facilitate money laundering. 

3. The Extent to Which Such Action is Sufficient to Ensure, With Respect to 

Transactions Involving LCB, that the Purposes of the BSA Continue To 

Be Fulfilled, and To Guard Against International Money Laundering and 

Other Financial Crimes 

 As detailed above, FinCEN has reasonable grounds to conclude that LCB is being 

used to promote or facilitate money laundering, and is, therefore, an institution of primary 

money laundering concern. Currently, there are no protective measures that specifically 

target LCB. Thus, finding LCB to be a financial institution of money laundering 

concern, which would allow consideration by the Secretary of special measures to be 

imposed on the institution under Section 311, is a necessary first step to prevent LCB 

from facilitating money laundering or other financial crime through the U.S. financial 

system. The finding of primary money laundering concern will bring criminal conduct 

occurring at or through LCB to the attention of the international financial community and 

further limit the bank’s ability to be used for money laundering or other criminal 

purposes. 

13 
14 

III. Finding 

Based on the foregoing factors, the Director of FinCEN hereby finds that the 

Lebanese Canadian Bank SAL is a financial institution of primary money laundering 

concern. 

 Dated: _____________ 

 ____________________ 

 James H. Freis, Jr. 

 Director 

 Financial Crimes Enforcement Network