Last Updated: Fri Feb 11, 2011 14:36 pm (KSA) 11:36 am (GMT)

Lebanon central bank defends US-targeted bank

Lebanon's central bank governor on Friday defended the Lebanese Canadian Bank against U.S. charges of money laundering and ties to Hezbollah, saying the institution complied with anti-laundering laws.

"The Lebanese Canadian Bank (LCB) complies with local and international anti-money laundering laws and regulations," Riad Salameh said in a statement carried by the state-run National News Agency.

"Management of this bank is highly professional and the bank has high liquidity reserves," he said. "We would like to reassure customers that their operations are safe."

The United States, which lists Hezbollah as a terrorist group, on Thursday accused LCB of laundering hundreds of millions of dollars in drug proceeds from Ayman Joumaa, an alleged cocaine trafficker with ties to Hezbollah.

LCB denies the allegations and has vowed to cooperate fully with authorities.

The U.S. Treasury has said it was seeking to bar U.S. financial institutions from doing business with the Beirut-based bank, designating it a "primary money laundering concern" for allegedly helping Joumaa's international syndicate launder as much as $200 million a month.

The syndicate is alleged to have sold multi-ton shipments of cocaine from South America, laundering the proceeds in Europe and the Middle East via West Africa by trading consumer goods worldwide, including through US-used car dealerships.

The funds allegedly reached Lebanon through LCB or exchange houses.

Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey complained to reporters on Thursday.

He blamed LCB's "management complicity, failure of internal controls, lack of application of banking standards," and pointed to "vulnerabilities" in the Lebanese financial system, such as the lack of cash reporting requirements for funds coming in and out of the country.

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