LONDON: A car dealership in Germany. A Belgian trading company. A restaurant in Austria. An art dealer in London. Charities in several countries.
These are just some of a multitude of front entities — some innocent dupes but many overtly criminal enterprises — that are part of a mind-bogglingly complex financial network that is raising and laundering hundreds of millions of dollars for Hezbollah in Europe.
The full extent of the group’s fundraising operation, which is fueled largely by running drugs into Europe on behalf of Latin American cartels, is laid out in a new report by the Austrian Fund for the Documentation of Religiously Motivated Political Extremism.
With Iran under extreme economic pressure because of its conflict with the US, some commentators have concluded that Iranian proxy Hezbollah has been significantly weakened by the disruption of the flow of cash and other support from Tehran.
In fact, as one of the report’s authors told Arab News, “Hezbollah is not solely dependent on Iran for funding as it generates at least 30 percent of its funding from illicit financial activities worldwide. Weakening Hezbollah comprehensively must address this factor too.”
Lina Khatib is an associate fellow at the Middle East and North Africa program at policy institute Chatham House and a previous director of the SOAS Middle East Institute.
“I decided to work on the report as far back as March 2023 because I realized that there was no major publicly available study on Europe’s role in Hezbollah’s financial operations, when Europe is a key money laundering hub for the group,” she said.
Since the 1980s, in a bid to destroy Hezbollah, Israel has attacked Lebanon multiple times and launched countless thousands of airstrikes against targets in the country. Tens of thousands of Lebanese citizens have been killed in the process.
Smoke rises after an Israeli strike in central Beirut's Bachora neighborhood in Beirut, Lebanon, on March 12, 2026 following an escalation between Hezbollah and Israel. Reuters/file photo)
On Tuesday Israeli airstrikes killed at least 13 people in southern Lebanon, including two paramedics trying to help victims of an earlier attack. More than 2,860 people have been killed since March 2, when Israel and the US attacked Iran and Hezbollah responded with rocket fire. At least 380 people have been killed since the shaky ceasefire came into force on April 16.
Khatib said her report carried a clear message: “Hezbollah is not only an armed group it is a financial system. Disrupting it requires going after the system, not just the commanders.”
The report was co-authored by Anrike Visser, an independent investigator and police adviser specializing in the illicit movement of money.
“They are professional, organized and hard to detect due to fragmentation across Europe.”
Opinion
This section contains relevant reference points, placed in (Opinion field)
The report concludes that Hezbollah is able to exploit Europe so effectively as a hub for money laundering and a wide range of other illicit financial activities in part because of “the fragmented designation of Hezbollah as a terrorist organization across European jurisdictions, allowing elements of its network to continue operating legally.”
This is compounded by the lack of consistency over the status in Europe of Iran’s Islamic Revolutionary Guard Corps, which works hand in glove with Hezbollah on a range of financial operations.
This “makes it difficult to trace IRGC-related financial activities across European borders and allows entities in Europe masquerading as charities or religious organizations to conduct financial transactions for Hezbollah’s benefit.”
The report highlights the key role of the Business Affairs Component of Hezbollah’s External Security Organization in its international drugs and weapons trafficking and money laundering operations.
The BAC was founded in the early 2000s by Imad Mughniyah, the then head of international operations for Hezbollah, who was killed in 2008 by a car bomb in Damascus. According to a subsequent investigation by the Washington Post, the bomb was made by the CIA and triggered remotely from Tel Aviv by Mossad agents.
A Lebanese boy holds a box of badges with portraits of Hezbollah chief Hassan Nasrallah and the Shiite group's slain top commander Imad Mughniyah during a rally in the southern suburbs of Beirut on March 24 2008, to mark the end of a 40-day mourning period for Mughniyah who was killed in a car bombing in Damascus. (AFP file photo)
But the operation he had set up continued, uninterrupted, emphasizing the point that simply targeting the Hezbollah leadership is not sufficient to fatally disrupt the group.
To this day “BAC works with Latin American cartels, helps move cocaine into Europe and the United States and then launders the proceeds through trade,” Khatib said.
This is how the system works:
The cash from cocaine sales is used to buy legitimate goods in Europe, such as luxury cars and watches.
Those goods are then shipped to West Africa, sold and the proceeds moved onward to Lebanon or elsewhere, “with Hezbollah taking a fee and in some cases using the money to purchase weapons for itself and affiliates in Syria and Iraq.”
Hezbollah, Khatib said, found it ridiculously easy to pour drugs into Europe.
The cash from Hezbollah's cocaine sales is used to buy legitimate goods in Europe, such as luxury cars and watches, according to Europol. (AFP file photo)
The BAC buys drugs, mainly cocaine, from South American drug cartels such as La Oficina de Envigado in Colombia.
“Drugs are shipped to Europe using diversified transport methods, embedded in normal trade and travel,” Khatib said.
“It is hard for Europe to turn off (the flow of drugs) because only 2-10 percent of containers at European ports are inspected, because goods and proceeds are mixed with legitimate commerce and because the chain crosses several jurisdictions with different legal and enforcement standards.”
The part of the BAC organization specifically focused on operations in Europe is called The Cedar Network, which works to convert cocaine proceeds into apparently legitimate trade.
But not all of the individuals and entities it draws into its complex web are knowing collaborators.
“Some actors are clearly part of Hezbollah-linked networks, some are professional criminals who work with Hezbollah because it is useful to them and some gatekeepers may be witting or unwitting facilitators,” Khatib said.
“Hezbollah uses a layered ecosystem of front companies, intermediaries, proxies, accountants, lawyers, art dealers and other gatekeepers but some such actors play unwitting roles in facilitating financial crime.”
Containers are seen stacked up on the container ship MSC Maria Elena at the port of Antwerp, Belgium September 23, 2022. Because only up to percent of containers at European ports are inspected, the flow of drugs from Latin America and elsewhere remain undisrupted, say analysts. (Reuters/file photo)
In particular, the network exploits the regulatory frailties of the markets in art and diamonds to launder money. It is a complex but highly rewarding process.
“Someone can buy or sell an artwork or diamond at an artificial price, hide who really owns it through relatives or front companies and use the transaction to move or disguise illicit money under the cover of normal high-end commerce,” Khatib said.
“Aliases, family members, associates and front companies are used to conceal beneficial ownership while exploiting the fact that art prices are subjective and diamonds can gain legitimacy and value through grading, certification and cross-border handling.”
One individual at the center of Hezbollah’s global network of money laundering and sanctions evasion, named in the report, is Nazem Said Ahmad, designated a global terrorist by the US in 2019 and on whose head the US Rewards for Justice scheme has placed a $10 million bounty.
Ahmad remains at liberty. None of this has stopped him operating, with apparent impunity. The US State Department describes Ahmad, who is based in Lebanon and Belgium, as “a prominent Lebanon-based money launderer and significant Hezbollah financier,” who generates funds “through his longstanding ties to the ‘blood diamond’ trade.”
This picture shows the facade of the Artual Gallery in Beirut on April 19, 2023, an art gallery owned by Hind Ahmad, the daughter of Nazem Said Ahmad, whom the US Treasury accused of financing the Hezbollah movement. (AFP file photo)
He “stores some of his personal funds in high-value art in a preemptive attempt to mitigate the effects of US sanctions and he opened an art gallery in Beirut as a front to launder money.”
In Lebanon, Ahmad is famous for his wealth and opulent lifestyle. His extensive art collection, worth tens of millions of dollars, is said to include works by Pablo Picasso and Andy Warhol, “many of which have been on display in his gallery and penthouse in Beirut.”
Matters have been complicated further for Europe’s financial authorities by Hezbollah’s enthusiastic embrace of cryptocurrencies, including the hugely profitable Tether.
According to its website, Tether “works to disrupt the conventional financial system via a more modern approach to money” and “has made headway by giving customers the ability to transact with traditional currencies across a blockchain, without the inherent volatility and complexity typically associated with a digital currency.”
READ MORE:
• Interactive map exposes shocking scale of Hezbollah’s global crimes
• Opinion: World should not overlook Hezbollah’s illegal activities
• Opinion: Hezbollah has turned Lebanon into a narco-state
• Opinion: Hezbollah’s multipurpose drug trade
• Hezbollah associate pleads guilty to money laundering conspiracy in US
The report said that, unlike with Bitcoin, global law enforcement agencies were less experienced in tracing transactions in Tether and similar cryptocurrencies.
Hezbollah also makes use of more traditional money transfer systems, such as hawala broker networks but there is a clear overlap between practices old and new.
The report highlights the case of Lebanon-based Syrian hawala operator Tawfiq Muhammad Said Al-Law, “who provided Hezbollah with digital wallets for cryptocurrencies in order to receive funds from IRGC commodity sales.”
In March 2024 Al-Law was among individuals sanctioned by the US Treasury’s Office of Foreign Assets Control “for having materially assisted, sponsored or provided financial, material or technological support for, or goods or services to or in support of Hezbollah.”
Yet Hezbollah’s European operators and operations and their Lebanon-based enablers have proved largely immune to sanctions regimes.
“The US is at the forefront of tracking and countering Hezbollah’s finances and US sanctions matter especially because of the global role of the US dollar,” Khatib said.
A man counts money at an exchange booth at the Buqayaa smugglers market on Lebanon's border with Syria close to Wadi Khaled on September 21, 2011. (AFP file photo)
“But many sanctioned actors and companies continue transacting. Sanctions are undermined by inconsistent scope, by the fact that many Hezbollah-linked facilitators remain unsanctioned and by the mismatch between US designations and European legal practice.
“So sanctions bite but they do not by themselves dismantle the network.”
There was, she said, no silver bullet solution to the problem. Cutting off the flow of funding to Hezbollah from its European operations is as complex a proposition as the operations themselves.
But the recommendations of the report can be summed up in one simple phrase: Europe needs to get its act together.
“The problem is not that there is no international collaboration,” Khatib said. “There is some, including US-Europol cooperation and the Law Enforcement Coordination Group.”
The LECG, convened by Europol and the US State and Justice departments, is focused on countering Hezbollah’s terrorist and illicit activities and brings together law enforcement, prosecutors and financial practitioners from across the Middle East, South America, Europe, Africa, Asia and North America.
Lina Khatib, associate fellow, MENA program at Chatham House. (Supplied)
“The problem is that collaboration is still outmatched by legal fragmentation, limited enforcement capacity, weak jurisdictions and the social embeddedness of Hezbollah’s networks.”
Europe must move toward “a single, unified designation of Hezbollah as a whole, because the current split between political and military wings in some countries creates an obvious enforcement gap,” Khatib said.
Financial authorities “should tighten beneficial ownership transparency and scrutinize not just Hezbollah operatives but the family members, nominees and front companies around them.”
They should also apply “much more pressure to gatekeepers — lawyers, accountants, art dealers, company service providers and others — because these are the bridges between illicit money and legitimate markets.”
On the trade side, Europe must use “much more aggressive risk-based container targeting and customs cooperation, because the present inspection rate is plainly too low for this level of threat,” she said.
Finally, European authorities “should treat Lebanon’s governance and financial opacity as part of the European security problem rather than as a separate regional issue … Once money reaches Lebanon, it moves into a system marked by political interference and weak oversight.”
