The Half-Hour Before the Sanctions

A licensed exchange house in Chtaura, a US designation, and the difference between a channel and its customers.

Contents

1. A business with more than one address
2. The money need not make the whole journey
3. The European trail
4. A replacement business
5. Another account, across another border
6. When the banks stopped being the answer
7. Sources

Kassem Chams said he needed half an hour. The caller was speaking English, and he wanted to find someone who could understand it. According to the account he gave Lebanese broadcaster LBCI in April 2019, the person on the line was from the United States Treasury Department. When the call came again, he was told that sanctions had been imposed on him. Chams said he replied that he did not own a bank account. He would find a lawyer to pursue the matter in New York.

The statement he made publicly was equally direct. He denied a financial relationship with Hezbollah and disputed Washington’s description of his business. His company, he said, handled only a few thousand dollars a day. Treasury was alleging a network moving tens of millions a month. Those figures described different scopes of activity, but the distance between the two accounts was unmistakable¹.

There was another disagreement. Chams told LBCI that the action concerned him personally, rather than his exchange business. The announcement named both. On April 11, the United States had targeted Chams, the organization it called his money-laundering network, and Chams Exchange, a licensed business in Chtaura, Lebanon. A dispute about a money changer had become a dispute about the reach of an international financial service¹.

A business with more than one address

Treasury’s account stretched across ten countries, from Australia to Colombia, through European collection points and back toward Lebanon. It named La Oficina de Envigado and Ayman Joumaa among the trafficking interests served by the organization. The allegation was that Chams could move proceeds across this geography and facilitate movements for Hezbollah. The announcement supplied no public transaction ledger allocating the monthly total among those clients¹.

Joumaa’s name carried an older case into the new one. A federal indictment announced in December 2011 accused him of coordinating cocaine shipments from Colombia toward Mexico’s Los Zetas and laundering proceeds back to suppliers. Prosecutors alleged fees of eight to fourteen percent⁹. That percentage belonged to the Joumaa allegations; it did not establish what Chams charged. The importance of the connection was the kind of service Treasury said Chams supplied to an already identified international customer¹.

For a trafficker, collecting money and possessing usable money are different achievements. Customers pay in one place; suppliers and partners expect settlement somewhere else. An intermediary who can bridge those obligations can become valuable to several organizations at once. Former undercover federal agent Robert Mazur has argued that such specialists are important investigative targets precisely because their client relationships cross criminal boundaries. They may hold the records and know the people that connect otherwise separate enterprises⁸.

Washington applied two classifications in the Chams action: the narcotics sanctions framework of the Kingpin Act and identification of a Hezbollah-affiliated network under the Hizballah International Financing Prevention Amendments Act. The distinction matters to the story. Authorities were targeting an alleged commercial service and its attributed beneficiaries together, rather than announcing a criminal judgment against the exchange owner¹.

Writing the following day, Emanuele Ottolenghi and Matthew Zweig of the Foundation for Defense of Democracies saw an opportunity to go further. They advocated pressure on the businesses and services supporting the designated network. Their argument moved the focus outward: an exchange could be isolated not only through action against its owner but through the decisions of everyone who continued to work with it. This was a policy proposal about extending pressure, not an additional court finding about Chams². The immediate US action already carried practical consequences: covered property had to be blocked, and US persons were generally barred from dealings involving the designated parties. Chams’s reported response that he had no bank account did not answer the whole measure. It reached property and dealings within US jurisdiction, not only a personal account bearing his name. The dispute had moved from what the business said it did to which counterparties could continue handling its transactions¹.

The money need not make the whole journey

An exchange house can occupy a position that its physical premises scarcely explain. Its reach depends on counterparties elsewhere: people who can pay a beneficiary, accept an obligation or settle a balance. In his explanation of hawala for the IMF’s Finance & Development magazine, economist Mohammed El-Qorchi began with a familiar use—workers sending money to families in another country. The arrangement exists because a household needs purchasing power at the other end, not necessarily the same banknotes²⁰.

The Financial Action Task Force describes non-bank settlement as a distinguishing feature of hawala and similar services. It also separates legitimate operators, businesses drawn unwittingly into abuse, and knowingly complicit providers. That distinction prevents a useful payment mechanism from becoming a synonym for crime. The questions are who supplied the value, what the intermediary understood, and whose obligation was ultimately discharged¹⁹.

Goods can enter this picture without making every purchase fraudulent. The US Government Accountability Office’s research on trade-based laundering explains that false invoices may be used, but are not indispensable. An ordinary-looking commercial transaction can help move illicit value. Conversely, the presence of merchandise, an exchange house or an overseas customer does not by itself establish laundering. The financial purpose has to be understood alongside the trade¹¹.

Chams’s Lebanese license therefore belonged at the center of the case. It was not a detail Treasury overlooked: the department explicitly acknowledged central-bank licensing and supervision¹. Washington was alleging that illicit services operated through an institution with formal standing, while Chams insisted that the business and its financial movements were legitimate^1,14.

Lebanon’s published money-changer law establishes a recognizable profession. It requires licensing, distinguishes categories of exchange activity and imposes recordkeeping duties. It also separates exchange institutions from ordinary deposit-taking banks. The statutory text puts their books under supervisory control and excludes them from the banking-secrecy protections it specifies. There was a framework through which a business could be examined. Whether its records supported the allegations was a different question from whether such records were legally required¹⁸.

The later MENAFATF evaluation makes the institutional picture more precise. Some category A exchange firms are licensed for hawala; only a small number ship banknotes across borders. Assessors described uneven implementation of controls rather than a wholly unregulated sector, and recorded nineteen exchange-license write-offs between 2017 and 2021. Those were sector-wide figures, not findings against Chams. They show why a license and effective scrutiny cannot be treated as interchangeable. The evaluation also described training requirements for managers and authorized partners, and different levels of control implementation across exchange categories. A supervisor could therefore ask concrete questions about customer information, staff preparation and the handling of risk. The issue was how those obligations worked inside a particular business, not whether every exchange operated beyond the reach of law¹².

The European trail

Before the sanctions call, Chams Exchange had appeared in reporting on a French investigation. In November 2018, Le Monde described European cash handovers in a hairdresser’s, a hotel, a restaurant and a café. The paper linked the exchange to the inquiry through DEA cooperation and described its alleged settlement role. Noureddine, one of the central defendants, denied knowing the funds’ origin. This was reporting as the trial opened, not a judgment against Chams¹⁵.

The DEA’s February 2016 announcement had presented the operation in broader terms. It described coordinated arrests with European partners and said the investigation grew out of leads from the Lebanese Canadian Bank inquiry. For investigators, the significance lay in relationships continuing across cases: a financial trail uncovered in one inquiry could lead to a different set of collectors, companies and intermediaries years later⁷.

Treasury had separately designated Noureddine and his company, Trade Point International, in January 2016. It alleged that he provided services to Adham Tabaja and other Hezbollah-linked clients. That action used a terrorism sanctions authority, Executive Order 13224. It supplied Washington’s explanation of Noureddine’s attributed Hezbollah connections; it did not turn every business named around the European inquiry into the subject of the same legal finding²¹.

The people pursuing the case did not always agree on its public description. In a 2020 account, DEA official John Fernandez recalled friction with European partners over emphasizing Hezbollah in announcements about Operation Cedar. His account helps explain why the same investigation could be discussed as an international criminal-finance case in one setting and a campaign against Hezbollah’s support network in another. Fernandez also acknowledged that a precise figure for Hezbollah’s criminal revenue was unknown⁵.

FDD researchers Tony Badran and Ottolenghi later described Chams Exchange as a major settlement point, citing a French court document supplied to them privately. Their account adds a research interpretation of the exchange’s position in the network. The underlying document was not reproduced as a publicly inspectable judgment against Chams³. The documented progression is from investigation and reporting to an administrative designation; a conviction of the exchange owner is not established by that sequence^1,3.

A replacement business

The older Lebanese Canadian Bank case explains why investigators watched for institutions taking over financial work. In 2013, the bank agreed to forfeit $102 million to resolve US civil claims. The government had alleged a route joining financial transfers, American used-car purchases, West African sales and funds returning to Lebanon. The settlement closed claims against the bank and specified assets; it did not close the larger problem of where the business would move next¹⁰.

That same year, Treasury alleged that Rmeiti and Halawi exchange houses had picked up work after earlier action against the bank and other exchanges. It invoked Section 311 against non-bank institutions for the first time. The announcement combined an immediate reporting order with a proposed further restriction. These were different procedural steps, but together they expressed the same concern: removing one institution could redirect customers toward another⁶.

Chams was not simply another name to insert into those earlier transactions^1,4,6. His designation came six years later and had its own allegations¹. But the earlier cases reveal the recurring strategic problem. A network organized around services can survive a change of provider. Clients need someone able to complete settlement; the next intermediary may inherit the work without inheriting the predecessor’s corporate identity^4,6.

INSS researchers describe Hezbollah’s financial arrangements in these terms: dispersed institutions and intermediaries rather than one central location. Their analysis argues that replaceable financial nodes can limit the lasting effect of targeting a single one. It also explicitly recognizes that most diaspora financial activity is legitimate. Both observations belong together. International relationships can give an illicit network resilience without making an entire diaspora responsible for it⁴.

In remarks later in 2019, Treasury official Marshall Billingslea used Chams as an example of the overlap Washington saw between criminal services and Hezbollah finance. Yet he also described Iran as supplying the bulk of Hezbollah’s funding. The attributed narcotics connection was part of a larger financing picture, not a public accounting of everything the organization received²⁹.

Another account, across another border

A 2021 OECD study introduced a different reported connection. Its researchers relayed anonymous interview accounts of gold delivered to Chams-named shops in Cúcuta, Colombia, against value released abroad. A separate coded source identified those outlets with Chams Exchange. The study offered a reason to investigate how gold and financial settlement might intersect; it did not publish the ledger of an identified transfer from a named customer to Hezbollah³⁰.

The detail is significant because it concerns value rather than a single cash route. Under the reported arrangement, a customer’s asset and the beneficiary’s payment could be separated geographically. But this remains the OECD report’s interview-based account. It cannot establish that a particular gold bar financed a particular operation, or that the entire alleged monthly narcotics volume was converted into gold. The connection should be followed at the level the evidence supports³⁰.

By then, the country at the other end of these allegations was undergoing a transformation much larger than one exchange business.

When the banks stopped being the answer

The pressures had been visible before Chams’s designation. In 2018, the IMF described slowing deposit inflows in a system that depended on them to finance Lebanon’s deficits. The discussion concerned vulnerabilities inside the banking model, not a finding that a single sanctioned firm caused the later collapse²⁸.

After the crisis began, the practical meaning of access to money changed. By May 2024, IMF staff were describing frozen deposits and banks unable to provide credit to the economy. Their warning was that failure to resolve the banking crisis would deepen reliance on cash and informal activity. Households and businesses still had bills to pay while the institutions meant to hold and circulate their money could no longer perform their usual role¹⁶.

The World Bank documented the retreat. Account ownership among adults fell from 45 percent in 2017 to 21 percent in 2021 in the data it cited. Money-transfer operators became important for remittances, wages and social payments. Its estimate of a cash economy approaching half of GDP measured economic activity outside normal banking channels; it was not an estimate of criminal money. Digital payments had retreated too: the share of adults making them fell from 27 percent to 5.7 percent over the same period. The change concerned daily transactions as well as savings. An economy could keep exchanging goods and paying people while losing much of the routine use of accounts and electronic payments through which those exchanges had previously been recorded¹³.

Currency depreciation intensified the change^26,27. The World Bank reported that the pound had lost more than 98 percent of its pre-crisis value by February 2023. A payment’s currency could now be as important to a family as its nominal size²⁷. Separate poverty research found that foreign-currency earnings offered protection against the loss of purchasing power, although access was unequal and the survey covered only part of the country²⁶.

This is where the distinction between channels and customers becomes concrete. Mercy Corps’s 2023 household research found that most surveyed remittance recipients had started receiving support after 2019. The assistance was often paying for immediate needs rather than investment. The study also cautioned that unequal access to relatives’ support could not substitute for public social protection. These transfers were helping people survive a banking and income crisis²³.

Regulators faced both obligations at once. Lebanon’s FATF action plan called for stronger financial-sanctions implementation beyond banks, among other measures. FATF also warned against disrupting legitimate remittances and humanitarian flows. A financial system had to become harder to abuse without making it harder for families to receive ordinary support²⁴.

Chams’s entry remained on the retrieved OFAC list, updated in October 2026. The public record still carried the allegations he had rejected after the phone call. A listing records an administrative action; it does not fill in the missing details of every transaction or replace a criminal judgment¹⁷.

The broader stakes, meanwhile, were visible in the household research. In Christelle Barakat’s LCPS report, remittances paid for food, healthcare and electricity. Those findings came from surveys and interviews, not the files of a narcotics investigation²². At the end of an international transfer could be an illicit settlement¹. It could also be a household keeping the lights on. Understanding the intermediary requires knowing which obligation the money has come to pay²².

Sources