FinCEN’s Latest Advisory on Hizballah Finance: Action Steps for FIs of All Sizes

The Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Treasury, recently issued an alert highlighting indicators of financial activities tied to Hizballah. These advisories are essential for U.S. financial institutions (FIs), yet without robust intelligence teams—such as those available in major banks—many FIs may find themselves with the information but unable to fully operationalize it.

As I’ve often emphasized regarding such typology advisories, effective implementation relies on an adaptable, highly customizable anti-money laundering (AML) system. If an FI depends solely on its AML provider for detection capabilities, it may be left waiting.

However, there are immediate steps that institutions can take to implement aspects of the advisory:

1) Hizballah’s reach goes beyond Lebanon and Iran. The alert notes several countries linked to Hizballah activities, including West African nations, Argentina, Paraguay, and Brazil—many of which are not traditionally flagged as “high-risk” in standard AML systems.

2) Multiple industries are identified as Hizballah-linked across these regions. Integrating these industry codes (such as NAICS) into a conditional rule-building process within your AML system is critical.

3) Charities and trusts with Lebanese connections should be flagged for review, especially if they exhibit connections through IP addresses, beneficial ownership (UBO) citizenship, mailing addresses, or ATM withdrawal locations.

4) Used car businesses transacting with West African countries? Such entities should be flagged for review.

Guidelines provided in FinCEN’s May 2024 alert remain relevant. Smaller institutions, including community banks and credit unions, must regard their AML monitoring tools as adaptive and able to incorporate FinCEN’s typologies.

If your current AML setup operates on a “set it and forget it” model that lacks the flexibility to address threats specific to your institution, it may be time to consider a new system. Accurate, accessible data will enable FIs to better implement not only this alert but also future ones.

By fLEXI tEAM