Within a single year, Israel paralyzed the financial system of the Shi’ite axis. In Operation Northern Arrows against Hezbollah in Lebanon in 2024, Israel severely damaged Hezbollah’s Lebanese channels for transferring money, its pool of money exchanges, and its main bank, Al-Qard al-Hassan Bank, blocking the organization’s ability to pay compensation to families harmed in the war.
In Operation Rising Lion against Iran, key people in the transfer of money from Iran to its proxies in the Middle East were killed, and its exchange mechanisms were damaged. This was a severe blow to Hezbollah and Iran, and to some extent also to Hamas, but the experts warn that without additional sanctions – perhaps under US pressure – the Iranians will easily be able to recover, with the aid of other countries that have rushed to lend them a hand, among them China, Russia, and Qatar.
"To make life difficult for Hezbollah"
Only recently has it emerged how effective the IDF and other security services’ financial campaign against Hezbollah has been, no less than the military campaign. After the operations in Lebanon and Iran, it turned out that Hezbollah had not paid compensation to casualties of the war with Israel and their families through Al-Qard al-Hassan Bank for a week.
Since the ceasefire in Lebanon in November last year, the bank has distributed at least $500 million in compensation to the Shi’ite population.
Before October 7, 2023, Hezbollah enjoyed an endless flow of cash from several sources, which it used to pay tens of thousands of terrorists and their families, to pay bribes to state officials, and to buy arms. Its control of Al-Qard al-Hassan Bank gave it almost complete financial freedom throughout Lebanon.
Control of the airports and seaports and the open border with Syria under Bashar Al-Assad enabled Hezbollah to transfer cash in suitcases and crates from Europe and South America, from trading in narcotics, among other sources.
Even after the collapse of the Assad regime in Syria and the end of Syria as a main exchange channel in December last year, Iran managed to transfer hundreds of millions of dollars to Hezbollah through the "Hawala" network, based on trust, of money transfer without money movement. Money was thereby transferred from the Quds Force of Iran’s Islamic Revolutionary Guard Corps. to money changers in Iraq, Turkey, and the UAE to exchanges in Lebanon, and from them to Hezbollah, according to information released by the IDF last week.
The war that the IDF declared last October on Hezbollah’s presence in the Lebanese banking system scored several achievements, each of which was considerable by itself. Branches and vaults of Al-Qard al-Hassan Bank throughout Lebanon were bombed; the US pressured the new Lebanese government under President Joseph Aoun to restrict Hezbollah’s ability to use the Lebanese banking system, in return for aid; and there were two significant killings in the operation in Iran.
The first was the elimination of Haytham Abdullah Bakri, who had headed the Al-Sadiq currency exchange. The second was the killing of Behnam Shahriyari, a prominent official of Quds Force Unit 190, who exclusively managed the mechanisms for the flow of hundreds of millions of dollars to the Quds Force and its proxies around the region.
Former Mossad official Udi Levi, who headed the organization’s Economic Warfare Unit, and is an expert of financial war on terrorism, warns, "The totality of threats has not finished off Hezbollah, which could recover in time. Its drug dealing business still thrives, and $1.5 billion of Al-Qard al-Hassan Bank have not been confiscated or destroyed – they still shelter under hospitals. Continued enforcement by Israel and the US together with the pressure exerted by the government in Lebanon could continue to make life difficult for Hezbollah and its recovery efforts."
China helps Iran
The twelve-day Operation Rising Lion against Iran struck a critical blow at the country’s financial infrastructure. Bank Sepah, which is connected to the Islamic Revolutionary Guard Corps. and provides financial services to it was attacked by a group of pro-Israeli hackers, which froze the payment of wages to Revolutionary Guard troops and halted the mechanism for distribution of food vouchers and welfare payments by the Iranian administration to its citizens. ATMs were also attacked, as were the gas and oil fields in Fars province.
Iran’s economic infrastructure was hard hit, and is now licking its wounds, but China, Russia and Qatar are willing to help. Udi Levi says that despite the direct sanctions on Iran and its oil trade, Chinese straw companies already sell oil, commodities and products from Iran, assisted by European banks.
The money does not of course flow directly to Iran, but to the Chinese straw companies, which buy equipment and machinery that reach Iran via cover companies, in an offset mechanism. "There is talk of repeat attacks by Israel and the US on Iran in the future, but no less importantly it is necessary to see how the Europeans can be brought into the war on Chinese straw companies that help Iran. Closing the Iranian tap at the European banks could be as lethal for the Ayatollahs’ regime as a military offensive."
"There’s agreement among the countries of Europe to do business with Iran under cover – whether its commercial companies, fuel companies, or ships sailing under the flag of a different country," says Adv. Nitsana Darshan-Leitner, founder of Shurat HaDin – Israeli Law Center, which represents terror victims in legal actions against terror organizations and their supporters, and author of "Harpoon: Inside the Covert War Against Terrorism's Money Masters."
"If you want to impose sanctions on Iran, they have to be hermetic, and include the European banks, and here President Trump should put fear into anyone who collaborates with them – but this is a loophole that has never been dealt with up to now. Successive US presidents have preferred to give Iran enough breathing room to keep oil prices low." Realpolitik, Darshan-Leitner says, limits the motivation of Western countries to combat terrorism in other places.
The imposition of sanctions on banks that work with Al-Qard al-Hassan Bank is limited "because of the fear of severely hurting the Shi’ite population of South Lebanon, even though this is the most effective way of getting at Hezbolah." International money transfer agencies are protected against sanctions because of their status as important international economic arteries.
Hamas could recover
Darshan-Leitner explains that Hamas too could recover quickly, despite the killing of the Quds Force officer responsible for the flow of funds to the organization, Saeed Izadi. "Hamas has many separate financial sources. It’s the main food supplier in the Gaza Strip, and although Qatar has stopped sending it suitcases full of dollars, it continues to finance it through its charitable societies, to the tune of hundreds of millions of dollars. Israel must take action against the Qatari charitable organizations and demand that the government of Qatar should stop transferring money to Hamas."
Despite the recommendations of action against the Chinese straw companies and the Qatari charities, the National Bureau for Counter Terror Financing in the Ministry of Defense currently operates without a head, which indicates the low priority that the Israeli government gives to economic warfare. Paul Landes stepped down the post a few weeks after a leaving date set a year ago. His term was not extended, and no replacement has been appointed.
Published by Globes, Israel business news – en.globes.co.il – on July 1, 2025.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.
