For more than four decades, Al-Qard Al-Hassan operated in Lebanon with relatively little scrutiny, outside the oversight of the central bank and largely beyond direct judicial accountability. It weathered wars, a devastating financial collapse and U.S. sanctions, while expanding its reach after the country’s banking sector imploded in 2019 and millions of Lebanese lost confidence in traditional financial institutions.
In recent days, however, the issue has entered a new phase.
Justice Minister Adel Nassar referred the organization’s file to Lebanon’s Public Prosecutor, while the Interior Ministry withheld its annual administrative certification.
Officially, Lebanese authorities have not announced any decision to shut down the association or ban its activities. Yet the two steps have opened one of the country’s most politically sensitive files: the financial network that Hezbollah has spent years building outside Lebanon’s formal banking system.
The move comes as Lebanon seeks to repair its relationship with the global financial system and secure its removal from the Financial Action Task Force’s gray list. International pressure has mounted on Beirut to strengthen anti-money laundering and counterterrorism financing measures, while tying reconstruction assistance and economic support to financial reforms.
A government source previously told Alhurra that the next phase could involve measures targeting institutions linked to Hezbollah’s financial infrastructure. As a result, the Al-Qard Al-Hassan case is increasingly viewed as a test of the Lebanese state’s ability to confront a parallel economy that has long been intertwined with the group’s social and financial influence.
Investigation Before Accusation
At this stage, the referral does not amount to a formal legal charge.
The process began with a request from the justice minister asking prosecutors to examine the nature of Al-Qard Al-Hassan’s activities and determine whether they are consistent with Lebanese law and the license under which the organization operates.
Nassar said in public remarks that no political party had asked him to raise the issue in cabinet. He added that he was acting out of the conviction that the law should be applied and that the matter should not be viewed as part of a political confrontation.
Human rights lawyer and activist Diala Shehadeh described the move as the beginning of an investigation rather than an accusation. According to her, authorities must first gather documents and evidence, hear from those involved and assess the organization’s activities before determining whether any violations warrant prosecution.
Mohassen Mersal, a researcher specializing in financial and economic crime, said investigators would likely focus on the association’s legal status, sources of funding, financial flows and the entities behind its operations.
From Lending Association to Financial Network
Al-Qard Al-Hassan traces its origins to the early 1980s, when it received authorization as a social association providing limited loans. Over time, however, its role expanded significantly, particularly in Hezbollah strongholds, where it established branches offering loans backed by gold collateral and a range of financial services.
Mersal argues that the institution has moved beyond the traditional framework of a charitable or social organization and now functions more like a financial institution whose activities warrant regulatory and legal scrutiny.
The debate surrounding Al-Qard Al-Hassan has never been purely legal.
Critics of Hezbollah view the institution as a central pillar of the group’s financial infrastructure and a mechanism for circumventing sanctions and banking restrictions.
The U.S. Treasury Department, which sanctioned Al-Qard Al-Hassan in 2007, says the institution serves as a cover for Hezbollah’s financial activities and provides access to the financial system. In 2021, Washington imposed sanctions on individuals it said used personal accounts at Lebanese banks to channel roughly $500 million on behalf of the organization.
Branches of Al-Qard Al-Hassan were also targeted by Israeli strikes during the war between Israel and Hezbollah. Yet the attacks did not halt its operations. The institution reopened some damaged facilities and resumed activities, reinforcing perceptions that it is not merely a service provider within Hezbollah’s sphere of influence but a component of a broader economic structure.
A Safety Net for Hezbollah and Its Constituency
For many Hezbollah supporters, Al-Qard Al-Hassan presents itself as a social support network in a country where banks collapsed, deposits were frozen and access to small loans became increasingly difficult.
That social role is also a source of political strength.
Political analyst Khaled Al-Hajj told Alhurra that the institution has served as a bridge between Hezbollah’s political and military structures and its social base by providing reliable financial services to large segments of its constituency.
Its importance grew, he said, as Hezbollah’s networks expanded and the group faced increasing U.S. sanctions and Israeli pressure. In his view, the organization helped shield parts of Hezbollah’s social environment from the effects of Lebanon’s financial crisis while maintaining a direct, everyday connection between the group and its supporters.
For that reason, Hezbollah treats any effort to target Al-Qard Al-Hassan with particular sensitivity. From the group’s perspective, the issue is not simply about a financial institution but about a support system tied to its constituency and its legitimacy within that community.
Economic journalist Khaled Abu Shakra told Alhurra that Hezbollah has long viewed Al-Qard Al-Hassan as a matter carrying symbolic significance comparable, in some respects, to the issue of its weapons, making any concession especially difficult.
Lebanon Under International Scrutiny
The Al-Qard Al-Hassan case cannot be separated from Lebanon’s broader effort to rejoin the international financial system after years of economic collapse.
Last July, the central bank issued a directive prohibiting licensed financial institutions from dealing, directly or indirectly, with unlicensed entities, including Al-Qard Al-Hassan.
Abu Shakra said the continued operation of unlicensed institutions or organizations subject to international sanctions increases risks for the Lebanese economy. Foreign correspondent banks, he noted, may intensify scrutiny of transactions linked to Lebanon or reduce their exposure to Lebanese banks if they conclude that the financial environment remains vulnerable to insufficiently regulated activity.
Mersal said international concerns extend beyond Al-Qard Al-Hassan itself. Lebanon faces broader challenges, including heavy reliance on cash transactions, shortcomings in anti-money laundering and counterterrorism financing legislation, and limited state capacity to monitor all financial channels operating within the country.
That reality makes the investigation part of a larger battle over Lebanon’s image and credibility abroad. International partners are looking not only for regulations and investigations, but for evidence that Lebanese authorities can enforce the law against politically and security-sensitive institutions.
The Limits of the Confrontation
Even so, few expect the case to result in the immediate closure of Al-Qard Al-Hassan.
Such a move would require significant political backing and could trigger a direct confrontation with Hezbollah at a time when the state is grappling with what many officials consider more pressing issues, including Hezbollah’s weapons, postwar reconstruction, border arrangements and relations with foreign partners.
Abu Shakra expects the initial approach to focus on restricting some of the institution’s activities and requiring it to operate within the limits of its original license. That could include ending services that give it characteristics associated with banking institutions, such as automated teller machines and certain forms of money transfers and lending, pending a broader political understanding between the state and Hezbollah over financial and security matters.
The judicial process itself could take months before reaching definitive conclusions. It may result in prosecutions, regulatory recommendations or a compromise that allows the state to demonstrate seriousness without escalating into a broader confrontation.
What has changed, however, is that Al-Qard Al-Hassan is no longer outside official scrutiny. After years of sanctions, warnings and international reports, the issue has entered Lebanon’s judicial system.
That alone makes the case far larger than a dispute over the licensing of a single association.
Adapted and translated from the original Arabic.
