Hezbollah has stepped up efforts to convert cash held by the group and funds in accounts linked to its companies and associates in Lebanon into gold, Lebanese security sources told Erem News, as it seeks to preserve the value of its assets and prepare for possible new banking and regulatory measures.

The sources said the shift reflects expectations of tighter measures by the Central Bank of Lebanon and increased U.S. scrutiny of cryptocurrency channels suspected of being used to move money linked to Iran and its allies outside the traditional banking system.

Hezbollah has also reduced its reliance on diamonds as a store of value and means of transferring money because of difficulties in reselling them and converting them quickly into cash, the sources said.

Instead, Hezbollah-linked traders and individuals have been instructed to increase purchases of gold through the local market or from people who previously brought gold bars into Lebanon illegally, they said.

Some transactions have involved the purchase of gold bars and jewelry from individuals within communities surrounding Hezbollah, in deals the sources described as raising financial suspicions.

Money withdrawn from banks

The increased gold purchases have coincided with moves by businessmen and commercial companies affiliated with Hezbollah to withdraw part of their funds from Lebanese banks, the sources said.

The withdrawals come amid information about possible new Central Bank measures targeting accounts suspected of being linked to Hezbollah financing, money laundering or terrorist financing, they said.

The developments coincide with Lebanese Prime Minister Nawaf Salam's meeting with U.S. Treasury Secretary Scott Bessent in Washington, where they discussed efforts to combat Lebanon's cash economy, reduce the use of money outside the formal financial system, improve transparency and compliance, and fight money laundering and terrorist financing.

A Lebanese security source said Hezbollah had previously relied on cryptocurrencies, moving funds through a series of transactions to finance commercial activities linked to the group or transfer money through networks operating for Iranian entities abroad amid sanctions on Tehran.

Stronger anti-money-laundering and counterterrorist-financing measures, together with tighter monitoring of cash movements across border crossings, have reduced some of the funding channels previously used to move money to Hezbollah, the source said.

That pressure has increased as Washington has expanded sanctions on Iranian economic entities, the source added.

Hezbollah is now seeking to convert some of the money it receives from affiliated companies and commercial entities abroad into gold bars and jewelry that can be held outside traditional banking channels, the source said.

The funds may reach Lebanon through cryptocurrencies or through fragmented transfers made through exchange houses, he said.

The strategy is intended to guard against possible new legal or banking measures targeting accounts, companies or individuals suspected of acting as financial intermediaries for Hezbollah, as well as growing U.S. sanctions against networks linked to Iran and its allies.

Tether draws scrutiny

The developments come as a U.S. Senate report examined Iran's growing use of Tether, a cryptocurrency pegged to the U.S. dollar, to circumvent sanctions and conduct financial transactions outside the traditional banking system.

The report also raised allegations that Tether is being used within financial networks linked to Iran's allies, including Hezbollah.

International economics researcher Munir Younes said Hezbollah's financial system does not depend on a single channel but on a network involving oil and commodity trading through front companies, money changers, remittance channels and the physical movement of cash.

Tether could play a role in moving money between different parts of those networks outside traditional banks, Younes told Erem News. But the arrival of funds in a digital wallet does not automatically mean they can be converted into cash dollars in Lebanon, he said.

The critical link is the money changer or intermediary who provides liquidity and delivers the funds to the intended beneficiary inside Lebanon, Younes said.

Cryptocurrencies have expanded the channels available for moving money but have not eliminated the need for cash in Lebanon, he added.

The main challenge is establishing a direct connection between a specific digital wallet, the intermediary who converts its balance into cash and the money that ultimately reaches the organization, Younes said.

A continuing battle over digital wallets

Lebanese economist Khaled Abu Shakra said unconventional methods used by Iran and its allies to move money, particularly cryptocurrency platforms and blockchain technology, are facing growing U.S. pressure.

That includes measures targeting digital wallets and platforms suspected of being used to move funds from abroad into Lebanon, he said.

Closing a digital wallet does not necessarily stop the flow of money because new wallets can be created quickly, Abu Shakra told Erem News. Tracking such transactions has therefore become an ongoing technological and financial contest between Washington and Iran and its allies, he said.

Some funds may enter digital wallets through cash purchases of cryptocurrencies in countries where financial scrutiny is weaker or through exchange houses before being transferred to entities in Lebanon, Abu Shakra said.

Once inside Lebanon, the funds may be converted into cash through unlicensed entities or financial intermediaries using multiple channels to turn digital balances into physical money before it reaches the intended beneficiaries, he added.