Iran has quietly pumped hundreds of millions of dollars to Hezbollah over the past year using money exchanges and businesses in Dubai, according to people familiar with the operation. The U.S.-designated terrorist group, long serving as Iran’s most important regional proxy, has been scrambling to rebuild its forces and finances after suffering major losses during its conflict with Israel last year.
With the fall of the Iran-backed Assad regime in Syria disrupting key smuggling routes, and Lebanese authorities tightening controls at Beirut’s airport to stop couriers hauling in suitcases of cash, Tehran has turned more aggressively to Dubai as a financial lifeline. Dubai has long served as a commercial and financial hub for the region, and Iran has frequently used it to evade sanctions and move illicit funds.
Sources, including a senior U.S. official, say Tehran is directing oil-sale revenue into exchange houses, private companies and couriers linked to Iran in Dubai. From there, the money is transferred to Hezbollah in Lebanon through the Hawala system—a centuries-old trust-based method that avoids formal banking channels. Funds are deposited with one dealer in Dubai and paid out by another in Lebanon, allowing accounts to be quietly balanced later.
A UAE official insisted the country is working with international partners to crack down on illicit finance and prevent its territory from being abused. Hezbollah and the Lebanese prime minister’s office declined to comment, and Iran’s mission to the U.N. offered no response.
Hezbollah, once considered the world’s most heavily armed nonstate militia, was severely weakened after Israel launched a major air campaign in response to the group’s rocket attacks following the Hamas-led assault on Israel on Oct. 7, 2023. Israeli forces targeted weapons depots and struck senior Hezbollah leaders, dealing the group a significant setback. Hezbollah now faces heavy financial burdens as it attempts to rebuild destroyed homes, compensate dead and wounded fighters, expand recruitment and restore its arsenal.
U.S. officials are also concerned about Iranian money being funneled through Turkey and Iraq. Treasury’s top counterterror finance official, John Hurley, met with leaders in the UAE, Turkey and Lebanon earlier this month to address Iranian money laundering and terror funding.
Under the cease-fire agreement that ended last year’s war, Lebanon is required to secure all ports of entry and stop arms flowing to militias like Hezbollah. Beirut has tightened airport screenings and banned direct flights from Iran. But Iran has shifted tactics, sending more travelers carrying smaller amounts of cash or jewelry to avoid detection.
Hezbollah also draws revenue from global criminal networks involved in drug and diamond trafficking and money laundering across West Africa and South America.
The U.S. is pressuring Lebanon to shutter Hezbollah’s financial arm, Al-Qard Al-Hassan—a U.S.-sanctioned institution that operates as a charity but functions as an off-the-books bank. Hezbollah refuses to disarm, claiming its weapons are needed to protect Lebanon. The country’s weak military cannot force disarmament, raising tensions with both the U.S. and Israel as Iran’s proxy seeks to rebuild.
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