For more than a year, Iran has quietly funneled hundreds of millions of dollars to Hezbollah, its Lebanese ally, through a complex web of money exchanges and businesses in Dubai, according to a series of reports by The Wall Street Journal and corroborated by multiple regional officials. These clandestine financial flows have become a lifeline for Hezbollah, the U.S.-designated terrorist group battered by last year’s war with Israel and now scrambling to rebuild its military, pay its fighters, and restore the homes and infrastructure destroyed during the conflict.
The new financial routes have emerged as traditional smuggling pathways—once a reliable conduit for Iranian support—have been choked off by shifting regional dynamics and stepped-up enforcement. The collapse of the Iran-aligned Assad regime in Syria last year disrupted key land corridors, while Lebanese authorities, under pressure from international partners, have cracked down on couriers hauling suitcases of cash through Beirut’s Rafic Hariri International Airport. As a result, Iran and Hezbollah have increasingly turned to Dubai, the United Arab Emirates’ bustling financial hub, which has long been used by Tehran to skirt international sanctions.
According to The Wall Street Journal, the funds originate from Iranian oil sales and are laundered through a network of Iran-linked exchange shops, private companies, businessmen, and trusted couriers operating in Dubai. The money is then moved to Lebanon using the Hawala system—a centuries-old, trust-based method of transferring funds that bypasses formal banking channels. In this system, a dealer in Dubai takes a deposit and arranges for its equivalent to be paid out in Lebanon, with accounts settled later between the brokers. As one senior U.S. official told the Journal, this approach lets Iran and Hezbollah evade the ever-tightening scrutiny of global financial watchdogs.
“Hezbollah is highly focused now on rebuilding,” said David Schenker, director of the program for Arab politics at the Washington Institute, as quoted by The Wall Street Journal. “Iran is not backing away from its commitment to its premier regional proxy.”
The scale of the operation is staggering. In early November, the U.S. Treasury Department revealed that Iran’s Quds Force—tasked with supporting the country’s allied militias overseas—had transferred more than $1 billion to Hezbollah since January 2025, mostly through money exchange companies. This sum, which once would have covered Hezbollah’s entire annual budget, now only scratches the surface of the group’s financial needs. “One billion used to be their entire annual budget, but after the war they need a lot more,” explained Hanin Ghaddar, a senior fellow at the Washington Institute, as cited by The Wall Street Journal.
The urgency is rooted in the aftermath of the two-month conflict with Israel last year. The Israeli military campaign, launched in response to Hezbollah’s rocket attacks that followed the Hamas-led October 7, 2023, assault on Israel, left much of southern Lebanon in ruins. Israeli airstrikes crippled Hezbollah’s fighting capability, killed much of its top leadership, and imposed a crushing financial burden. In the wake of the war, Hezbollah has pledged to rebuild destroyed homes, pay stipends to the families of dead and wounded fighters, expand its recruitment efforts, and replenish its arsenal. Yet, a year after a cease-fire ended the heaviest fighting, the group remains financially strained.
The November 2024 cease-fire deal, brokered under intense international pressure, included provisions requiring Lebanon to secure its ports of entry and prevent the flow of arms to nonstate militias, with a particular focus on Hezbollah. Lebanese authorities have responded by banning direct flights from Iran and ramping up screening at airports and other border points. But Iran and Hezbollah have adapted, sending larger numbers of travelers each carrying smaller amounts of cash or valuables—such as jewelry—that can be easily concealed and do not need to be declared. “It’s a cat-and-mouse game,” one Arab official told The Wall Street Journal, underscoring the difficulty of shutting down these illicit flows entirely.
The United Arab Emirates, for its part, insists it is committed to combating illicit finance. A UAE official told The Wall Street Journal that the country “is working to stop such activity on its territory and is cooperating with international partners.” The UAE’s reputation as a haven for dirty money led to its inclusion on the Financial Action Task Force’s “gray list” in 2022, but the global watchdog removed it two years later, citing improvements in oversight. Still, some anticorruption groups argue that more progress is needed.
Washington’s concerns extend beyond the UAE. Senior U.S. officials have voiced worries about Hezbollah’s funding streams through Turkey and Iraq as well. John Hurley, the Treasury’s undersecretary for terrorism and financial intelligence, recently visited the UAE and Turkey before heading to Lebanon to discuss efforts to disrupt Iranian money laundering and terrorist financing networks.
Hezbollah’s financial resilience is not solely dependent on Iranian largesse. The group maintains a sprawling global network of illicit income streams—including drug and diamond trafficking and money laundering operations reaching as far as West Africa and South America, according to Arab officials cited by The Wall Street Journal. These shadowy enterprises supplement the group’s war chest, making efforts to cut off its funding all the more challenging.
Meanwhile, the U.S. is pressuring Lebanon to shut down Al-Qard Al-Hassan, Hezbollah’s key financial institution. Established in the 1980s and structured as a charity, Al-Qard Al-Hassan offers loans and ATM services to many Lebanese but operates outside the purview of the country’s central bank. The U.S. has sanctioned the institution and insists that its closure is vital to stemming Hezbollah’s access to funds.
The political stakes in Lebanon remain fraught. The cease-fire agreement requires Lebanon to disarm Hezbollah in the south before moving on to the rest of the country, in line with earlier commitments. Yet Hezbollah refuses to lay down its weapons, arguing that its arsenal is essential to defending Lebanon’s sovereignty. With Lebanon’s regular army comparatively weak, efforts to force the group’s disarmament have stalled, fueling ongoing tensions with both Israel and the U.S.
Earlier this month, the U.S. pushed back against a plan for Lebanon’s government to make disability payments to those injured by an Israeli attack on Hezbollah fighters last year, according to a senior U.S. official. Lebanese Prime Minister Nawaf Salam later reversed the decision, though a spokesman said the reversal was due to ineligibility of some applicants, not direct U.S. pressure.
As the region’s actors continue their high-stakes game of cat and mouse, the flow of Iranian funds through Dubai stands as a testament to Hezbollah’s adaptability and Iran’s determination to keep its most important proxy afloat. The financial networks may shift and evolve, but the underlying struggle for influence and security in Lebanon shows no sign of abating.
