The US Treasury labels Lebanon-based group ‘an extension’ of the IRGC’s Quds Force and takes aim at financing.

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The United States has changed its designation of Hezbollah to that of an Iranian proxy and announced sanctions against an alleged funding network.

The re-designation of the Lebanon-based armed group and sanctioning of the financing network, which the US Treasury linked to Iran’s Islamic Revolutionary Guard Corps (IRGC), was announced on Thursday.

The move comes as the US prepares economic measures which it says will crush Iran’s economy and “collapse” the “regime” in Tehran.

The US Treasury said in a statement that Hezbollah’s legal designation, previously that of a “terrorist organisation”, had been changed to take into account the group’s “service to the Iranian regime under the command of Iran’s Islamic Revolutionary Guard Corps”, particularly the elite Quds Force.

The US designated Hezbollah as a “foreign terrorist organization” in 1997, then updated its label to a “specially designated global terrorist” group in 2001.

The new re-designation “specifies that Hezbollah is an Iranian proxy, not a stand-alone operation as implied by the previous designation”, a State Department official said.

“This action builds on years of US designations that have repeatedly documented the operational, financial, and logistical integration between Hizballah and the IRGC-QF,” the official added, calling Hezbollah “an extension” of Iran’s Quds Force.

“This underscores that Hezbollah operates with little to no regard for Lebanese sovereignty, the Lebanese people, or the Lebanese state.

“It is not a Lebanese resistance movement,” as Hezbollah describes itself, the official said.

Both Hezbollah and Iran reject Western involvement in the Middle East and Israel’s military actions across the region.

The US has already imposed multiple rounds of sanctions on Hezbollah. The new restrictions target 10 people who are allegedly part of a network that transfers cash to the armed group, the Treasury statement said.

Washington accused the network, which Turkish businessman Yunus Alper Yilmaz is accused of leading, of using couriers travelling on commercial airline flights between Lebanon, Turkiye, the UAE, and Iran to move hundreds of millions of dollars.

The setup provides “an avenue outside the formal financial system for Hezbollah to obtain foreign currency and evade sanctions”, the statement said.

The re-designation of Hezbollah comes as the US mediates negotiations between Israel and Lebanon, which remain technically at war.

Hezbollah has refused to take part while the Israeli military continues to occupy parts of southern Lebanon and conduct attacks inside the country.

Hezbollah began firing rockets at Israel as it launched its war against Iran alongside the US in March. Israel responded with a heavy air campaign and ground invasion that Lebanese authorities say have killed more than 4,300 people.

Despite the talks having brokered two truce agreements – on June 4 and 26 – the hostilities continue, and Israeli troops remain inside Lebanon.

Several new attacks were reported on Friday, according to Lebanon’s National News Agency.

Israeli air attacks, bombing and shelling were reported in the town of al-Mansouri, to the south of Tyre, and Mayfadoun, near Zawtar al-Sharqiyah.

In a later development, NNA said Israeli forces carried out a massive explosion on Friday afternoon between the towns of Arnoun and Kfar Tibnit.