BEIRUT — The governor of Lebanon's Central Bank on Friday disputed claims by the United States that a local bank with a branch in Canada was laundering money for smugglers tied to the militant Hezbollah group, saying the financial institution abides by all national and international regulations.

Riad Salameh said the Lebanese Canadian Bank SAL has the "absolute support of the Central Bank," the state-run National News Agency reported.

The U.S. Treasury Department on Thursday had designated the bank a "primary money laundering concern," claiming it helped launder up to $200 million a month for a Lebanese-based drug smuggling with ties to Hezbollah.

In a statement released late Thursday, LCB "categorically denied any link to the operations mentioned" by the U.S. Treasury Department.

"The bank works with complete transparency and respects all laws in its dealings," the LCB statement said, adding it was ready to co-operate with authorities to prove it "is not involved, directly or indirectly, in suspicious" acts.

The Treasury Department and the Drug Enforcement Administration said the smuggling ring is run by alleged drug kingpin Ayman Joumaa, and has provided financial support for Hezbollah, which the U.S. designated a terrorist organization in 2001.

Several Hezbollah officials refused to comment.

Salameh said LCB has a "highly professional" administration and maintains high liquidity.

The bank's chairman and general manager, Georges Zard Abou Jaoude, told a Lebanese television network, LBC that "all our books are open, with full transparency, whether for Lebanese monetary authorities represented by the anti-money laundering bureau or even American authorities."

One of the individual named by the U.S. had no dealing with the bank over the past four years, said Jaoude.

Lebanon is famed for its banking secrecy laws. Officials have also taken pride in the ability of the country's banks to whether the global financial meltdown, citing their strict lending standards and high liquidity.

Salameh said last month that bank deposits increased 10 per cent in 2010 to reach $110 billion or about three times the country's gross domestic product.

The LCB, which is headed by a Maronite Christian, was Lebanon's 9th largest by the end of 2009 with assets worth $5 billion. BLC's deposits stood at $4.4 billion by the end of 2009 while its profit that year reached $35 million.