The sanctions issued by the Treasury Department target Jammal Trust Bank, a Lebanese commercial bank with 25 branches across the country.
"Jammal Trust's misconduct undermines the integrity of the Lebanese financial system," U.S. Secretary of State Mike Pompeo said in a statement issued shortly after the sanctions were announced.
A senior Trump administration official told reporters in a conference call laying out the sanctions that "we do have a very good relationship with the central bank of Lebanon and we have confidence that they'll take the right action here."
However, in Beirut, the Association of Banks in Lebanon voiced "regret" for the U.S. decision, adding that all funds deposited with Jammal Trust were safe and the country's central bank was capable of rectifying the situation if need be.
Israeli Prime Minister Benjamin Netanyahu praised U.S. President Donald Trump for the latest set of sanctions, which come amid an increase in aggressions coming from Israel to Hezbollah and Lebanon in the last couple of weeks.
On Sunday, the leader of the Lebanese Hezbollah movement, Hassan Nasrallah, informed that two Israeli drones exploded and crashed in the southern suburbs of Beirut were on a "suicide mission," warning that the movement will prevent Israel from sending more drones to Lebanon.
Hezbollah was formed in 1985 with the backing of the newly-founded Islamic Republic of Iran as a militant political party. The U.S. designated Hezbollah a foreign terrorist group in 1997, and since then has accused it of serving as a proxy force for Iran in Lebanon.
The group denies such accusations and defines itself through its struggle against Israeli settler-colonialism in Palestine and Lebanon, particularly the 1982 Israeli occupation of South Lebanon, which ended in Israeli defeat and its withdrawal from the country in 2000.
In July, Trump’s administration also imposed sanctions on three Hezbollah political figures, including two members of the Lebanese parliament, quickly rejected by Lebanese leaders from different political parties.