A Lebanese university will pay $700,000 to settle a US lawsuit over allegations it provided "material support" to entities linked to Hezbollah, US officials said.

The American University of Beirut (AUB) confirmed in a statement on Friday it was settling the lawsuit, which charged it had violated the terms of grants it received from US Agency for International Development (USAID).

The US Attorney's Office in Manhattan announced the deal on Thursday, saying AUB would be required to pay the US government $700,000 and revise its internal policies to ensure future compliance with US law.

"For years, the American University of Beirut accepted grant money from USAID, but failed to take reasonable steps to ensure against providing material support to entities on the Treasury Department's prohibited list," said Acting Manhattan US Attorney Joon H Kim said.

"With today's settlement, the University is being made to pay a financial penalty for its conduct, and importantly, it has admitted to its conduct and agreed to put proper precautions in place to ensure that it does not happen again."

Media training

The civil lawsuit charged that AUB violated US law by providing media training between 2007-2009 to representatives of two media outlets - Al-Nour Radio and Al-Manar television - under US sanctions for their ties to Hezbollah.

It also accused AUB of listing the Hezbollah-linked Jihad al-Binaa, also under US sanctions, on the university's NGO database.

Hezbollah, a Shia political and military organisation with members in Lebanon's parliament and government, is listed as a "terrorist" group in the United States and entities linked to it are also under sanctions.

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In its statement, AUB said it acknowledged the accusations but it insisted "AUB does not agree that its conduct was knowing, intentional or reckless".

It welcomed the settlement and said it would conduct additional training of faculty and staff on US law going forward.

AUB was founded in 1866 and is considered one of the Middle East's leading universities.

Hezbollah 'funding'

In a separate case on Friday, a Lebanese businessman who the US says has provided millions of dollars to Hezbollah has pleaded not guilty to federal criminal charges.

Kassim Tajideen, who was arrested in Morocco earlier this month, made his first court appearance in Washington on Friday.

He was ordered detained after prosecutors called him a flight risk.

An 11-count indictment unsealed on Friday accuses Tajeddine of violating the sanctions against the Lebanese group.

A lawyer for Tajideen declined to comment after the court appearance.