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Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Requirements for Financial Institutions in Lebanon

Overview

The Lebanese financial sector has implemented various measures to combat money laundering and terrorist financing. This guide provides an overview of the key requirements for financial institutions in Lebanon, including transaction monitoring systems, pre-implementation testing, post-implementation testing, sanctions screening, and more.

Key Requirements

1. Transaction Monitoring (TM)

• Importance: TM systems and processes are critical in identifying suspicious transactions and preventing money laundering.
• Requirements:
  • Implement effective TM systems to monitor transactions for potential money laundering activity
  • Integrate TM systems with other relevant systems, such as customer due diligence and sanctions screening

2. Pre-Implementation Testing

• Purpose: To ensure proper functionality and integration of TM systems before implementation.
• Requirements:
  • Conduct thorough testing to identify any issues or discrepancies in the TM system
  • Validate that the TM system is properly integrated with other relevant systems

3. Post-Implementation Testing, Tuning, and Validation

• Purpose: To ensure continued effectiveness of TM systems and calibration of rule threshold values and parameters.
• Requirements:
  • Conduct periodic re-testing to validate that the TM system remains effective in preventing money laundering
  • Regularly tune and calibrate rule threshold values and parameters to ensure optimal performance

4. Sanctions Screening

• Purpose: To prevent dealings with sanctioned individuals or entities.
• Requirements:
  • Conduct regular searches against applicable sanctions lists
  • Escalate identified omissions or inaccuracies in customer or beneficial ownership information for priority remediation

Best Practices

1. Effective AML/CFT Programs

• Financial institutions must implement effective AML/CFT programs, including TM systems and sanctions screening processes.
• These programs should be regularly tested and validated to ensure they remain effective in preventing money laundering and terrorist financing.

2. Sanctions Compliance

• An effective sanctions screening program requires a well-calibrated risk-based framework, robust training, and meaningful integration into the wider sanctions control environment.

By following these requirements and best practices, financial institutions in Lebanon can help prevent money laundering and terrorist financing while complying with relevant regulations.