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Lebanon’s Anti-Money Laundering Laws: Key Requirements for Financial Institutions
In a bid to combat money laundering and terrorist financing, Lebanon has implemented a robust anti-money laundering (AML) regime that requires financial institutions to adhere to strict regulations. Here are the key requirements for banks operating in the country.
Obtaining Senior Executive Management Approval
Before engaging with any new clients or transactions, financial institutions must obtain approval from senior executive management. This ensures that all parties involved in a transaction are aware of and comply with AML regulations.
Responsibility for Payable Through Accounts
Financial institutions must determine the responsibility of both parties involved in payable through accounts. They must also ensure that the respondent is capable of providing relevant customer identification data if requested.
Shell Companies Not Permitted
Lebanese financial institutions are prohibited from engaging with shell companies that lack substance and credibility.
Due Diligence Requirements
For non-face-to-face transactions, financial institutions must conduct additional due diligence. This includes:
- Verifying client identity
- Authenticating signatures for written transactions
- Obtaining official procuration and identifying documents for transactions conducted via agents
SAR Reporting
Suspicious activity reports (SARs) are made to the Governor of the Central Bank in his capacity as chairman of the SIC and the Special Investigation Committee (SIC).
Automated Suspicious Transaction Monitoring Technology
Banks are required to use specialized software to monitor accounts and transactions for any risk indicators.
Reporting Requirements
Financial institutions must report all suspicious transactions, regardless of materiality. Failure to comply with reporting requirements can result in imprisonment and fines as stipulated by Law no. 318.
External Auditors’ Role
External auditors are required to assess a bank’s AML function and issue a “gap analysis” report annually. The report must be submitted to the Governor of the Central Bank, the SIC, and the bank’s management.
AML System Part of Financial Statement Audit
The AML system is not part of the financial statement audit process in Lebanon.
Data Protection Laws
Lebanon has data protection laws that govern the sharing of personal data. Banking secrecy laws also apply to corporate data, with exceptions for certain situations such as bankruptcy or debtor accounts.
Risk-Based Approach
Lebanon’s AML regime employs a risk-based approach, requiring financial institutions to adopt measures commensurate with the level of risk associated with their clients and transactions.
By adhering to these requirements, Lebanese financial institutions can ensure compliance with AML regulations and help prevent money laundering and terrorist financing.