Lebanon Tightens Grip on Financial Crimes with New Law
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Lebanon’s Parliament has passed a landmark law aimed at strengthening the country’s stance against money laundering and terrorist financing. The new legislation, known as Law No 44, introduces significant changes to Lebanon’s financial landscape, making it more difficult for criminals to hide their illicit funds.
Definition of Illegal Funds
At the heart of the law is its definition of illegal funds, which includes profits derived from criminal activities such as:
- Drug trafficking
- Terrorism financing
- Insider trading
- Corruption
- Human and environmental crimes
The scope of reportable offenses has also been expanded to include:
- Illegal arms trafficking
- Smuggling
- Other serious financial crimes
Money Laundering Definition
The law defines money laundering as the process of:
- Concealing the illicit origin of funds
- Providing false justifications for their source
- Transferring, transporting, or investing laundered funds in various assets or transactions
Crucially, money laundering is considered a separate offense that does not require a charge of the underlying predicate offense.
Penalties and Reporting Requirements
Individuals found guilty of money laundering or terrorist financing can face severe penalties, including:
- Imprisonment
- Fines of up to twice the amount laundered
Financial institutions are required to implement customer due diligence measures and retain copies of documents for at least five years.
Reporting Requirements
The law places specific reporting requirements on various regulated entities, including:
- Lawyers
- Notaries
- Insurance companies
- Casinos
- Real estate dealers
- Merchants of valuables
Special Investigation Commission (SIC)
The SIC is an independent legal entity established to ensure compliance with the new law. The commission has been granted significant powers, including:
- Receiving suspicious transaction reports
- Investigating operations suspected of money laundering or terrorist financing
- Ensuring compliance by financial institutions and other parties subject to the law
- Issuing binding decisions, such as:
- Lifting banking secrecy
- Freezing accounts
- Prohibiting the disposal of assets
The SIC will communicate directly with domestic and foreign authorities to conduct investigations and coordinate efforts in ongoing cases.
Conclusion
The new law is a significant step forward for Lebanon’s fight against financial crimes, and its implementation is expected to have a major impact on the country’s financial sector.