Financial Crime World

Lebanon Vows to Crush Money Laundering as US Tightens the Noose

Introduction

In an effort to restore its battered financial reputation, Lebanon has made a commitment to take stern measures against money laundering. This move comes after a devastating collapse of its banking sector in 2019 created an ideal breeding ground for illicit financing and terrorist funding.

The Struggle Against Money Laundering

  • The country’s porous border with Syria has made it a hub for drug smuggling and other organized crime activities.
  • Lebanon’s financial systems are vulnerable to money laundering due to the proliferation of cash transactions, particularly through Circular 165, which permits the opening of new bank accounts known as “fresh dollar” accounts.

Commitment to International Standards

At a high-level meeting with US Treasury officials, Lebanese authorities assured their counterparts that they are committed to implementing international standards against money laundering and terrorist financing. These standards are mandated by the Financial Action Task Force (FATF) and the Middle East and North Africa Financial Action Task Force (MENA-FATF).

US Warning

The US delegation, led by Deputy Assistant Secretary Jesse Baker, expressed confidence in Lebanon’s efforts but emphasized that further measures were needed to prevent suspicious transfers that violate counter-terrorism financing and money laundering regulations. Baker highlighted concerns about the proliferation of cash transactions in the Lebanese economy, particularly through Circular 165.

Response from Lebanese Authorities

Wassim Mansouri, acting governor of the Central Bank of Lebanon, assured that Lebanon will “meticulously scrutinize all fund movements through Lebanon, whether through banking systems, transfer companies or wire firms.” He also argued that Circular 165 has significantly contributed to Lebanon’s protection against money laundering.

International Consequences

Lebanon’s efforts to crack down on money laundering will be closely monitored by FATF and MENA-FATF. Failure to meet these standards could have severe consequences for Lebanon’s ability to conduct international financial interactions.