Lebanon Introduces Strict Banking Regulations to Combat Money Laundering and Terrorism Financing

New Measures Aim to Prevent Illicit Activities

In a bid to curb money laundering and terrorism financing, Lebanon’s central bank has issued new regulations requiring banks and financial institutions operating in the country to strictly implement measures to prevent such activities.

Key Requirements

• Banks and financial institutions must adopt a risk-based approach when dealing with customers who request cross-border operations through correspondent banks and financial institutions.
  • Vetting the identity of both customers and economic right owners
  • Obtaining necessary information
  • Setting procedures for ongoing monitoring of their accounts
• Banks and financial institutions must update their databases on money laundering and terrorism financing operations in conformity with the regulations.
• Banks and financial institutions must be fully informed of laws and regulations governing their correspondents abroad and deal with them in accordance with international legal organizations’ standards or sovereign authorities’ sanctions and restrictions.

Due Diligence Emphasis

The circular emphasizes the importance of due diligence when dealing with customers, particularly those conducting transactions on payable-through accounts. Banks and financial institutions must implement enhanced due diligence measures on concerned customers.

Auditing and Compliance

External auditors have been tasked with checking banks and financial institutions’ compliance with the new regulations. Their reports must include: + Detailed information about their inspection of adopted procedures + Audit results + Remarks

Consequences for Non-Compliance

The circular warns that any party violating the provisions will incur administrative sanctions stipulated in applicable laws and regulations.

Effective Date

The decision is effective immediately and has been published in the Official Gazette.