Lebanon’s Struggle with Money Laundering and Corruption

Anti-Money Laundering Efforts

Lebanon has taken steps to combat money laundering and corruption, but its efforts are hampered by a lack of enforcement and institutional capacity. Here are some key points:

• Membership in MENAFATF: Lebanon has been a member of the Middle East and North Africa Financial Action Task Force (MENAFATF) since its foundation.
• Law n. 44 (2015): The country approved Law n. 44 on Fighting Money Laundering and Terrorist Financing, which:
  • Expanded the list of predicate offenses to money laundering and corruption
  • Imposed stricter AML/CFT controls on financial institutions
  • Required customer due diligence and suspicious transaction reports

Asset Recovery

Despite efforts to combat money laundering, Lebanon has struggled with asset recovery. Here are some key points:

• Lack of progress: No cases have been initiated by the government since 1990, according to the Stolen Asset Recovery Initiative’s (StAR) Asset Recovery Watch Database.
• Factors contributing to lack of progress:
  • Lack of political will to implement necessary reforms and invest resources in asset recovery efforts
  • Absence of an independent judiciary
  • Effective national strategy for asset recovery
  • Constitutional immunities afforded to high-ranking officials

Recent Developments

Lebanon has taken steps to update its anti-money laundering laws, but progress is slow. Here are some key points:

• National risk assessment (2022): Lebanon updated its money laundering and terrorist financing national risk assessment, concluding that higher-risk money laundering crimes are associated with corruption, tax evasion, and illicit drug trafficking.
• Bank secrecy law amendment (2022): Parliament approved an amendment to the bank secrecy law, allowing for the lifting of bank secrecy in investigations of money laundering, terrorism financing, and illicit enrichment. However, the president declined to sign the bill into law.

IMF Loan Conditions

Approval of legislation to lift bank secrecy was one of the conditions for a loan provided by the International Monetary Fund (IMF) to ease Lebanon’s economic crisis.

Overall, while Lebanon has made some progress in combating money laundering and terrorism financing, its efforts on asset recovery have been hindered by a lack of political will and institutional capacity.