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Lebanon’s Central Bank Issues New Regulations for Financial Institutions

Date: October 22, 1998

Beirut - The Governor of Banque du Liban, Riad Toufic Salamé, has issued a new decision aimed at regulating the operations of financial institutions in Lebanon.

Key Provisions

• Each branch of these institutions will receive an allocation of LL250 million.
• Several key provisions to ensure compliance with international standards for combating money laundering and terrorist financing:
  • Exemption of certain employees from examination requirements
  • Obligation to establish provisions against doubtful loans
  • Requirement to build up provisions against microloans when they become classified as doubtful loans
  • Update internal systems to evaluate and classify these loans in accordance with BDL’s classification of debt risks decision

New Requirements for Financial Institutions

• Allow financial institutions to open offices under the management and supervision of their head offices or branches, provided that these offices meet certain requirements:
  • Receive applications for microloans
  • Obtain signatures on contracts and bonds
  • Send documents to the head office or branch for examination and approval
• Require financial institutions to inform the BDL Legal Department and Banking Control Commission of any changes in their operating offices
• Abide by any objections raised by Banque du Liban regarding these offices

Consequences of Non-Compliance

• Failure to comply with these regulations may result in the revocation of a financial institution’s license.

Effective Date

The decision comes into effect upon its issuance and will be published in the Official Gazette.