Title: Lebanon’s Anti-Money Laundering and Counter-Terrorist Financing Measures: A New Chapter in the Financial Landscape

Subtitle: Findings and Recommendations from the Middle East North Africa Financial Action Task Force Report

The Republic of Lebanon, known for its rich cultural heritage and economic significance in the Middle East, underwent a thorough evaluation of its Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) measures by the Middle East North Africa Financial Action Task Force (MENAFATF) in late 2023. This evaluation aimed to assess the effectiveness and technical compliance of Lebanon’s current framework and provide recommendations for improvement.

Key Findings

1. National Risk Assessment and ML/TF Risks: After conducting a comprehensive national risk assessment, Lebanon identified Money Laundering (ML) and Terrorist Financing (TF) risks related to the most serious crimes and the financial and non-financial sectors. Risks include unregulated sectors, local paramilitary organizations, and senior-level government corruption.

2. Investigations and Prosecutions: Competent authorities have access to relevant information during ML and TF investigations but inconsistent investigations and prosecutions do not align with identified threats and risks. Areas of concern include customs smuggling, tax evasion, illicit drug trafficking, and human trafficking crimes.

3. Designation of Sanctioned Persons and Entities: Lebanon has made efforts to designate persons and entities targeted for UN Security Council Resolutions (UNSCR) 1267 and successors. However, there is a disparity in the implementation of these designations by financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs).

4. Legalframework and Supervision: Banks and money transfer companies apply risk-based approaches and customer due diligence measures, but gaps in professional secrecy laws hinder access to information for entities supervising lawyers and notaries’ sectors.

5. International Cooperation and Mutual Legal Assistance: Mutual legal assistance requests are not always consistent with Lebanon’s risk profile and there is a delay in sending and executing such requests. Lebanon’s efforts to cooperate with counterparts on combating money laundering and predicate offenses are considered inconsistent with its risk profile.

Risks and General Situation

Lebanon’s financial sector is modest compared to global and regional hubs but remains crucial for the economy due to remittances from Lebanese expatriates. The economic and financial crisis, combined with large numbers of refugees in the country, poses significant challenges for the banking and financial sector.

The most significant threats of predicate offenses that generate criminal proceeds for money laundering include corruption, tax evasion, illicit trafficking in narcotic drugs and psychotropic substances, cybercrimes, smuggling and counterfeiting.

Upcoming Articles

Stay tuned for further articles discussing:

• Key findings and recommendations related to Lebanon’s AML/CTF measures, such as legal systems, operational issues, international cooperation, priority actions, and effectiveness and technical compliance ratings.
• Case studies, good practices and best practices in combating money laundering and terrorist financing from other countries or sectors.
• Insights and updates on regulatory changes, trends, and challenges shaping the global AML/CTF landscape.