Financial Crime World

Title: Lebanon’s Know Your Customer (KYC) Procedures: A Comprehensive Guide for Banks and Financial Institutions

Overview

Amidst growing global efforts to combat money laundering and financial crimes, Lebanon has established robust KYC (Know Your Customer) procedures for onboarding both domestic and international clients. In this article, we delve into the specifics of Lebanon’s KYC requirements and regulatory landscape.

Identification Requirements

For Individuals

  • Domestic clients: passport, identity card, and residence permit
  • International clients: passport and identity card along with a residence permit or similar document

For Corporate Entities

  • Articles of incorporation
  • Certificate of registration
  • Ownership structure
  • Lists of stocks or shares
  • Legal representatives’ identities
  • KYC forms

Electronic Document Submission

Lebanon introduced Esignature Laws (Official Gazette-Law No. 81), allowing for the electronic signing and submission of various documents, including KYC forms and articles of incorporation.

  • AML (Anti-Money Laundering) laws became effective in 2001, starting with Law 318 Fighting Money Laundering.
  • Most recently updated to include tax evasion in 2015.
  • Regulated by the Central Bank of Lebanon (BDL).

Regulatory Authorities and Websites

  • The Central Bank of Lebanon (BDL), which falls under the jurisdiction of the banking sector, website: www.bdl.gov.lb
  • No regulatory site available for other financial services.

Retroactive Identification Checks

Retroactive identification checks are mandatory in Lebanon as per Article 6 of Basic Circular no. 83.

KYC Compliance and Threshold Limits

  • Minimum transaction thresholds do not apply generally.
  • New clients opening accounts and those dealing in cash or cheque transactions below USD10,000 are required to submit a detailed KYC form.

Due Diligence for Correspondent Banking Relationships

Thorough due diligence is necessary for foreign correspondent banks, including:

  • Demonstration of existence
  • Good reputation
  • Effective money laundering and terrorist financing controls
  • Identifying beneficial ownership, as stipulated by Article 9 of Basic Circular no. 83.

Reporting Suspicious Transactions (SARs)

Banks in Lebanon should report suspicious transactions (SARs) to:

  • The Governor of the Central Bank in his capacity as Chairman of the SIC
  • The Special Investigation Committee (SIC)

Banking Secrecy Law

The banking secrecy law outlines certain exceptions to confidentiality, allowing for the reporting and sharing of personal data to competent judicial authorities regarding suspected illicit activities.