Financial Crime World

Here is the converted article in Markdown format:

Lebanon’s Efforts to Combat Money Laundering and Predicate Offenses Fall Short

Despite having a modest financial sector, Lebanon has struggled to effectively combat money laundering and predicate offenses such as drug trafficking, corruption, and tax evasion.

Economic Challenges

According to a recent report, Lebanon’s Gross Domestic Product (GDP) has declined significantly since 2018, from $55 billion to approximately $21.7 billion in 2021. The economic crisis has led to a shrinking of the banking sector, reduced international trade, and a decline in the value of the national currency.

Remittances and Money Laundering

Remittances from Lebanese expatriates have been a significant contributor to the economy, with an estimated $6.5 billion recorded in 2021. However, this influx of funds has also created new challenges for authorities seeking to combat money laundering.

Threats to AML/CFT System

The report highlights corruption and tax evasion as major threats to Lebanon’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) system, along with illicit drug trafficking and cybercrimes. The Special Investigation Commission (SIC) has identified new criminal threats related to smuggling and counterfeiting of goods.

In response, Lebanon has strengthened its legal framework by enacting Law No. 44 in 2015, which criminalizes money laundering and terrorist financing. The law provides for severe sanctions and increases the powers of the SIC to investigate suspected transactions.

AML/CFT Controls

Supervisors have issued AML/CFT controls and circulars to entities subject to their supervision, including banks, non-banking financial institutions, exchange houses, and money transfer companies.

Challenges Remain

Despite these efforts, challenges remain. The report highlights the need for further improvement in risk assessment, coordination, and policy setting to effectively combat money laundering and predicate offenses.

Key Recommendations

  1. Strengthen AML/CFT regulations and supervision to address emerging threats.
  2. Enhance risk assessment and monitoring to identify high-risk transactions and individuals.
  3. Increase cooperation between authorities to share information and best practices.
  4. Improve public awareness campaigns to educate citizens about the risks of money laundering and predicate offenses.

Conclusion

Lebanon’s efforts to combat money laundering and predicate offenses have been inconsistent with its risk profile. While the country has taken steps to strengthen its legal framework, supervisors must continue to improve their controls and coordination to effectively address emerging threats. It is crucial that Lebanon prioritizes these efforts to protect its financial sector and economy from the risks of money laundering and predicate offenses.