Financial Crime World

Lebanon’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Framework: An Assessment

Economic Situation

The economic situation in Lebanon has been deteriorating over the past few years, with significant consequences on the country’s economy and people.

  • Declining GDP: The Gross Domestic Product (GDP) in Lebanon has declined from $55 billion in 2018 to approximately $33 billion in 2020 and further to about $21.7 billion by the end of 2021.
  • Unemployment Rates: Increased unemployment rates have been reported, adding to the economic burden on individuals and families.
  • Refugee Crisis: The large number of refugees in Lebanon poses an additional burden on the country’s resources and infrastructure.

AML/CFT Framework

The legal framework for AML/CFT in Lebanon is based on Law No.44 dated November 24, 2015, which provides a comprehensive approach to combating money laundering and terrorist financing.

  • Predicate Offenses: The law includes a list of predicate offenses related to money laundering and terrorist financing.
  • Sanctions: It also provides for severe sanctions for ML conviction and adds new forms of TF criminalization.

Supervisory Controls

Supervisors in Lebanon have issued AML/CFT controls and circulars to entities subject to their supervision, including banks, non-banking financial institutions, exchange houses, and credit counters.

  • Regulatory Texts: The Special Investigation Commission (SIC) has issued regulatory texts addressed to insurance companies and designated non-financial businesses and professions (DNFBPs).

Regulatory Developments

Law No.44 of 2015 provides for the establishment of an independent legal entity with judicial status at Banque du Liban (BDL), which regulates the rules for the entry and exit of currencies and negotiable bearer instruments across borders.

  • Implementation of UN Resolutions: Mechanisms have been put in place for implementing UN Security Council resolutions on targeted financial sanctions related to terrorism and terrorist financing.

Assessment of Risks, Coordination, and Policy Setting

The report concludes by noting that there are risks associated with the AML/CFT framework in Lebanon, including corruption and tax evasion.

  • Coordination: Coordination between different stakeholders is essential for effective implementation of the AML/CFT framework.
  • Policy Setting: Effective policy setting is critical to mitigate the risks associated with AML/CFT in Lebanon.