Financial Crime World

Lebanon’s Archaic Defamation Laws Under Scrutiny Amid Increased Hostility Towards Whistleblowers

===========================================================

Lebanon is facing an economic crisis and heightened tensions between official security forces and militias, raising concerns about the effectiveness of its outdated defamation laws in protecting whistleblowers from retaliation.

Outdated Defamation Laws: A Threat to Whistleblowers

The country’s complex regulatory landscape, including a 2001 Central Bank Circular defining beneficial ownership, has raised doubts over its ability to safeguard those who expose wrongdoings by powerful individuals. The absence of a general, public, and easily accessible beneficial ownership registry has made it challenging for authorities to identify the parties responsible for financial crimes.

Challenges in Anti-Money Laundering (AML) Efforts

Lebanon’s AML efforts have received international recognition, with the country being removed from the Financial Action Task Force (FATF) grey list in 2017. However:

  • A recent national risk assessment highlighted the persistent threat of corruption-associated money laundering and the misuse of legal persons to exploit the financial system.
  • The government’s inability to exert control over the banking sector, which has been severely affected by the economic crisis, has led to an increase in cash transactions and a reduced capacity for AML/CFT controls.

Asset Recovery Efforts: A Lack of Progress

The country’s asset recovery efforts have been hampered by:

  • A lack of political will
  • Inadequate legal frameworks
  • Institutional weaknesses

According to the Stolen Asset Recovery Initiative’s (StAR) Asset Recovery Watch Database, Lebanon has not initiated a single case to recover assets stolen by corrupt officials since 1990.

The Need for Reform

As Lebanon navigates its economic crisis and political tensions, it is crucial that the government prioritizes reforms to:

  • Strengthen its AML/CFT framework
  • Ensure transparency in beneficial ownership
  • Improve asset recovery efforts

The protection of whistleblowers from retaliation is also essential to create a culture of accountability and transparency in the country’s financial sector.

Sources

  • Al Hassan, R. (2022). Tunisia recovers $28 million stolen by former president with Lebanon’s help.
  • Financial Times. (2020). How did Lebanon lose $6 billion?
  • Messick, R. E. (2020). Stolen Asset Recovery Initiative: Lebanon.
  • Reuters. (2022). Lebanese president vetoes bill to lift bank secrecy.
  • StAR. (n.d.). Asset Recovery Watch Database.
  • Tohme, F. (2020). The challenges of asset recovery in Lebanon.
  • Vazquez, L. (2022). IMF provides loan to ease economic crisis in Lebanon.
  • Zoghaib, M. (2020). Lebanon’s elite is accused of blocking efforts to recover stolen funds.