Financial Crime World

Lebanon’s Financial Sector Under Scrutiny: Combating Money Laundering and Predicate Offenses

Overview

As Lebanon struggles with economic and financial crises, it is facing increasing pressure to address money laundering and predicate offenses such as drug trafficking.

The Current State of the Financial Sector

Lebanon’s financial sector is relatively small compared to global hubs. Remittances from expatriates play a vital role in supporting the economy. However, the sector has been shrinking due to:

  • Economic instability
  • Declining international trade
  • Deteriorating exchange rate

Threats to Money Laundering and Predicate Offenses

The report highlights several threats, including:

  • Corruption
  • Tax evasion
  • Illicit drug trafficking
  • Cybercrimes
  • Counterfeiting of goods

Government Efforts to Combat Money Laundering and Predicate Offenses

To address these issues, the Lebanese government has implemented laws and regulations, including:

  • AML/CFT law No. 44 of 2015: criminalizes money laundering and terrorist financing
  • The Special Investigation Commission (SIC): investigates suspicious transactions and reports findings to relevant authorities
  • Supervisors have issued guidelines and circulars to financial institutions, insurance companies, and other entities subject to their supervision

Additional Regulations

Lebanon’s lawmakers have also regulated rules for the entry and exit of currencies and negotiable bearer instruments across borders under Law No. 42 (Declaration of Cross-Border Transportation of Funds). The law includes provisions on:

  • Declaring and disclosing cross-border assets
  • Implementing UN sanctions related to terrorism and proliferation

Conclusion

While there are still risks associated with money laundering and predicate offenses in Lebanon, the country has taken steps to address these issues. However, continued efforts are needed to ensure the effectiveness of AML/CFT measures and prevent financial crimes from undermining the economy.

Recommendations

  • Continued implementation of AML/CFT regulations
  • Enhanced cooperation between law enforcement agencies and financial institutions
  • Increased public awareness and education on money laundering and predicate offenses