The Secretary General of the Association of Banks in Lebanon (ABL), Fadi Khalaf, indicated that despite the significant efforts made by the Central Bank of Lebanon (BDL) to avoid including Lebanon on the gray list, and keep the banks clear from thorough monitoring of transfers, major challenges remain. He stressed that Lebanon is still under international scrutiny as the Financial Action Task Force (FATF) meeting is scheduled before next autumn. Khalaf believes that the Lebanese state, as well as its official institutions and various political forces, must assume their responsibilities in the fight against corruption and the reduction of the dominance of the cash economy to ensure that Lebanon does not fall into new financial crises, the consequences of which could be disastrous for the country.
Khalaf expressed these concerns in the preamble to the July monthly report of the Association of Banks, where he wrote: “In recent months, the Lebanese financial sector has been concerned about the risks related to Lebanon’s inclusion on the FATF gray list, which could threaten the already crisis-hit Lebanese financial system.”
He explained that placing Lebanon on the gray list amounts to putting the Lebanese financial system under strict surveillance, which will increase the complexity of financial transactions and have negative effects on banking transactions abroad. Similarly, the crisis of confidence affecting the Lebanese economy will be exacerbated, which will inevitably impact the ability to attract funds from abroad in the future.
He recalled that the Central Bank of Lebanon had taken swift and effective measures to avoid Lebanon’s inclusion on the gray list and has so far succeeded in its mission. The banks have also supported these efforts with complementary measures, which have helped prevent Lebanon from being on the gray list.
However, a number of important observations have been directed at Lebanon regarding its efforts to combat money laundering and terrorist financing, notably the continued expansion of the cash economy, which remains a major concern for the FATF. A situation like this one increases challenges and places a large portion of financial transactions outside the supervision of the Central Bank of Lebanon and the banks. It was also noted that corruption in government institutions is a major challenge to implementing the necessary reforms aimed at ensuring Lebanon’s compliance with international standards.
The FATF also expressed concern about pending cases in the Lebanese judicial system, noting that delays in addressing these cases weaken efforts to combat money laundering and the financing of terrorism.
