Lebanon faces the imminent risk of being placed on the FATF grey list by late May

Report by Bassam Abou Zeid, English adaptation by Yasmine Jaroudi

Lebanon has been listed under the Grey List by the Financial Action Task Force (FATF), signaling heightened oversight in combating money laundering and terrorist financing.

This development could potentially prompt correspondent banks to cease dealings with Lebanese banks, leading to a halt in financial transfers to and from the country.

Last December, Lebanon narrowly avoided being placed on the FATF grey list, being granted a six-month grace period following assurances from Banque du Liban (BDL) and the government to implement measures enhancing anti-corruption efforts and combating money laundering and terrorist financing.

In response, BDL imposed stricter reporting requirements on banks regarding the source of funds and mandated that each bank establish departments dedicated to combating money laundering and terrorist financing.

However, these measures fell short of FATF expectations. After six months, the Lebanese government had not taken significant steps to address three key areas:

Firstly, combating corruption within state administrations remained stagnant.

Secondly, the judiciary's pursuit of money laundering cases was lacking, with the offense considered a felony rather than a crime. Moreover, there were no instances of assets or properties seized from prosecuted drug traffickers.

Thirdly, the government failed to confront financial activities associated with para-military groups, including Hezbollah.

Lebanon now faces the imminent risk of being placed on the FATF grey list by late May.

During his recent visit to Washington, the acting BDL governor Wassim Mansouri, expressed hope that he was able to convey Lebanon's unique circumstances and challenges to FATF officials.

Mansouri expressed optimism that Lebanon could once again avoid being listed but cautioned that this might be the country's final opportunity to do so.