Grey-listed: FATF adds Lebanon to grey list amid financial compliance shortcomings

Report by Theresia Rahme, English Adaptation by Yasmine Jaroudi

Lebanon was officially added to the Financial Action Task Force's (FATF) grey list during a recent meeting in Paris, placing the country among those under heightened international scrutiny for deficiencies in preventing money laundering, terrorism financing, and other financial crimes. 

This intergovernmental organization assesses nations' compliance with standards aimed at combating financial misconduct, and Lebanon's listing is a culmination of longstanding concerns.

While Lebanon has cooperated with the FATF in formulating action plans to curb money laundering and terrorism financing, it has failed to implement the necessary reforms. 

The ongoing financial challenges were exacerbated by Lebanon's default on Eurobond payments, inaction on International Monetary Fund (IMF) recommendations, lack of financial oversight over banks, and minimal progress in combating illicit financial activities.

The situation has deteriorated to what is now termed a "cash economy," making oversight nearly impossible. Despite repeated warnings about the severe implications of this situation, officials have not taken the matter seriously. 

Lebanon's listing on the grey list now places it among 21 countries identified as high-risk for investment. 

However, there are no immediate risks to transactions between the Banque du Liban (BDL), local banks, and correspondent banks. 

The primary concern lies in the potential delays by the government in implementing the necessary reforms and conditions required to exit the grey list—something that several countries have successfully achieved.