Tracking money in Lebanon: US sanctions expose gaps in banking oversight

Report by Lara El Hachem, English adaptation by Mariella Succar

The U.S. Treasury Department has added three Lebanese nationals — Ossama Jaber, Ja’far Muhammad Qasir, and Samer Kasbar — to its sanctions list, accusing them of facilitating the transfer of tens of millions of dollars from Iran to Hezbollah this year through currency exchange companies.

What stood out in the statement was the mention of licensed exchange companies, not just unlicensed ones. These firms are typically authorized to exchange currencies and transfer funds between countries.

Licensed money changers expressed surprise at the Treasury’s announcement. According to industry sources, they stressed that they verify each client’s identity and are subject to oversight by the Banking Control Commission and the Central Bank of Lebanon.

They also emphasized their strict compliance with anti-money laundering and counterterrorism financing regulations, noting plans to adopt an app that can identify clients and flag anyone listed under sanctions.

If transactions are monitored so closely, the question remains: how are these funds entering the country?

Financial sources say one of the easiest ways to evade regulatory oversight is through digital currencies, particularly USDT (Tether) — a stablecoin pegged to the U.S. dollar. 

The process involves transferring USDT from a client’s digital wallet abroad to that of a money changer in Lebanon, who then converts it into cash.

The danger lies in the absence of legislation regulating digital wallets in Lebanon — even though licensed exchangers claim they do not deal with them.

These currency exchange activities form part of the broader cash economy, which the government — through both the Central Bank and the Finance Ministry — is working to curb. 

Tackling this issue remains one of the key demands of the International Monetary Fund and the World Bank.

The Central Bank has already signed a contract with an international firm to help combat the cash economy, while banks have become stricter than ever in verifying clients to protect their relationships with correspondent banks.

Meanwhile, the Finance Ministry has instructed public institutions to resume collecting taxes and fees through banks rather than in cash and is working to install POS (Point of Sale) machines across state departments — including land registries — to limit cash transactions.

These are part of ongoing efforts to contain money laundering activities linked to various financial crimes. Still, experts say the process remains complex, and real control will not be possible without restoring trust in Lebanon’s banking sector, which would enable proper tracking of financial flows.