Out of the gray: Lebanon still has 10 FATF requirements to meet

Report by Theresia Rahme, English adaptation by Yasmine Jaroudi

Lebanon has failed to secure its removal from the Financial Action Task Force (FATF) gray list, despite making some progress in addressing deficiencies in its financial system.

The FATF, which holds three plenary meetings a year in February, June and October, has kept Lebanon under increased monitoring since October 2024.

The reason: A number of shortcomings that Lebanon must address to demonstrate that its financial system is capable of combating money laundering and terrorist financing.

Remaining on the gray list carries economic consequences, including increased scrutiny of financial transfers, more complicated banking relationships with foreign institutions, and an impact on investor confidence.

However, the latest report was not entirely negative. The FATF acknowledged that Lebanon had taken positive steps, including issuing instructions for the implementation of financial sanctions and providing training to institutions on combating money laundering.

Despite this progress, Lebanon still has 10 outstanding requirements to meet.

The FATF is seeking the effective enforcement of existing laws, including tangible investigations, prosecutions and convictions in money laundering cases. It also wants Lebanon to identify the ultimate beneficial owners of companies, as some businesses lack clear ownership structures and may be used to conceal illicit activities.

Other requirements include strengthening oversight of non-financial institutions, tracking illicit funds, and monitoring the cross-border movement of cash, gold and precious stones.

The FATF is also calling for stronger investigations into terrorist financing, greater information-sharing with other countries and closer monitoring of high-risk associations.

Speaking to LBCI, economist Dr. Wassim Chahin said: "Lebanon is unlikely to be blacklisted like Iran, North Korea and Myanmar, given its different circumstances and the FATF's acknowledgment of its reform efforts and cooperation."

At the FATF's latest meeting in Paris, held from October 28 to 30, four countries successfully exited the gray list: Bulgaria, Monaco, Côte d'Ivoire and the Democratic Republic of the Congo.

These countries could serve as examples for Lebanon as it seeks to improve its financial classification.

The question now is whether Lebanon will manage to leave the gray list at the next FATF meeting or whether the country will once again face the same outcome.