When countries’ governments and financial organisations do not do enough to tackle the threat of money laundering and terrorist financing, sirens go off. Those sirens sound from the Financial Action Task Force (FATF).
The FATF tracks terrorist funding, helps mitigate risks, and promotes standards. If a country repeatedly fails to implement those standards, it can be named as a high-risk jurisdiction (placed on a blacklist) or in need of increased monitoring (placed on a grey list). Iran is the only Middle Eastern country on the blacklist, but several are now grey-listed: Algeria, Yemen, Syria, and—as of 25 October—Lebanon.
A list of failings
The December 2023 FATF report on Lebanon indicated that it had complied with 34 of the 40 official recommendations and stressed the need to address “partial compliance” with the remaining six. Some relate to the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) legislation, which requires the criminalisation of money laundering in accordance with the Vienna and Palermo Conventions, specifically amending the penalty for this offence to make it more dissuasive.
The report also said the government needed to improve its verification of certain categories of customers (such as holders of economic rights in credit transactions and a number of professions and occupations), develop better procedures for seizing, confiscating, and managing frozen criminal assets, and improve its extradition of criminals. Now that it has been ‘grey-listed,’ Lebanon’s financial transactions are subject to additional scrutiny.
The country had shortcomings in ten areas across four domains that need strengthening. These domains were judicial (promptly executing legal assistance requests), professional (improving understanding of risks), regulatory (increasing penalties for non-compliance), and procedural (improving the use of financial intelligence unit products by competent authorities).
Tackling corruption
It was not all bad news. The FATF commended the Central Bank of Lebanon for issuing a directive to banks and financial institutions to establish a dedicated department to combat crimes related to bribery and corruption.