Lebanon Country Summary

FATF Status

Lebanon is on the FATF list of countries identified as having substantial money laundering and terrorist financing (ML/TF) risks or having strategic AML/CFT deficiencies.

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Lebanon was undertaken in 2023. According to that Evaluation, Lebanon was deemed Compliant for 9 and Largely Compliant for 25 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective for 0 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.

Lebanon faces significant challenges related to crime and corruption, with widespread issues in governance and law enforcement undermining efforts to combat these problems. The country's political instability and economic crisis have exacerbated corruption, while organized crime is deeply intertwined with political factions, particularly Hezbollah, complicating the landscape for effective governance and judicial integrity.

As of April 2024, Lebanon's economy remains in a state of crisis, exacerbated by ongoing political paralysis and recent regional hostilities, which have hindered recovery efforts since the economic downturn began in late 2019. The World Bank has projected a decline in Lebanon's real GDP due to these factors, alongside a staggering depreciation of the Lebanese pound and a significant rise in poverty rates, which have surged from 25% in 2019 to 74% in 2021. Despite these challenges, there are glimmers of hope, as the economy has shown signs of stabilization in private sector activity, bolstered by tourism and remittance inflows, although reliance on these sectors is not a sustainable long-term strategy for recovery.

Lebanon is open to foreign direct investment (FDI), with the Investment Development Authority of Lebanon (IDAL) promoting various sectors, yet its operational capacity is severely limited due to funding constraints and political instability. The legal framework allows for foreign ownership and investment, but restrictions exist in sensitive sectors, and the lack of a cohesive regulatory environment poses challenges for potential investors. While Lebanon has signed numerous bilateral investment treaties and maintains a free-market economy, the ongoing economic crisis and the absence of effective governance continue to deter substantial foreign investment, highlighting the urgent need for political reform and economic restructuring to restore investor confidence.