Risk Indicators
- FATF/EU Blacklist/Greylist (Higher Concern)
- Terrorism Financing (Lower Concern)
- US Dept of State INCSR
- Proliferation Financing
- Corruption
- Criminality
- Resilience & Governance
- Financial Transparency
- Offshore Finance Centres
- Sanctions
Background
Lebanon’s position at the crossroads of three continents has shaped a history marked by cultural diversity, foreign rule, and independence in 1943, followed by alternating periods of turmoil and prosperity. The 1975–90 civil war, prolonged Syrian influence, Israeli military involvement, and the enduring role of sectarianism and Hezbollah continue to inform the country’s political and security landscape. Since 2019, an economic crisis has weakened the currency, banking sector, and living standards, while large refugee flows and emigration have added further pressure.
Sharing unresolved borders with Syria and Israel, Lebanon remains exposed to regional conflicts, armed-group activity, and cross-border movements of people, money, weapons, and goods. Captagon trafficking and sanctions-evasion networks have reportedly linked Lebanese actors to wider regional flows, while US, EU, and UK measures have targeted Hezbollah-associated financial structures. The US Treasury and other agencies have identified networks involving front companies, oil smuggling, and complex ownership arrangements, offering a deeper view of the forces affecting Lebanon’s economy and security.
AML & Terrorist Financing
Lebanon remains subject to enhanced international scrutiny, having been identified by FATF as presenting strategic AML/CFT deficiencies and added to the European Commission’s high-risk jurisdictions list in August 2025. While the 2023 evaluation recognized structures involving Banque du Liban and the Special Investigation Commission, it found uneven effectiveness across risk understanding, beneficial ownership transparency, DNFBP supervision, financial intelligence use, prosecutions, and asset recovery. Terrorist-financing controls show a similarly mixed picture, with capable investigations and sanctions mechanisms alongside gaps in timely list implementation, nonprofit oversight, cross-border cooperation, and attention to risks associated with a major local paramilitary organization.
Sanctions
Lebanon faces layered international restrictions, led by the UN arms embargo under UNSCR 1701, extensive OFAC designations tied to Hezbollah and sovereignty concerns, EU governance measures, and targeted actions by Canada, the UK, Australia, and Switzerland. Its own enforcement role is primarily the implementation of UN sanctions and related controls, alongside participation in the Arab League boycott of Israel, rather than a broad autonomous sanctions program against other nations. The picture is further complicated by alleged evasion networks involving Hezbollah, Iran, residual Syrian smuggling routes, front companies, ports, and informal financial channels.
Criminality
Lebanon faces entrenched corruption affecting procurement, contracts, customs, taxation, and dispute resolution, while criminal penalties are reportedly applied unevenly despite the National Anti-Corruption Commission and recent legal reforms. Illicit activity spans trafficking, counterfeit pharmaceuticals, tobacco, arms, drugs, cybercrime, and financial misconduct, with networks linked to political and militia actors and concentrated in areas including Beirut, the Beqaa Valley, and the Syrian border.
Reports
Lebanon remains a regional transit point for cocaine and heroin and a production hub for fenethylline, while the Internal Security Forces and Lebanese Armed Forces continue seizures despite operational and political constraints. Trafficking vulnerabilities affect migrant domestic workers, Syrian refugees, children, and others, alongside persistent terrorist recruitment and activity involving Hizballah, ISIS, and groups operating in Palestinian refugee camps, with government responses showing both new initiatives and significant gaps.
Industry/Product Sector Risk
Lebanon’s industry risk landscape is shaped by a predominantly cash-based economy, with elevated exposure concentrated in banks, money remitters, Category A currency exchange houses, public works, transportation, arms-related activity, and selected charitable organizations. Banque du Liban-linked institutions, Casino du Liban, notaries overseen by the Ministry of Justice, and channels connected to Rafic Hariri International Airport illustrate how formal and informal systems intersect with risks involving corruption, smuggling, tax evasion, drug trafficking, and terrorist financing. Other areas, including insurance, securities, money lending, and virtual currencies, appear more limited or currently lower risk, although beneficial-ownership gaps, informal value transfer, crisis-driven payment practices, and uneven supervision leave important vulnerabilities for closer examination.
Economy & Investment Climate
Lebanon’s economy shows tentative signs of stabilization after the November 2024 cessation of hostilities and the formation of a new government, yet output remains well below 2019 levels amid extensive conflict damage, widespread poverty, and strained public services. The Lebanese banking sector, informal capital controls, delayed IMF-linked reforms, and limited administrative capacity continue to weigh on investment, even as IDAL promotes opportunities in sectors such as technology, tourism, agriculture, and agro-industry.
Cryptocurrency Regulations
Lebanon permits individuals to own and trade cryptocurrency, but it is not legal tender and remains outside a dedicated framework, with the Central Bank of Lebanon having warned against it and restricted related card purchases since 2013. Law No. 44 of 2015 and FATF expectations shape the broader compliance backdrop, while a 2018 Ministry of Finance circular points to 15% taxation even as exchange licensing, VASP oversight, token offerings, and transaction-monitoring rules remain uncertain.
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