FATF Status

Lebanon is not currently identified by FATF 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.

US Department of State Money Laundering assessment (INCSR)

Lebanon was last deemed a Jurisdiction of Primary Concern in the US Department of State 2018 International Narcotics Control Strategy Report (INCSR). The Overview from that report was as follows: -

Lebanon is a hub for banking activities in the Middle East and Eastern Mediterranean and has one of the most sophisticated banking sectors in the region. Over the past two years, Lebanon’s government passed key legislation that strengthened its AML regime. The Central Bank of Lebanon, together with its Special Investigation Commission (SIC), regularly issues and updates compliance regulations in accordance with international banking standards. The SIC, Lebanon’s FIU, is also the main AML supervisory authority and is empowered to freeze financial transactions and accounts.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           24

World Governance Indicator – Control of Corruption             14

Corruption is a major obstacle for companies operating or planning to invest in Lebanon. Businesses are mostly hindered by entrenched patronage networks monopolizing the economy and impeding competitiveness, but also by petty corruption when applying for basic services. The Lebanese Penal Code criminalizes most forms of corruption; including active and passive bribery and the bribery of foreign officials, however, enforcement of these laws is poor. Offering bribes and gifts are widespread practices and an established way of doing business in the country. Facilitation payments are illegal in Lebanon. For further information - GAN Integrity Business Anti-Corruption Portal

A June 2021  World Bank report estimated that Lebanon’s depression was likely to rank among the world’s top three most severe economic crises since the 1850s, noting that the “brutal and rapid” contraction in Lebanon’s GDP was of a magnitude usually affiliated with conflicts or wars.

The World Bank estimated Lebanon’s real GDP fell 5.4 percent in 2022, after 7 percent and 21.4 percent contractions in 2021 and 2020, respectively.  Lebanon’s currency, the Lebanese pound (LBP), has lost more than 98 percent of its value since 2019.  Inflation reached an estimated 186 percent in 2022.  According to the United Nations, the country’s income poverty rate increased from 25 percent in 2019 to 74 percent in 2021. Lebanon’s financial sector accumulated more than $72 billion in USD losses. As a result, Lebanese depositors face monthly withdrawal restrictions on their accounts, and some turned to armed robbery of their own banks to access their life savings. Public sector workers, demanding salary increases to keep pace with rising inflation, have stopped showing up to work or only work one or two days per week. Some essential public sector services – such as registering new home ownership – are either unavailable or significantly delayed. A growing number of Lebanese have felt compelled to emigrate in search of a better life.

The IMF and the government reached a staff-level agreement on proposed economic reforms in April 2022.  The government committed to executing eight reform-related prior actions that the IMF requires before its Executive Board will consider financing the $3 billion, four-year loan.  However, as of April 2023, the government has made only limited progress on these prior actions. An IMF delegation visited Lebanon in March 2023 and concluded that the country is at a “dangerous crossroads” and, absent critical reforms, faces “a never-ending crisis.”

The primary obstacle to undertaking these and other much-needed reforms remains persistent political paralysis.  Since the end of President Michel Aoun’s term in October 2022, Lebanon’s presidency has remained vacant.  Meanwhile, the country’s Cabinet is in caretaker status with reduced authorities per the country’s constitution, creating a “double vacancy” for the first time in Lebanon’s history. Even before this double vacancy, Lebanon’s politicians did not pursue reforms at a speed commensurate to the severity of the country’s economic crisis. The United States has called on Lebanon’s political leaders to set aside their partisan brinkmanship and work for the common good of the Lebanese people.

While the overall economic picture is bleak, there are still some sources of optimism. Lebanon and Israel finalized a historic agreement to demarcate their maritime boundary on October 27, 2022, with the United States playing a lead negotiator role.  The deal clears the way for Lebanon to develop underwater hydrocarbon resources, although industry experts expect it will be years before Lebanon could begin large-scale extraction, and the amount of any commercially extractable resources is still unproven. Additionally, Lebanon still has the underpinnings of a free-market economy with unrealized potential. The country benefits from a highly educated labor force, diverse culture, rich history, strong tourism appeal, and mild climate. The Lebanese diaspora community has provided a backstop to Lebanon’s economic woes through a steady flow of remittances and could be the country’s vanguard of renewed investment if conditions improve.

Country Links

Special Investigation Commission (SIC)

Central Bank of Lebanon

Banking Control Commission of Lebanon