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.

Latest FATF Statement - 25 October 2024

In October 2024, Lebanon made a high-level political commitment to work with the FATF and MENAFATF to strengthen the effectiveness of its AML/CFT regime in spite of the challenging social, economic and security situation within the country. Since the adoption of its MER in May 2023, Lebanon has made progress on several of the MER’s recommended actions and has applied measures to its financial sector, including through issuing a circular for banks and financial institutions to establish a department dedicated to combating bribery and corruption related crimes and guidance on politically exposed persons, while taking measures against unlicensed financial activity.

Lebanon will continue to work with the FATF to implement its FATF action plan by: (1) conducting assessments of specific terrorist financing and money laundering risks identified in the MER and ensuring that policies and measures are in place to mitigate these risks; (2) enhancing mechanisms to ensure the timely and effective execution of requests for mutual legal assistance, extradition and asset recovery; (3) enhancing DNFBPs’ risk understanding and applying effective, proportionate and dissuasive sanctions for breaches of AML/CFT obligations; (4) ensuring beneficial ownership information is up-to-date and that there are adequate sanctions and risk-mitigating in place for legal persons; (5) enhancing competent authorities’ use of products of the FIU and financial intelligence; (6) demonstrating a sustained increase in investigations, prosecutions and court rulings for types of ML in line with the risk; (7) improving its approach to asset recovery and identifying and seizing illicit cross-border movements of currency and precious metals and stones; (8) pursuing TF investigations and sharing information with foreign partners related to investigations of TF as called for in the MER; (9) enhancing the implementation of targeted financial sanctions without delay, particularly at DNFBPs and certain non-banking financial institutions; and (10) undertaking targeted and risk-based monitoring of high-risk NPOs, without disrupting or discouraging legitimate NPO activities. 

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.

Corruption remains a significant barrier to foreign direct investment (FDI) in Lebanon, affecting various sectors such as government procurement and taxation. Despite the passage of anti-corruption laws and the establishment of a National Committee to Combat Corruption, effective implementation is crucial for real progress. The Lebanese Transparency Association plays a vital role in advocating for stronger enforcement and providing resources for citizens to report corruption, while ongoing challenges, including entrenched patronage networks and inadequate law enforcement, continue to hinder business operations.

As of April 2024, Lebanon's economy remains severely depressed due to a prolonged economic crisis that began in late 2019, compounded by recent hostilities along its southern border. The World Bank projects a decline in real GDP by 0.6-0.9 percent for 2023, following significant contractions in previous years, while the Lebanese pound has lost over 98 percent of its value since 2019, leading to a dramatic increase in poverty rates. Despite these challenges, there are signs of stabilization in private sector activity, largely supported by tourism and remittances from the Lebanese diaspora.

Lebanon is open to Foreign Direct Investment (FDI), with the Investment Development Authority of Lebanon (IDAL) promoting local and foreign investment across various sectors. However, IDAL's operations are currently limited due to funding constraints, and while foreign entities can establish businesses, there are restrictions in certain sectors, such as defense and media. The investment climate is further complicated by ongoing political paralysis, economic instability, and a lack of significant progress on necessary reforms.