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Lebanon passes new banking secrecy law after IMF concerns

Window, Silhouette, Building REUTERS/Aziz Taher
The latest draft needs to be signed into law by Lebanese president

Lebanon’s parliament on Thursday passed another round of amendments to a banking secrecy law after the International Monetary Fund (IMF) said a previous draft retained key deficiencies.

The IMF has laid out a list of reforms, including amending its banking secrecy law, that Lebanon must implement before it can gain access to $3 billion to relieve its economic crisis, one of the worst in modern history.

Parliament passed an amended banking secrecy law in late July but the IMF recommended a slew of changes and Lebanese President Michel Aoun sent it back to parliament to make them.

On Thursday, lawmakers passed the latest draft amid significant criticism from independent MPs and outside observers that it still failed to implement the IMF’s recommended changes.

The latest draft still does not lift banking secrecy as a whole. The older draft allowed only some government bodies to lift it in the case of criminal investigations, while the new draft allows additional government institutions to ask for general information on a body of transactions.

Karim Daher, a lawyer and the head of the Beirut Bar Association’s Commission for Depositors, said the new draft would not provide the transparency needed.

“The whole point is to make sure that transfers between the bank owners and the political class cannot be traced. They are fleeing accountability at all costs,” Daher told Reuters.

Mark Daou, a first-time parliamentarian, said he attended the finance committee’s session on the new draft before the general assembly.

“Several members of parliament made comments on this draft and how it shouldn’t be passed in this way. Suddenly, we find that it’s on the agenda for the general assembly to be voted on,” he said.

The law still needs to be signed into law by Aoun, whose term ends on October 31.

The IMF did not immediately respond to a request for comment.

It has in recent weeks lamented Lebanon’s “slow progress” on the list of reforms laid out in the staff-level agreement.

Vested interests by the private sector and politicians have systematically blocked crucial reforms included in a financial recovery plan from being implemented.