Lebanon placed on financial task force ‘grey list’

Mohamed Azakir/Reuters

• Lebanon under ‘increased scrutiny’
• Pledge to implement action plan
• Algeria and Angola also join

Lebanon has been added to the Financial Action Task Force’s (FATF) “grey list” of countries under increased scrutiny, the global financial crime watchdog announced on Friday. 

Algeria, Angola and Côte D’Ivoire join Lebanon as the latest jurisdictions subject to heightened monitoring.

The FATF places countries on this list when they exhibit serious deficiencies in addressing money laundering, terrorist financing and proliferation financing. 

These jurisdictions are then urged to implement corrective measures to protect the international financial system from illicit activity.

Lebanon has been struggling with severe financial issues since 2019, exacerbated by political paralysis and, more recently, growing damage from Israeli airstrikes and the ongoing conflict with Hezbollah.

The country faces mounting concerns over terrorism financing and a lack of judicial independence.

• Lebanon’s startups face a battle to survive
• Grey list removal is milestone for investor confidence
• ‘Serious money laundering shortcomings in Kuwait’, says watchdog

Despite its social, economic and security challenges, Lebanon made a political commitment in October to work to strengthen its anti-money laundering and counter-terrorism financing measures.

FATF said in a statement that Lebanon has taken steps to address the watchdog’s concerns, including ordering banks and financial institutions to create departments dedicated to combating bribery and corruption, and providing guidance on dealing with politically exposed persons.

However, the country still faces significant challenges. 

President of FATF Elisa de Anda Madrazo told AGBI on Friday: “We regret the loss of life in the region.

“The FATF is not calling for countermeasures with regards to Lebanon.

“We are working with the jurisdiction to make sure that the humanitarian aid flows into the country.

“The [FATF] members are sensitive to this situation and in that sense I can tell you that there was a degree of flexibility granted to Lebanon as it relates to the deadlines set in the action plan.”

Lebanon has pledged to implement a FATF action plan, which includes enhancing risk assessments for money laundering and terrorist financing, improving legal frameworks for asset recovery, and applying stronger sanctions for non-compliance. 

The grey-listing is expected to further undermine much-needed investor confidence in Lebanon and could weaken relationships between its banks and the global financial system, deepening the strain at a time when the country is desperately seeking solutions to its prolonged crisis.