ALBAWABA - Lebanon has been added to the money laundering "grey list" of nations that are subject to heightened scrutiny for financial transactions by the Financial Action Task Force (FATF), which is a worldwide anti-money laundering agency comprising of 40 members headquartered in Paris, according to Reuters.
The purpose of this status, declared Friday, is to encourage Lebanon to improve its financial regulatory systems so that it remains in line with global norms while simultaneously increasing the level of monitoring that is carried out.
FATF highlighted Lebanon's financial difficulties, particularly with relation to anti-money laundering policies and counter-terrorism funding structures.
As the country deals with additional strains from a protracted economic crisis and rising regional tensions, these issues, in addition to a lack of judicial independence, need further adjustment, the watchdog said.
FATF President Elisa de Anda Madrazo stressed that this greylisting is a motion to assist Lebanon in implementing the required changes rather than a punitive one. She acknowledged the difficult situation in Lebanon and said the heightened oversight would not impact humanitarian assistance operations, Aljazeera reports.
In response, Najib Mikati, interim prime minister of Lebanon, said that the greylisting was expected owing to the hold-ups in enacting important financial reforms and laws. He affirmed that ties with foreign correspondent banks will continue to be steady and reassured that Lebanon is committed to putting the FATF's recommendations into action.
The conflict caused the FATF to give Lebanon until 2026, rather than 2025, to resolve the challenges that led to its grey-listing, such as worries over "terrorist funding" and a lack of judicial independence, a source told Reuters earlier Friday.
However, the grey-list designation may have an effect on Lebanon’s economic environment by discouraging foreign investment and harming the country's banking industry's position internationally.
Since 2019, Lebanon has been experiencing an economic crisis that has damaged its banking sector and stalled important reforms. Lebanese banks could find it difficult to preserve their reputation in the global financial system as a result of the grey-listing, which might further weaken investor trust.
