Feb.19, 2010

Lebanon has stepped up its campaign against money laundering and all types of financial fraud in an attempt to assure the United States and Europe that lawbreakers cannot take advantage of the country’s banking secrecy law.

In its 2009 report, the Special Investigation Commission (SIC) released a breakdown of all the foiled attempts to channel suspicious funds through the Lebanese banking system.

According to the report which is widely read by all embassies and diplomatic missions, the financial authorities lifted the banking secrecy on 14 cases, 12 of them local and the remaining two foreign.

SIC investigated 202 cases involving suspected financial fraud, money laundering, terror funding, embezzlement, organized crime, trade of narcotics, illegal arms trade and others.

Out of the cases investigated cases, 127 originated from Lebanon while the remaining 75 came from abroad.

However, the report did not disclose the total amount of money involved in these suspicious cases.

In 2001, Lebanon’s name was lifted from the list of countries that are not fully cooperating in the campaign to stamp out money laundering.

The government at that time created the SIC and gave it full powers along with the central bank to investigate any complaint from any official Lebanese or foreign source about suspected financial fraudulent activity.

Some Western nations feared that drug dealers and organized criminals would take advantage of Lebanon’s banking secrecy by channeling large sums of illicit cash to the coffers of Lebanese banks.

To soothe these fears, the central cank and SIC encouraged all countries to submit any suspected case involving illegal financial deals.

Central bank Governor Riad Salameh hailed the achievements of SIC and said the mission of the commission would continue to stop all types of illegal financial practices.

“As the year 2009 unfolds, our banking and financial sector continues to show resilience in spite of the turbulent times the global markets and world economies continue to witness,” Salameh said in a letter to the SIC report.

He added that Lebanese banks made impressive growth in 2009 thanks to the confidence in Lebanon, sound banking practices and proper banking supervision in which the SIC plays a small but important part by ensuring the existence adequate internal controls.

“Under this context, the compliance unit during the year conducted numerous on-site examinations covering 22 banks, 22 financial institutions, 20 insurance firms, 49 money dealers and a number of other reporting entities,” the governor said.

Salameh added that other SIC activities during the year relate to the Audit and Investigation Unit handling 202 cases, 127 from local sources and 75 from foreign surces.

“All cases were investigated and prompt decisions were taken, including lifting banking secrecy off 14 that were consequently passed to the General Prosecutor,” Salameh said.

The SIC said that it received a request of assistance from the General Prosecutor office concerning charges brought against a group of individuals from different nationalities suspected of being involved in terrorist activities in Lebanon.

The SIC circulated the names of the suspects to all financial institutions, asking not only if they maintained bank accounts with those financial institutions but also inquiring about the existence of bank accounts under the names of these individuals.

The findings revealed the existence of several bank accounts held by the suspects, prompting the SIC to freeze the accounts and forward the findings to the general prosecutor.