Report comes as U.S. scrutinizing Lebanese banks for possible links to terrorist financing

Saturday, March 12, 2011

http://www.dailystar.com.lb/article.asp?edition_id=1&categ_id=3&article_id=125899#axzz1GL0jhULQ

BEIRUT: Lebanon lifted the banking secrecy on 23 accounts involved in money laundering, financial embezzlement and terrorist funding in 2010, according to a report by the Special Investigation Commission (SIC).

SIC, which was formed by the Lebanese authorities and the Central Bank to review any complaint of money laundering activity, said that it has transferred some of cases which it received to judicial authorities to take proper actions against the suspects.

The release of the report comes as the banking sector is coming under tremendous pressure from the U.S. authorities who believe that some Lebanese banks were knowingly and unknowingly engaged in money laundering and financing of terrorist groups.

The U.S. Treasury Feb. 10 accused the Lebanese-Canadian Bank of money laundering in connection with Hezbollah, which is labeled by Washington as a terrorist group.

Central Bank governor Riad Salameh immediately left to Washington and held urgent talks with officials from the U.S. Treasury.

Salameh, who is keen to protect the reputation of the Lebanese banks, persuaded the management of the Lebanese-Canadian Bank to sell its entire stake to a major Lebanese bank to protect customers’ deposits.

SGBL offered the best package to acquire the Lebanese-Canadian Bank, with a pledge to keep all of its staff.

 “This year [2010] the SIC Compliance Unit examined 23 banks, 18 financial institutions, 34 insurance companies, 73 money dealers and a number of other reporting entities. The SIC issued Circular 11 to facilitate financial investigations which the Audit and Investigation Unit handles. During the year 245 cases were received, 160 from local sources and 85 from foreign. He added investigations were concluded and appropriate decisions were taken, including passing on information to Financial Intelligence Unit (FIUs) or competent authorities and lifting bank secrecy in 23 cases and passing them on to the general prosecutor.”

The report did not disclose the names of the suspects nor the total amount of money involved in illegal financial activities.

Citing some examples, the SIC said that a local bank filed a suspicious transaction report on a customer who had opened an account with the said bank a few months earlier.

 “This came after coming across an article in a local newspaper that leaked names of individuals arrested by local law enforcement agencies on possible terrorist connections,” the report said.

It added that the SIC immediately initiated its investigation by obtaining all bank records available and simultaneously forwarded the name of the suspects to all banks and financial institutions operating in Lebanon to find out whether or not the suspect maintained additional accounts at other institutions.

Analysis of the Know Your Customer form and account movement revealed that the suspect claimed to be an electrician and that approximately $20,000 was deposited in cash followed by a number of withdrawals. The SIC froze the account and sent its findings to the General Prosecutor, who in turn forwarded the case for prosecution.

Additional information available to the General Prosecutor included the suspect’s inability to justify where the cash came from and his claim that the funds were borrowed from relatives to open a bank account needed for a visa application. SIC believes that this case may have involved terrorist financing.

The SIC received a request of assistance from a foreign competent authority concerning one of its nationals involved in the embezzlement of public funds totaling $5.7 million.

It added that the suspect had forged and collected checks issued by a government agency and used forged identification documents to flee to a neighboring country and then on to Lebanon.

The authority also mentioned that some of the embezzled funds were transferred to bank accounts in Lebanon and that several other individuals were involved in the scheme.

Consequently, the SIC opened its investigation and circulated the suspect’s name along with those of the other suspects to all banks and financial institutions in Lebanon to inquire about the existence of any accounts held by them. either directly or indirectly.

Findings revealed the existence of one bank account belonging to the suspect and analysis of the account movement reflected an incoming wire transfer of $3 million. Findings also uncovered two additional accounts belonging to accomplices that were financed by cash deposits amounting to approximately $250,000.

Analysis of the two accounts revealed that a check payment was made to purchase an apartment by one of the suspects. – The Daily Star.