Central Bank expected to adopt stricter supervisory measures after rumored pressure from U.S.

Thursday, March 10, 2011

http://www.dailystar.com.lb/article.asp?edition_id=1&categ_id=3&article_id=125798#axzz1G9NltUvS

BEIRUT: The Central Bank and the Special Investigation Commission (SIC) are expected to adopt tougher measures to tighten supervision and ensure that any attempt to launder money in Lebanon is extremely difficult, bankers said Wednesday.

“There is no doubt that we need to have another look into the existing laws and take the necessary measures to protect our banks,” Makram Sader, the secretary-general of the Association of Banks in Lebanon told The Daily Star.

An informed source told The Daily Star that the U.S. Treasury, which last month accused the Lebanese-Canadian Bank of money laundering and connection to a terrorist group, is pressing the Central Bank to upgrade its anti-money laundering measures.

Central Bank governor Riad Salameh, who made an urgent visit to Washington earlier this month, succeeded in persuading the Lebanese-Canadian Bank management to sell its stake to the highest bidding bank.

The bank was acquired by SGBL on March 4, an acquisition that is yet to be ratified by the Central Bank.

Sader brushed off media reports that three to four Lebanese banks could be blacklisted by the U.S. Treasury for money laundering and connection to Hezbollah, which is labeled by Washington as a terrorist organization.

“There is no foundation for these reports. Jerusalem Post newspaper came up with lie and some papers picked it up,” Sader said.

Among the measures that are expected to see the light soon are a modification of the anti-money laundering law and a new law regulating the operation of foreign exchange bureaus and dealings with commercial banks.

“The new law would include regulating cash transfers to Lebanon by requiring disclosure at entry points of amounts in excess of $10,000 and verifying their source,” said the informed source, who was speaking on condition of anonymity.

Sader also denied that the U.S. and the West were pressing Lebanon to lift the banking secrecy law.

“Banking secrecy is not an obstacle to more measures to combat money laundering. All the enquiries to the SIC  are being carefully examined and if there are suspects connected with any account the commission will immediately freeze [that account],” Sader said.

Lebanese banks must carry out a comprehensive review of all of their customer databases, he said.

This involves identifying the type of business each customer has and the source of his or her money which is being deposited in the bank.

Sader stressed that Lebanese banks must provide all their departments with the necessary funds and qualified human resources to carry out their duties to reduce or even eliminate risks.

“These risks are great, serious and diverse, and the protection of banks takes priority over anything else.”

He added that the monetary supervisory authorities, namely the Central Bank, the Banking Control Commission and the SIC, must do everything within their powers to review the procedures to combat money laundering.  “The world expects us to adhere to the standards and fully implement them.”

But Sader underlined the need to monitor the movement of foreign cash from Lebanon and impose compulsory declarations based on a ceiling limit, in keeping with internationally recognized standards.

He also advised Lebanon to join the International Convention for Suppression of the Financing of Terrorism, issued by the United Nations in 1999.

“Lebanon’s reservations are no longer justified with regard to withholding information in order to preserve banking secrecy,” Sader said.

Analysts say Lebanon and the U.S. differ over the definition of Hezbollah, with Washington labeling it a terrorist group and Lebanese authorities treating it as part of Lebanese society.