Lebanon Set to Be Grey-Listed by Financial Watchdog Amid Warnings from Officials

Lebanon is poised to be placed on a grey list of countries under special scrutiny by a global financial crime watchdog at the end of this week, despite appeals from Lebanese officials for leniency. Four sources familiar with the situation revealed this information on Monday.

Wassim Mansouri, the governor of Lebanon’s central bank, had previously expressed in August that he was working to prevent the country from being added to the Financial Action Task Force’s (FATF) grey list. Such a move would likely further deter investment in Lebanon, a nation already embroiled in a financial crisis since 2019. However, due to insufficient progress in addressing financial crimes such as money laundering, Lebanon is set to be grey-listed following a final decision that will be announced during the FATF plenary session in Paris on Friday, according to the sources.

The individuals, speaking on condition of anonymity due to their lack of authorization to discuss the matter publicly, indicated that Lebanon would be given an extended deadline to work on some of the reforms demanded by the FATF. Still, the decision to grey-list the country is final.

Lebanon, grappling with severe financial instability since 2019, is also facing devastation from expanding Israeli military operations against the Hezbollah militant group. Nasser Saidi, a former economy minister and ex-vice governor of the central bank, told Reuters last week that the damage caused by Israel’s bombing campaign would require $25 billion in repair costs.

In May 2023, Reuters initially reported that Lebanon had received a preliminary evaluation from the FATF, indicating it was at risk of being grey-listed. The country was then granted a year to address deficiencies in areas such as anti-money laundering efforts, transparency regarding the beneficial ownership of companies, and providing legal assistance in asset freezing and confiscation.

Mansouri is currently in the United States for the annual meetings of the International Monetary Fund (IMF) and the World Bank in the first half of the week. He is expected to travel to Paris for the FATF plenary by the end of the week, where the final decision will be made.

Meanwhile, France is set to host an international conference on Thursday aimed at mobilizing humanitarian aid for Lebanon and bolstering security in the southern part of the country.

By fLEXI tEAM