Anti-money laundering, or AML, is a system that utilizes a set of laws, rules, and procedures as a defense mechanism for criminals from hiding illegal money or “dirty money” to look “clean”. AML systems find suspicious financial activities with a magnifying glass, ensuring illegal financial activities don't pass through the legal economy unnoticed.
This set of processes helps firms achieve compliance with legally required criteria to deliberately monitor and report any suspicious transactions.
What Is the AML Legal Framework in Lebanon?
Lebanon’s framework and approach to defeating money laundering is strong and solid and has multiple layers in its systems that match global standards, set by the Financial Action Task Force (FATF). The core of this system includes key laws, regulations, and rules that enable the country to diminish money laundering and terrorist financing. Here are the main AML legal frameworks in Lebanon:
Law No. 44 (2015): This Law includes crimes such as corruption, drug trafficking, and other organized crimes as “money laundering”. This law introduced Counter-Terrorist Financing (CFT) measures, requiring entities to immediately report suspected terrorist financing.
Law No. 318 (2001): This Law has decreased Lebanon’s rate of money laundering and criminal offenses. Eventually, money laundering was seen as a criminal offense, resulting in the setting up of the Special Investigation Commission (SIC), serving as the country’s Financial Intelligence Unit (FIU). SIC is a foundational core to Lebanon’s AML efforts. Hence, receiving and investigating suspicious transactions reports and keeping in mind local and international authorities.
2025 Amendments to Lebanon’s Banking Secrecy Law: Now, authorities can access financial account data, even from 10 years ago, without the banking secrecy rules blocking them. As a result, it is now much easier to monitor and track down illegal funds and promote transparency across financial systems.
Banque Du Liban (BDL) Circulars: The central bank of Lebanon regularly issues guidelines on AML/CTF for financial institutions, ensuring that these firms are following international standards. This framework is continuously evolving to address emerging risks, particularly in the fast global developments in financial crime prevention.
Who Regulates AML Compliance in Lebanon?
AML compliance in Lebanon is overseen by several key authorities that work in coordination to ensure an effective regulatory environment:
Banque Du Liban (BDL)
Lebanon’s central bank, BDL, is responsible for AML/CFT compliance for institutions and money service businesses.
DFNBPs and High-Risk Sectors
The Ministry of Finance regulates compliance in tax-related sectors such as DNFBPs.
Special Investigation Commission (SIC)
As Lebanon’s Financial Intelligence Unit, the SIC is the primary authority responsible for receiving, analyzing, and investigating STRs. It also plays a proactive role in freezing suspicious assets and collaborating with international FIUs.
Judiciary and Law Enforcement Agencies
These enforcers are responsible for eliminating money laundering in cases involving criminal networking and cross-border crimes.
Which Sectors Are Subject to AML Obligations in Lebanon?
Lebanon’s AML rules cover a wide range of industries, as money laundering doesn’t just happen in banks; it exists across the spectrum, from inside finance to even non-financial businesses and professions. These are the sectors that need to comply:
Financial Institutions: Ranging from banks to any entity that provides financial services. These institutions must adhere to strict AML and Combating the Financing of Terrorism (CFT) measures, like customer due diligence (CDD), transaction monitoring, and reporting of suspicious activities.
Designated Non-Financial Businesses and Professions (DNFBPs): Sectors whose services might be taken for granted and need extra security from services that might be misused to hide “dirty money”
Virtual Asset Service Providers (VASPs): While still in development, crypto-related businesses are a matter worth paying attention to. Although there is no fully established framework yet, the SIC and BDL are scrutinizing this matter.
By addressing these diverse sectors, Lebanon ensures that its AML efforts are in line with local and global standards.
Enhanced Due Diligence (EDD) in Lebanon: When Is Extra Observation Needed?
In some cases, enhanced due diligence or EDD is required if there are situations where the potential risk for money laundering or terrorism financing is high. This includes measures such as:
● Stricter Verification process
● Increased Scrutiny of Transactions
● Closer Monitoring
Here are some specific instances that trigger EDD actions:
Politically Exposed Persons (PEPs): People who hold powerful positions who have the potential to misuse their power and possibly manifest corruption
Non-Resident Clients: People who don’t reside in Lebanon strike a higher risk of tax evasion leading to the need for a closer look at their transactions and financial activities.
Third-Party Accounts and Complex Structures: Legitimate entities that don’t have clear ownership or control must be investigated to acquire their origin and purpose
High-Value Transactions: Any unusual transaction that is perceived as “out of the ordinary” for a customer’s behavior may result in EDD requirements
By introducing EDD measures, Lebanon is able to prevent risks that are related to high-risk clients and transactions, protecting the integrity of its financial systems.
What Are the Key AML Laws in Lebanon?
Law No. 44 and 42 of 2015
Law No. 44 of 2015 addresses all offenses and provides a deep and comprehensible definition of money laundering. CDD, STRs, and documentation of record-keeping processes. Law No. 42 is a legislation that established the legal framework in Lebanon for the exchange of tax information between authorities.
Circular No. 83 and Circular No. 137 (BDL)
Circular No. 83 and Circular No. 137 Banque du Liban (BDL), these circulars possess detailed operational guidelines for Know Your Customer (KYC) practices, due diligence procedures, and implementation of AML requirements programs.
Which Industries Are Subject to AML Obligations?
AML rules in Lebanon apply to any industry of entities and are not limited to banks that may be vulnerable to financial crimes, including:
● Banks and Financial Institutions
● Insurance Providers
● Money Transfer and Remittance Services
● Capital Market Participants (brokers, investment firms)
● Designated Non-Financial Businesses and Professions (DNFBPs
What Are the KYC and Due Diligence Requirements in Lebanon?
To mitigate the risk of financial risk, Lebanese regulations require regulated entities to fully conduct:
Customer Identification: Verify identities using national IDs or passports, source of funds, and transactions to ensure the purpose of the transactions.
Beneficial Ownership Checks: For companies or legal entities, institutions need to find out who owns or controls them, not just on paper, but also the ultimate beneficial owner behind every financial action.
Ongoing Monitoring: Customers and their transactions; especially those that are high-risk, should be consistently reviewed and monitored for any possible illicit transactions.
Enhanced Due Diligence (EDD): For PEPs, non-resident clients, and unusual transaction patterns, institutions, extra scrutiny is required when dealing with these entities. This allows for deeper security and prevention of bribery, corruption, or misuse of public funds.
How Are Suspicious Transactions Reported in Lebanon?
Lebanon takes the reporting of suspicious financial activity seriously. The process includes:
Reporting Entity: Any regulated entity that is suspicious of money laundering must submit an STR to the Special Investigations Commission (SIC).
Reporting Timeline: Reports must be filed immediately upon suspicion, there should not be a delayed follow-up.
No Threshold Requirement: For any transaction, regardless of amount, if the transaction is out of the ordinary, it must be reported.
What Are the Penalties for Failing to Comply?
AML non-compliance in Lebanon leads to serious consequences:
Administrative Sanctions: Entities or individuals may face fines, warnings, or even restrictions on their operations which are imposed by the Banque du Liban or the Special Investigation Commission (SIC).
Criminal Liability: Under Law No. 44 of 2015, criminals could face up to 7 years in prison. Regulatory authorities can also revoke any assets connected to illegal activities.
Reputational Risk: Not following AML does not only bring legal consequences. Non-compliance can also damage an entity’s reputation. In some cases, global banks decide to cut ties, making it harder for businesses to be international.
Has Lebanon Been Subject to International Scrutiny?
Lebanon still faces enhanced monitoring after an assessment in 2021 under the MONEYVAL evaluation that identified significant gaps in implementing AML and CFT procedures.
Lebanon is on the FATF’s grey list, the country continues to face international pressure to strengthen its regulatory framework and enforcement regimes.
The Organization for Economic Co-Operation and the EU have called out concerns about Lebanon’s financial system. They believe that greater transparency of company ownership is needed and less strict banking secrecy laws prevent the detection of illicit financial activity.
How Sanction Scanner Supports AML Compliance in Lebanon?
We help you to support compliance in Lebanon by providing tools that ensure regulatory requirements:
● Real-Time Screening against global watchlists (UN, EU, OFAC)
● PEP and Adverse Media Monitoring are seemingly integrated into compliance workflow.
● Integrated PEP and adverse media monitoring
● Case management and STR tools that meet the reporting standards of SIC
● Audit-Ready Records Comprehensive logs to support regulatory inspections.
FAQ's Blog Post
Yes. Lebanon was added to the FATF grey list in February 2024, indicating strategic deficiencies in its AML/CFT framework. The country is currently under increased monitoring and is committed to resolving these issues.
Lebanon’s primary AML legislation is Law No. 44 (2015) – “Fighting Money Laundering and Terrorist Financing.” It outlines obligations for financial institutions and DNFBPs to detect, prevent, and report suspicious activities.
The Special Investigation Commission (SIC) is Lebanon’s Financial Intelligence Unit (FIU). It oversees AML compliance, investigates suspicious activities, and collaborates with domestic and international bodies.
KYC regulations in Lebanon require institutions to: • Identify and verify customers using valid documents • Understand the nature and purpose of the relationship • Conduct ongoing monitoring and risk profiling • Apply Enhanced Due Diligence (EDD) for high-risk clients
Cryptocurrencies are not yet comprehensively regulated, but they fall under general AML obligations. The SIC has advised caution, and VASP-like entities are expected to comply with FATF Recommendations.
AML obligations apply to: • Banks and financial institutions • Insurance companies • Real estate agents • Lawyers, notaries, and accountants • Casinos and dealers in precious metals and stones
Penalties include: • Administrative sanctions (suspension or license revocation) • Criminal charges, including imprisonment and fines • Reputational damage and international scrutiny These are enforced under Law No. 44 and relevant banking regulations.
Lebanon has made progress but still faces gaps, especially in beneficial ownership transparency and the regulation of DNFBPs. FATF and MENAFATF continue to monitor reform efforts closely.
Lebanese banks must: • Maintain detailed customer records • Report Suspicious Transactions (STRs) to the SIC • Conduct CDD and ongoing monitoring • Implement internal AML/CFT programs and staff training