The Lebanese financial authorities lifted banking secrecy rules on 17 bank accounts suspected of involvement in money laundering, embezzlement and terrorist funding in 2013, the Central Bank’s Special Investigation Commission reported Thursday.
The SIC, which was founded to investigate all reports and complaints of money laundering and terrorist funding, said in its report that it had examined 301 cases forwarded by local and foreign sources.
In the introduction to the report, Central Bank Governor Riad Salameh was quoted as saying that the 17 cases were referred to the general prosecutor.
“Furthermore, corruption-related funds were traced and returned to the Tunisian government and work was done through the judicial committee tasked with developing a manual on recovering corruption related funds smuggled to Lebanon,” he said.
Salameh also raised the issue of exchange traders who were prohibited from dealing with Lebanese banks because of their suspicious activities.
He added that the bank had implemented a raft of other regulatory amendments “to ensure compliance with international standards and sanctions.”
In 2001, Lebanon was removed from the list of countries that were not cooperating in the battle against money laundering.
Some Western observers, especially in the United States, have viewed Lebanon’s banking secrecy law with suspicion and pressed the government and Central Bank to take serious action against all individuals and groups suspected of involvement in money laundering or funding for terrorism.
Lebanese financial authorities remain determined to preserve the law, however, and since 2001 they have attempted to allay the West’s fears by examining all complaints about suspicious banking activities and making exceptions to the secrecy rules in the case of accounts thought to have been involved in illegal operations.
The SIC said it had received 301 cases in 2013, 189 of which came from local sources and 112 from foreign sources.
Out of the 301 cases, 255 were investigated, 17 saw banking secrecy lifted and 46 remain pending.
As to the nature of the cases, 35 involved forgery, 19 embezzlement of private funds, 12 embezzlement of public funds, 15 funding for terrorism and six organized crime.
In 2012, there were a total of 284 cases, 24 of which resulted in the lifting of the secrecy law, and 93 of which remain pending.
The report did not disclose the names of individuals and groups who were investigated nor the total value of the accounts that were frozen by the financial authorities.
Outlining examples of the cases it had handled, the SIC said a local bank had reported a suspicious transaction after its compliance officer discovered media reports that revealed the names of individuals allegedly linked to terrorist operations against government and security forces on Lebanese soil.
“The SIC initiated its investigation and obtained all bank records including ‘know your customer’ forms, bank statements and copies of identification documents from the bank concerned,” the report said.
“Analysis of the account movement revealed that several checks were deposited at other banks. Bank records and statements were obtained from other banks, and a similar pattern of transactions ... mainly consisting of cash and check deposits followed by cash and check withdrawals was noted.”
The report added that, as a result, an exception was made to the banking secrecy law, the accounts in question were frozen and the investigation findings were forwarded to the general prosecutor.
The report did not reveal the names of the individuals and groups involved in this case.
Lebanese bankers told The Daily Star that they were prohibited from accepting any financial transaction from members of Hezbollah, which has been labeled as a terrorist group by Washington.
The report described a rise in credit card and Internet fraud in 2013, adding that the year was marked by “a rise in criminal activity that is becoming extremely hard to investigate or trace.
“A surge in STRs [suspicious transaction reports] on individuals using forged identification documents to open bank accounts with the intention of defrauding third parties was also noted.”
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