Salameh toughens up on money laundering
April 28, 2011 01:52 AM By
The Daily Star
BEIRUT: Central Bank Governor Riad Salameh Wednesday announced new tougher measures to combat money laundering in Lebanon.
“The Central Bank of Lebanon will not spare any efforts in fighting money laundering in order to strengthen the international community’s confidence in the country and increase investors’ trust in the Lebanese banking and financial system,” he said.
His remarks came during a conference organized by the Central Bank in cooperation with the Union of Arab Banks and held at Coral Beach hotel.
Dubbed “The international conference on combating money laundering and terrorist financing,” the event is aimed at highlighting the new challenges for combating money laundering and terrorist financing.
Salameh said that the Central Bank recently proposed an ammendment to Article 318 of the money laundering law to include terrorism financing alongside the crime of money laundering, and to further explain the measures which are required to be adopted if a new money laundering case is uncovered.
“The amendment also includes an item calling upon lawyers, public notaries and accountants, when doing their mission, to notify the head of the Special Investigation Commission immediately of the operations that they suspect are linked to money laundering or terrorism,” he added.
He said the Central Bank is now amending the circular linked to the transfer of foreign currencies from and into Lebanon by adopting stricter measures on all banking and financial institutions falling under the Bank’s authority. “They have to notify the Central Bank prior to implementing their operations,” Salameh said.
Salameh also emphasized the need to appoint a compliance officer to ensure that institutions are fully complying with the regulations issued by the Central Bank.
The governor added that the Central Bank was currently working on issuing a number of circulars pertaining to the work of exchange institutions in Lebanon. “This helps us preserve the good reputation of the banking sector and prevent it from being used as a safe haven for money laundering,” he said.
Salameh said the Central Bank has been doing a good job in fighting money laundering over the past few years but a great role remains to be played by financial institutions themselves.
“The major deterrent factor in this field will be financial institutions themselves, because they know better the nature of the funds that go into their firms, and their responsibility will be to notify the commission about their suspicions,” he added.
He noted that Lebanon has come a long way in a short period of time with its effort to crack down on money laundering, noting that in 2000 the country was placed by the Financial Action Task Force on the list of noncooperating countries in this field.
“The Central Bank took all the necessary measures to remove Lebanon from this blacklist,” he said.
Salameh also cited the measures taken by the Central Bank over the previous years to combat money laundering.
“The Central Bank has suggested a draft law on money laundering in order to cover the gap that existed in this field, taking into account the provisions of the banking secrecy,” he said.
He explained that these efforts began with the Anti-Money Laundering Law first issued in 2001, of which Article 318 defined the crime as being any act that intends to hide the real source of illicit funds, or to own or transfer them.
Salameh added that Article 6 of the same law created the Special Investigation Commission, an independent oversight body that ensures compliance with the legislation.
The commission, he said, functions independently, in the same way an autonomous judiciary, and is not subject to the authority of the bank.
“Its mission is to investigate suspicious transactions and seek to enforce money laundering measures,” he said.
He noted that Lebanon was removed from the list of noncooperating countries in October 2003, following the efforts of the Central Bank.
“We did not stop our hard work after that date and we have agreed with the Cabinet on establishing a national committee to fight money laundering and facilitate cooperation among the different concerned institutions,” he said.
For his part, Joseph Torbey, chairman of the World Union of Arab Bankers, said money laundering has negative repercussions on institutions and governments worldwide.
“Funds laundered are estimated at 8 percent of the volume of international trade, nearing $3 trillion per year,” Torbey said. “As such, the industry of money laundering comes in the third position after currencies trading and cars manufacturing.”
For her part, Yamam Fadl, compliance officer at the Office of Foreign Assets Control, U.S. Treasury Department in Washington, gave an overview of OFAC’s main duties.
OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, as well as other threats to the national security, foreign policy or economy of the United States.
Fadl said OFAC imposes five elements to be met by banks in the U.S. for them to be considered as compliant with U.S. sanctions.
The elements include conducting a risk assessment, having good internal controls, conducting an internal test or audit of the compliance program, designating a qualified compliance officer and conducting training.
A version of this article appeared in the print edition of The Daily Star on April 28, 2011, on page 4.
