Lebanon's New Central Bank Chief Pledges War on Money Laundering and Terrorism Funding

BEIRUT (AP) — The newly appointed governor of Lebanon's central bank pledged on Friday to combat money laundering and the funding of terrorism. They also emphasized their commitment to maintaining the bank’s independence free from political influence.

Karim Souaid After officially assuming office in Beirut, he stated that he would focus on overhauling the banking system, addressing public debt, and restoring funds to depositors.

Lebanon’s economy has been experiencing its most severe downturn in recent times since 2019, and the government needs to carry out the reform measures requested by the global community. These changes are crucial for accessing international assistance, not to mention the ongoing conflict with Israel which has lasted for 14 months. Hezbollah which resulted in what the World Bank approximates was $11 billion in terms of damage and economic loss.

Lebanon's crisis stems from years of corruption by the nation's political and financial elites, which depleted public funds and culminated in a bank run in 2019 when individuals could not withdraw their savings. Since then, the pandemic and the huge explosion in Beirut have exacerbated this dire situation. port blast In August 2020 and during the Israel-Hezbollah conflict.

Ever since the major economic collapse started, Lebanon has been functioning primarily with cash. In October, the Paris-based Financial Action Task Force (FATF), which monitors global efforts against money laundering, added Lebanon to its "grey list."

"We aim to enforce international anti-money laundering regulations alongside measures against financing terrorism," Souaid stated. As a previous asset manager, he suggested that Lebanese banks must replenish their capital through fresh investments; institutions unable or unwilling to do so could integrate with other financial entities. Prioritizing deposit returns for individuals holding smaller accounts was his recommendation, emphasizing that this obligation falls upon the banks themselves, along with support from the central bank and government authorities.

Souaid said the central bank will study all economic recovery plans put forward by previous governments to help the small nation get out of the crisis.

Wassim Mansouri, who had been acting central bank governor since July 2023, said the central bank’s reserves stood at $10.73 billion at the end of March.

Souaid succeeds Riad Salameh The controversial ex-governor, who completed a 30-year tenure ending amid multiple international corruption charges as well as accusations of embezzlement and various financial crimes. Salameh took office in 1993, a time when Lebanon was striving to recover from a 15-year-long civil conflict.

Bassem Mroue, The Canadian Press

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