Lebanon’s bank secrecy law has major problems – IMF

The International Monetary Fund told the Lebanese state on Thursday that its bank secrecy law had failed to address “key shortcomings”, urging officials to make further changes to their first attempt at financial reform.

The assessment, seen by Reuters and confirmed by a government official as accurate, is the IMF’s first comment on steps Lebanon has taken to complete a checklist that would give it access to $3 billion to ease the worst economic crisis. of the country since the civil war of 1975-1990.

The amended bank secrecy law passed in July was a watered down version of the original proposal, raising concerns that the IMF did not consider it strong enough to qualify.

Lebanese President Michel Aoun on Wednesday refused to sign it and sent it back to parliament for further modifications.

On Thursday, Lebanese officials received a letter from the IMF saying the law represented “substantial reform…but few key shortcomings remain.”

He said more government agencies should have access to bank data, including for administrative functions and not just for criminal investigations, as the current draft stipulates.

He also said criminal liabilities for breaches of bank secrecy “could have a stifling effect on the detention and disclosure of criminal or suspicious activity.”

The IMF did not immediately respond to a request for comment.

Now in its third year, Lebanon’s financial collapse has caused the currency to plummet by more than 90%, spread poverty, crippled the financial system and frozen depositors of their savings.

Donor states want Lebanon to pass reforms to tackle the root causes, including decades of state waste and corruption, before releasing aid.

The IMF staff-level agreement had called for a new bank secrecy law “in line with international standards to fight corruption and remove obstacles to effective restructuring and supervision of the banking sector, tax administration, as well as the detection and investigation of financial crimes and asset recovery.”
Source: Reuters

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