BEIRUT: Lebanon’s central bank must focus on fighting money laundering and terrorist financing, its newly appointed governor said on Friday, as he began the job of salvaging the fragile banking sector and getting it off a global watchdog’s “grey list.”
The Financial Action Task Force placed Lebanon on its list of countries requiring special scrutiny last year in a move many have worried could discourage the foreign investment it needs to recover from a 2019 financial crisis that is still felt today.
Terrorist financing and money laundering are top concerns for the US, which wants to prevent Hezbollah from using the Lebanese financial system and cash flows through the country to re-establish itself.
Karim Souaid, who was appointed last week, listed his main priorities during his official handover with the outgoing acting central bank governor who preceded him.
“The most important of these are combating money laundering and terrorist financing, and identifying and disclosing politically and financially influential individuals, their relatives, and those associated with them,” he said.
Souaid replaces interim chief Wassim Mansouri, who has been overseeing the bank since long-serving governor Riad Salameh’s tenure ended in disgrace in 2023 due to the financial implosion and accusations of embezzlement, which Salameh denies.
Triggered by widespread corruption and profligate spending by the ruling class, the financial crisis in Lebanon brought the banking system to a standstill, creating an estimated $72 billion in losses.
Souaid said the central bank would work to reschedule public debt and pay back depositors, while calling upon private banks to gradually raise their capital by injecting fresh funds.
Those banks unable or unwilling to do so, should look to merge with other institutions. Otherwise, they would be liquidated in an orderly manner, with their licenses revoked and depositors’ rights protected, he said.
Souaid also pledged to safeguard the central bank’s independence from political pressure and prevent conflicts of interest.
“I will ensure that this national institution remains independent in its decision-making, shielded from interference, and grounded in the core principles of transparency and integrity,” he said.
