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Lebanese banks confident in regulatory compliance
File - Banks street in Beirut, Wednesday, Sept. 25, 2013. (The Daily Star/Mohammad Azakir)
File - Banks street in Beirut, Wednesday, Sept. 25, 2013. (The Daily Star/Mohammad Azakir)
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BEIRUT: Lebanese banks are fully complying with United States anti-terrorism-funding regulations and have no intention of repeating the Lebanese-Canadian Bank experience, lenders said Thursday.

“I don’t know why some news media are spreading malicious lies about the Lebanese banking sector. All of the U.S. officials who we met in Washington expressed their deep satisfaction with the financial measures taken by our banks,” Makram Sader, secretary-general of the Association of Banks in Lebanon, told The Daily Star.

A number of Kuwaiti newspapers claimed this week that the U.S. Treasury intended to blacklist two Lebanese banks for allegedly laundering money for Hezbollah, which Washington labels as a terrorist organization.

In February 2012, the U.S. Treasury accused the now-defunct Lebanese-Canadian Bank of money laundering and funding Hezbollah’s activities.

Central Bank Governor Riad Salameh persuaded the management of the bank to sell its assets and liabilities to another Lebanese bank to spare Lebanon further painful financial measures against the banking sector.

In March 2012, SGBL agreed to acquire LCB for $550 million.

Salameh and ABL representatives have paid several visits to Washington since the closure of LCB to reassure U.S. officials that Lebanon was tightening controls on all suspicious funding and most notably on individuals linked to Hezbollah.

“Lebanese banks are not only complying with the U.S. blacklist but are also adhering to all the lists from the European Union and United Nations,” Sader said. “We are not going to ruin our reputation for suspicious money. We are well-off without them.”

Daniel Glaser, assistant secretary at the U.S. Treasury Department, warned last month during an Arab banking conference in Beirut that any financial dealings with Hezbollah carried risks, adding that Lebanon’s “resistance” was essential to thwarting any attempts to evade international sanctions on Iran and Syria.

“We met with Glaser when he was in Beirut, and we did not sense that the Americans are frustrated with the Lebanese banks. On the contrary, Glaser was quite satisfied by the presentation we made for him,” Sader said.

Joe Sarrouh, the adviser of the chairman of Fransabank, echoed Sader’s argument:

“The Central Bank and Banking Control Commission are working diligently to ensure that every bank, irrespective of its size, is fully complying with the anti-money-laundering rules and anti-terrorist funding.”

Sarrouh believes that Lebanon has even made more progress in complying with the U.S. Foreign Account Tax Compliance Act than many developed countries.

“Lebanon is spearheading the implementation of FATCA and is mobilizing resources for this task,” Sarrouh explained.

Other bankers added that Lebanon had no choice but to comply with all U.S. measures as any attempt to dodge them would only bring disaster to the banking sector by cutting it off from international markets.

Meguerditch Bouldoukian, former vice governor of the Central Bank and a consultant at Credit Libanais, said the drop in capital inflows and foreign direct investments to Lebanon clearly showed that the country was not laundering money.

“The growth in deposits over the past years has been very modest compared to previous years,” Bouldoukian said. “Most of the money generated is from the interest rates on the current deposits. If we have $100 billion in deposits, then the compounded interest rate from them is close to 4 percent on average. If the government takes 5 percent tax from the deposits on interest then this growth will be even lower.”

Citing an example of the compliance with U.S. measures, he said that Credit Libanais was refusing any accounts that carry risk, such as offshore accounts.

“Banks have also closed all of the accounts of the exchange dealers in accordance with the directives issued by the Central Bank,” he said. “The lenders are not willing to take even one small chance.”

Bouldoukian said that rumors about money laundering in Lebanon went back to the days when he was a vice governor of the Central Bank back in the 1980s.

“Rumors against Lebanese banks will not stop, but this will not discourage the lenders from taking more measures to protect the sector.”

A version of this article appeared in the print edition of The Daily Star on December 06, 2013, on page 5.
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