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If American correspondent banks resort to de-risking Lebanon for failure to comply, then Lebanese banks will lose their access to the U.S. dollar and the U.S. markets.Lebanon cannot afford to be cut off from the U.S. markets, and turning to European banks will not help, as they are likely to follow the lead of American correspondent banks in cutting exposure to Lebanese banks. Even one major correspondent bank de-risking a Lebanese bank will represent a substantial threat, as it can start a chain of reactions across the remainders of banks. Indeed, to foreign correspondent banks, Lebanese banks only make for a small volume of business and income.The compliance role was non-negotiable for the banks' leaders, one that needed to be protected and implemented sharply.For the readers who may have not heard of FATCA (the Foreign Account Tax Compliance Act), FATCA is a U.S. law enforcing the reporting of foreign financial assets by all U.S. taxpayers, at the cost of withholding and fining the breaching party.
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