Lebanon's central bank has signed an agreement with K2 Integrity, a US risk management advisory firm, to combat illegal activities and fraud, Lebanese media reported on Monday.
The agreement is part of Banque du Liban’s broader effort to remove Beirut from the “grey list” of the Financial Action Task Force (FATF), the international policy-making and standard-setting body dedicated to combating money laundering and terrorist financing.
Countries on FATF’s grey list are subject to increased monitoring by the intergovernmental organisation for their inadequate safeguards against financial fraud, and they face difficulty in raising funds.
The size of the Lebanese economy has contracted by nearly 40 percent since 2019 when a financial crunch hit an already crisis-ridden country.
The country’s economy sustained further blows when Hezbollah, the Iran-backed group that simultaneously operates as a political party and a non-state militia, joined Hamas in the fight against Israel after October 2023.
Subsequently, Tel Aviv conducted repeated air strikes that escalated into a ground offensive.
The Lebanese government has shown willingness to disarm Hezbollah, a move that may significantly improve economic conditions and pave the way for financial aid from countries like the US and Saudi Arabia.
The US has promised economic aid to the Lebanese government if it fully disarms Hezbollah, a proposal that the Iran-backed group is opposing. Both the US and Israel consider Hezbollah a terrorist organisation.
Terrorist financing and money laundering are top concerns for the US, which wants to prevent Hezbollah from using the Lebanese financial system to re-establish itself after recent setbacks.
In April, the newly appointed governor of Lebanon's central bank vowed to fight money laundering and terrorist financing.
FATF placed Lebanon on its list of countries requiring special scrutiny last year in a move many worried could discourage the foreign investment it needed to recover from a 2019 financial crisis that is still felt today.
