Building A Financial Intelligence Unit In a Bank Secrecy Environment Lebanon’s Experience Presented by A. Mansour Secre

1. BuildingA Financial Intelligence Unit In a Bank Secrecy Environment Lebanon’s Experience Presented by A. Mansour Secretary Special Investigation Commission

2. Lebanon on the NCCT List • FATF placed Lebanon in 2000 on the list of non-cooperative countries /territories (NCCT) due to the following reasons: • No AML Law • Major Banking Center in the Region • Strict Banking Secrecy Law • Due Diligence accord adopted by the banks in 1996 was insufficient • No measures for Fighting money laundry in place

3. Bank Secrecy law - Lebanon • Law passed in 1956 even prior to the promulgation of the law of Money & Credit in 1963 • The law Provides total bank secrecy whereby secrecy cannot be lifted even by a court order • Secrecy can be lifted only in the following cases: • Bankruptcy • Death (Death of one of the holders of a joint account does not lift secrecy) • Client approval • Litigation between client & bank

4. AML/CFT Regime & FIU Creation • In 2000 a Team was set up at BDL to create public awareness that lead to a “High Political Commitment” on AML • In 2001 AML law 318 was passed and BDL issued Reg 83 • The Special Investigation Commission (Lebanon’s FIU) was set up with additional Powers & Functions: • Exclusive powers on Lifting Bank Secrecy & Freezing Accounts • Carry out Financial investigations with the Capacity to request information from : Judicial, Law enforcement , Customs , and all Administrative agencies • Supervision : Examinations of Reporting entities on Compliance with AML law & regulations , as the banks prudential supervisor does not have access to customers’ deposit accounts • Set up 2 National committees on AML & CFT

5. AML/CFT Regime – Set Up • Other steps taken to put in place an AML/CFT operational regime : • Developed SIC appropriate organizational structure • Created public AML/CFT awareness in the business community : Banks, Fis, Money dealers, Insurance,.. • Tracked developments of international standards to prepare for necessary amendments to AML law & regulations • Established International Cooperation by joining Egmont Group in July 2003 • Launched Regional initiatives : lead the efforts to the creation of MENFATF in Nov 04

6. AML law 318 of 2001 & Reg 83 • Mile stone in the Lebanese legislation on AML. It defines, criminalizes, and imposes sanctions on ML • Establishes the SIC as an “independent legal entity “ with a “Judicial Character” at the Central Bank of Lebanon • Immunity for SIC staff and Reporting entities on actions taken while discharging their duties under law 318 • Reg 83 covers various AML procedures ranging from KYC/CDD requirements, filing of STR’s & other control procedures

7. Lifting Bank Secrecy Mechanism • SIC receives STRs or ROAs requesting information about a Bank client, a transaction , or bank account • In cases of ROA the SIC request the reasons behind the request to verify if the underlying predicate crimes are within the scope of AML/CFT laws of Lebanon • SIC writes to the bank or financial institutions asking for the provision of the required information • SIC request information on KYC, account balances or accounts statements, cards, other details on the account • Banks & financial institutions have to respond within a week • SIC analyses the received information and disseminate to the relevant parties

8. 2001-2010 The SIC Handled 1573 Case Classified by Predicate Offences • Secrecy Lifted: 188 cases • Information Provided Involving Secrecy: 738 cases • Freezing Accounts: 145 cases

9. Bank Secrecy & International Cooperation, Rec 40 • Lifting bank secrecy is essentail to be in compliance with Rec 40 • International cooperation is of key importance when assessing the effectiveness of individual jurisdictions and multi-lateral efforts to combat ML&TF • Current issues under consideration to review Rec 40 : • Status of the FIU should not affect their capacity to exchange information • What info the FIU should be able to access directly or indirectly ( Calls to revisit Rec 26 before Rec 40) • FIU to respond to ROAs same as STRs • Easing of restrictive conditions to cooperation and consistency with Rec 36-39 ( Mutual legal assistance, Dual criminality, freezing of accounts, Extradition)

10. In Brief • Lebanon’s answer to Bank Secrecy was an AML/CFT law that created a “Multifunctional” FIU , empowered with to lift Bank Secrecy • Strict implementation of the law • Active and enhanced inter-agency & international cooperation Results: Lebanon is in compliance with International AML/CFT requirements while preserving its own particularities in respect of the Bank Secrecy law

11. Thank You