Banking secrecy lifted 42 times in 2016: report
Watchdog says it took actions to combat terrorism, money laundering
BEIRUT: Lebanon lifted banking secrecy in 42 cases of suspected involvement in money laundering, embezzlement and terrorist funding, according to the Central Bank’s financial watchdog, the Special Investigation Commission said in its 2016 report.
According to the report, the SIC received 470 cases and investigated 399 of them. It added that 71 cases are still pending, which means that the SIC will determine if they will be prosecuted, depending on the strength of the evidence against them.
But the report did not disclose the nationalities involved in the suspected cases or the size of the accounts that were frozen by financial authorities. Out of the cases received by the SIC, 363 came from Lebanese sources while the remaining 107 came from abroad.
Lebanon has been aggressively enforcing the laws that were passed by Parliament to crack down on all types of financial crimes and money laundering. Lebanese banks are obliged to examine all suspicious accounts and report them to the Central Bank and the SIC.
The crackdown is part of an international effort to tighten the noose on the finances of terrorist organizations such as Daesh (ISIS) and Jabhat Fatah al-Sham. Hezbollah is also included on the blacklist.
The SIC said out of the cases examined, 163 involved embezzlement of private funds, 63 forgery, 23 terrorism or terrorism funding and 11 fraud. The report gave examples of the cases that were cracked by the financial authorities in Lebanon.
It added that one case involved terrorism funding.
“A local bank filed a suspicious transaction report on a customer and related accounts, after coming across an article in a newspaper that mentioned names of individuals arrested abroad by a foreign law enforcement agency for suspicion in taking part in a ML/TF network and for being affiliated with [Daesh],” the SIC said, using a shorthand for money laundering and terrorist financing.
The report added that the SIC initiated its investigation by obtaining all available bank records including “know your customer” forms, bank statements and copies of identification documents from the reporting bank, and also circulated the suspect’s name to all banks operating in Lebanon.
“The analysis performed on the account statements identified several cash deposits below the threshold, and payment orders that were not related to the suspect’s line of business that were followed by cash withdrawals. The related accounts reflected a similar pattern of transactions. Furthermore, the SIC analysis revealed that a spontaneous dissemination received from a counterpart [financial intelligence unit], as a result of its own analysis of several [suspicious transaction reports] filed by an international money-remittance company, had also mentioned the same suspect,” the report explained.
After a thorough investigation, the SIC lifted banking secrecy and froze the account balances of the suspect at all banks and financial institutions and also froze transactions at money-remittance companies.
In another suspected terrorism financing incident, the SIC said it received a request of assistance from the Internal Security Forces, which apprehended a suicide bomber before being able to carry out his attack in Lebanon. It added that the ISF was seeking the SIC’s assistance to identify accounts and transactions of several suspects.
“The SIC initiated its investigation by circulating the names of the suspects to all banks and financial institutions operating in Lebanon in an effort to identify bank accounts and transactions. During this period, and while under interrogation by law enforcement authorities, the apprehended suicide bomber provided authorities with names of additional suspects that were involved in two suicide bombings that took place in Lebanon killing innocent civilians and injuring many more. Under interrogation, some of the arrested suspects confessed to have pledged allegiance to [Daesh],” the report said.
The SIC conducted a thorough investigation into the suspects’ bank accounts. “The analysis on those bank accounts revealed that they had minimal activity and balances. Furthermore, a money-remittance company reported several transactions in prior years,” the report said.
Abdul Hafez Mansour, the secretary-general of the SIC, said that the commission has endeavored to examine any suspicious accounts with the help of the authorities.
“The SIC workload has grown; 470 ML/TF cases were received, 107 from foreign sources and 363 from local sources. Furthermore, 514 spontaneous disclosures were handled during the year,” he said.
Central Bank Gov. Riad Salameh also praised the work of the SIC over the past years. “Your work on spontaneous disclosures was as demanding. So was your tracking of evolving ML/TF trends that led to important work jointly carried out by the SIC, [the Central Bank], ISF and [the Association of Banks in Lebanon], which resulted in the issuance of the cybercrime prevention guidance,” the governor said in a letter published in the SIC report.