AML/CFT Compliance Regime in Lebanon

Transcription

1 AML/CFT Compliance Regime in Lebanon Abdul Hafiz Mansour SIC Secretary US MENA PSD conference on Correspondent Banking New York, United States of America October 14, 2014

2 Compliance Regime - Lebanon Pillars of the Compliance Regime I Regulatory II Institutional Law 318/2001 for Fighting Money Laundering AML/CFT Regulations issued by the Central Bank of Lebanon (BDL) The Special Investigation Commission (Lebanon s FIU) Compliance Program A designated compliance officer An on-going training program Independent audit function High Commitment to Compliance

3 Law 318 for AML/CFT Considered as the cornerstone of the AML/CFT Regime Issued on the 20th of April 2001, one of the earliest in the Middle East region Key fundamentals: - Predicate offences - Reporting Obligation - Establishment of an FIU

4 The following are some of the fundamentals of BDL regulations Adoption of a Risk Based Approach Compliance Program Undertaking Customer Due Diligence Verification of Beneficial Owner Prohibition of dealing with Shell Banks Relationship with correspondent banks Regulating the Hawala system Money Service Businesses

5 Basic Circular 83/2001 Risk Based Approach (RBA) Require a RBA to classify customers & operations into low, medium & high risks Major classifications: - Customer Risks (foreign PEPs, offshore companies, non face to face banking etc. ) - Country Risks (Strictness of AML/CFT laws, country s corruption index etc.) - Service Risks (E-banking, private banking etc.) Key Features Customer Due Diligence (CDD) -Require clear procedures for opening new accounts -Require measures for checking customers identity and determine purpose & nature of the account and identify the source of funds -When CDD cannot be applied in a satisfactory way, No account must be opened or relation started or operation performed. Verification of Beneficial Owner -Determine identity of BRO, especially in the following instances: When operations are performed through a proxy given to a 3 rd person When operations performed by the customer are inconsistent with his profile, etc.

6 Basic Circular 83/2001 Shell Banks Banks & FIs must ascertain that the respondent bank establishing a relation with a local Bank or FI: Is not a shell bank Does not deal with shell banks (Direct/Indirect: Nesting) Has good internal controls & implements sufficient and effective AML/CFT procedures Has a good reputation

7 Basic Circular 83/2001 Comprehensive Compliance Regime Front Liners (Branch manager, AMF/CFT branch officer, cashiers etc. ) Compliance Department Internal Audit Department External Audit Special Investigation Commission (SIC) is Lebanon s FIU Compliance function is not a one person s job!

8 Basic Circular 126/2012 Relationship with Correspondent Banks Key Features Banks & FIs must be fully informed of the laws & regulations governing their correspondents abroad Banks & FI must deal with correspondents in conformity with the laws, regulations, procedures, sanctions & restrictions adopted by international legal organizations or by sovereign authorities in the correspondents home countries. They must strictly implement AML/CFT regulations by: Adopting a RBA Vetting the identity of both customers & BRO Setting procedures for monitoring operations & accounts on an on-going basis Notifying the SIC of any operation contravening this decision

9 Basic Circular 111/2007 Hawala System Key Features Only category A exchange institutions are entitled to perform Hawala cash transfers. They must: Notify BDL of their intent to carry out Hawala cash transfers Ensure that each Hawala transaction does not exceed USD 20,000 Retain for a minimum 5-year period, Hawala records & photocopies of official documents pertaining to concerned clients Establish a compliance department Adopt risk-based procedures & measures on Hawala transactions

10 Basic Circular 263/2011 Money Service Businesses Key Features Exchange Institutions that undertake cross-border transportation of cash & precious metals must each: Have a capital of no less than LBP 5 billion (around USD 3.3 million) Appoint an external auditor selected among international audit firms Appoint a compliance officer or a compliance unit Appoint an Internal Audit Officer Exchange Institutions & Banks must provide BDL with a monthly position for the total cross-border transportation volume, number & amount of cash/precious metals from/to Lebanon

11 The Special Investigation Commission (SIC) The (SIC) is the national central agency for receiving STRs, is hybrid FIU with judicial character empowered by law to carry out: Investigation -Investigate cases of ML -Request information from domestic authorities Supervision -Supervise Reporting Institutions to ensure their compliance with AML laws & regulations Exchange information with foreign counterparts Freeze -Accounts/Transactions suspected of concealing ML/TF operations -Accounts/Transactions suspected to be connected with corruption

12 High Commitment to Compliance High commitment to compliance is essential on several fronts Political Leadership Monetary Authorities Financial Sector

13 Speaker Contact information: Abdul Hafiz Mansour Secretary Special Investigation Commission Central Bank of Lebanon Masraf Loubnan Street, Beirut - Lebanon