--- title: "Lebanon Between the Hammer of Israeli Attacks and the Anvil of the Grey List | Ghazi Mahmoud" url: https://ghazimahmoud.com/en/articles/2024-09-25-27ba44/ lang: en description: "As the meeting of the Financial Action Task Force (FATF) approaches, the threat of placing Lebanon on the grey list has resurfaced, with the grace period previously granted to Lebanon nearing its end." --- [All articles](https://ghazimahmoud.com/en/articles/) # Lebanon Between the Hammer of Israeli Attacks and the Anvil of the Grey List [Brig. Gen. (Ret.) Dr. Ghazi Mahmoud](https://ghazimahmoud.com/en/about/) 25 Sep 2024 · 4 min read [Banking and money](https://ghazimahmoud.com/en/articles/money/)[Politics and security](https://ghazimahmoud.com/en/articles/geo/) As the meeting of the Financial Action Task Force (FATF) approaches, the threat of placing Lebanon on the grey list has resurfaced, with the grace period previously granted to Lebanon nearing its end. The threat coincides with the escalation of relentless Israeli aggression against Lebanon, while the presidential vacancy continues, paralysing the work of state institutions and agencies. This comes at a time when Lebanon's financial and economic crisis is approaching the completion of its fifth year, managed by a caretaker government that lacks a reformist vision, and perhaps the will. The threat of the grey list comes against the backdrop of the cash economy's dominance over financial relations and commercial transactions, along with the accompanying risks of money laundering and the encouragement of corruption and fraud, given the inability of the relevant supervisory bodies to trace the origin of circulating capital and its ultimate destinations. It is well known that the dominance of the cash economy is the result of the banking sector's distress and the lack of confidence in it, after it withheld the deposits of the Lebanese and restricted withdrawals and transfers. Smuggling operations and porous borders have also played their part in encouraging the cash economy and deepening the crisis. The Financial Action Task Force (FATF) is a global watchdog concerned with money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction, setting international standards to prevent these illegal activities and avert the harm they cause to societies. Working in cooperation with international bodies, the group identifies vulnerabilities at the national level with the aim of protecting the international financial system from abuse. The group's recommendations and the essential measures that states must put in place can be summarised as aiming to: - Identify risks, develop policies, and ensure domestic coordination. - Pursue money laundering, terrorist financing, and the financing of arms proliferation. - Apply preventive measures to the financial sector and other designated sectors. - Grant the necessary powers and responsibilities to the competent authorities (for example, investigative, law enforcement, and supervisory authorities) and other institutional measures. - Enhance transparency and the availability of information regarding the beneficial owners of legal persons and legal arrangements. Despite the passage of nearly five years since the onset of the financial and economic crisis in which Lebanon is floundering, there are no serious indications that the caretaker government will address the crisis by drawing up an economic recovery plan and the radical reforms it requires. By contrast, significant efforts have been made by Banque du Liban and Lebanese banks to prevent Lebanon from being placed on the grey list, by restoring the banking sector to effectiveness through shifting the economy from cash circulation to circulation via banks, and by resuming cheque clearing. The risks of placing Lebanon on the grey list lie in subjecting the Lebanese financial system to intensive monitoring that increases the complexities of financial transactions and exacerbates the crisis of confidence afflicting the Lebanese economy, while reflecting negatively on Lebanon's banking dealings with the outside world. Listing Lebanon also affects its ability to attract capital from abroad and raises its cost, just as it raises already high production costs and limits the competitiveness of Lebanese exports. It is worth noting that this is not the first time Lebanon has been placed on the grey list, as it was previously listed in 2000 before being removed the following year. That came after the creation of the Compliance Unit within the Special Investigation Commission at Banque du Liban, which worked on exchanging information with the relevant bodies. Compliance departments were also established in banks to subject banking operations to review prior to their completion in pursuit of transparency. Yet these attempts remained of limited effectiveness owing to laxity in enforcing laws and regulations and the judiciary's failure to uphold justice. Today, however, as Israeli aggression against Lebanon expands and reaches a level of brutality that has spared neither people nor stone, the threat of the grey list from the Financial Action Task Force appears to be a continuation of that aggression and no less dangerous. Restricting Lebanon's financial dealings with the outside world and imposing strict oversight on its financial transfers increases the cost of these transfers and delays their execution. The rise in transfer costs will negatively affect Lebanon's foreign trade and drive up the cost of importing foreign goods, as well as the cost of exporting and subsequently transferring the proceeds to Lebanon. There is a golden rule stating that necessity permits what is forbidden, and is there any greater necessity for Lebanon today than halting the threat of placing it on the grey list? Especially since, despite the state of weightlessness gripping the Lebanese state, Banque du Liban has managed to reassure those concerned of the banks' adherence to scrutinising financial transfers and restoring monetary settlements through them. The most important challenge facing Lebanon today is its ability to overcome the requirements and challenges of the current stage, not compliance with the conditions of the Financial Action Task Force. Translated from Arabic with AI. [Read it in Arabic](https://ghazimahmoud.com/articles/2024-09-25-27ba44/) ## Published in - [Channel 23](https://ch23.com/Article/196891/لبنان-بين-مطرقة-الاعتداءات-الإسرائيلية-وسندان-اللائحة-الرمادية) - [LinkedIn](https://www.linkedin.com/pulse/%D9%84%D8%A8%D9%86%D8%A7%D9%86-%D8%A8%D9%8A%D9%86-%D9%85%D8%B7%D8%B1%D9%82%D8%A9-%D8%A7%D9%84%D8%A7%D8%B9%D8%AA%D8%AF%D8%A7%D8%A1%D8%A7%D8%AA-%D8%A7%D9%84%D8%A5%D8%B3%D8%B1%D8%A7%D8%A6%D9%8A%D9%84%D9%8A%D8%A9-%D9%88%D8%B3%D9%86%D8%AF%D8%A7%D9%86-%D8%A7%D9%84%D9%84%D8%A7%D8%A6%D8%AD%D8%A9-mahmoud-ph-d--rssxf/) - [Lebanon Files](https://archive.lebanonfiles.com/2024/articles/باقلامهم/لبنان-بين-مطرقة-الاعتداءات-الإسرائيل/) - [MTV Lebanon](https://www.mtv.com.lb/news/1490112) - [OZ Arab Media](https://ozarab.media/لبنان-بين-مطرقة-الاعتداءات-الإسرائيل/) - [Radar News](https://www.radar-news.net/لبنان-بين-مطرقة-الاعتداءات-الإسرائيل/) ## More on banking and money [All articles on this subject](https://ghazimahmoud.com/en/articles/money/) [11 Sep 2024 · Adjusting the salaries of public sector employees and retirees, back to square one · Channel 23, MTV Lebanon ](https://ghazimahmoud.com/en/articles/2024-09-11-aa3e5b/) [28 Aug 2024 · A Return to Promoting a Fall in the Value of the Pound · Channel 23, Lebanon Files ](https://ghazimahmoud.com/en/articles/2024-08-28-52b9af/) [14 Aug 2024 · The Economic Viability of Electricity from Solar Energy · Channel 23, LinkedIn ](https://ghazimahmoud.com/en/articles/2024-08-14-6cd3b7/)