HAVE YOU ANTICIPATED THAT LEBANON WILL BE PLACED UPON THE FATF GREY LIST, WITHIN YOUR RISK-BASED COMPLIANCE PROGRAM?

All the preliminary signs are that the Financial Action Task Force, the FATF, will designate the Republic of Lebanon a Jurisdiction under Increased Monitoring, its dreaded "Grey List."This action, which will be based upon the sad fact that a designated global terrorist organization, HEZBOLLAH, which basically runs the country from a political, as well as military perspective, operates a parallel economy that is outside the regulated Lebanese financial structure. the Terrorist group operates an entity that is, in essence, an unlicensed bank with zero AML/CFT capability, AL-QARD AL-HASAN, a US-sanctioned entity.

Although a number of other Arab countries are objecting to Lebanon being grey-listed, the circumstances support such a move by the FATF; the question is merely when, and not if, such a designation will be entered. Your risk-based compliance program should take note of this likely impending event, and make the appropriate modifications regarding an increase in internal due diligence procedures ahead of the FATF action. Whether that means that enhanced due diligence will be required on international trade transactions, funds remittances, loan repayment, and wire transfers should be based up your updated risk assessment, and whether you can conclusively rule out any possible terrorist financing factor during transaction monitoring, given customer history.