Lebanon SIC Annual Report 2023

SIC Annual Report 2023

In 2023, Lebanon’s Special Investigation Commission (SIC) released its annual report, presenting a detailed account of the country’s financial crime landscape. As Lebanon continues to grapple with a range of financial challenges, from corruption to money laundering, the SIC’s findings offer critical insights into the country’s efforts to combat these issues. The report, which encompasses investigations into local and international cases, reveals significant developments in the areas of bank secrecy, predicate offenses, and suspicious transactions, alongside Lebanon’s adherence to global financial compliance standards.

Cases Received and Investigated

The SIC received a total of 527 cases in 2023, marking a significant step in the ongoing battle against financial crime. Out of these, 422 were from local sources, while 105 came from foreign entities. This strong international cooperation underscores the growing importance of cross-border collaboration in tackling financial crimes like money laundering, terrorism financing, and tax evasion.

Of the 527 cases, 396 (75%) were thoroughly investigated. Approximately 312 of these were forwarded to the General Prosecutor’s office or other relevant authorities for further action. Interestingly, the report highlights a backlog of pending cases—99 in total—underscoring the complexity of financial crime investigations. The 36 cases that had been pending since the previous year (2022) were resolved in 2023, with 30 passed on and 6 classified as “not passed on.”

Bank Secrecy Lifting: Increased Transparency

A major highlight of the SIC’s activities revolves around the lifting of bank secrecy, a once-sacred principle in Lebanon. The report reveals that bank secrecy was lifted in 96 cases during 2023, with 81 cases involving local entities and 15 involving foreign entities. This is a significant step forward for Lebanon, signaling a stronger commitment to transparency and global financial regulations. Additionally, information—often covered by bank secrecy—was provided in 315 cases, further contributing to the international community’s trust in Lebanon’s regulatory systems.

The data points to a strong focus on domestic investigations, but the international component also remains critical, particularly in cases involving foreign entities that require Lebanon to collaborate with overseas counterparts.

Breakdown by Predicate Offenses: Fraud and Corruption Dominate

The report provides a detailed breakdown of cases by predicate offense, shedding light on the primary financial crimes in Lebanon. Fraud and corruption were the most common offenses, with 86 cases of fraud and 35 cases of corruption investigated in 2023. Other significant crimes included forgery (46 cases), cybercrime (35 cases), and embezzlement of private funds (19 cases).

The international cases showed a somewhat different pattern, with terrorism financing taking center stage. Foreign cases included 25 related to terrorism or terrorism financing, 20 cases of fraud, and 14 of corruption. These figures underscore Lebanon’s geopolitical location, which makes it a focal point for investigations involving both traditional financial crimes and terrorism-related activities.

Suspicious Transaction Reports (STRs): A Key Tool in AML/CFT Efforts

Suspicious Transaction Reports (STRs) are critical in identifying and preventing financial crimes, particularly money laundering and terrorism financing. In 2023, a total of 166 STRs were filed, with banks being the leading source, contributing 57% of all reports. Other notable contributors included money remittance companies (10%) and police (28%).

The report also highlights the geographic distribution of STRs within Lebanon. Unsurprisingly, Beirut accounted for the majority (57%) of these reports, given its role as the financial hub of the country. Other regions like Mount Lebanon (18%) and North Lebanon & Akkar (10%) also had a notable share, reflecting the widespread nature of financial crimes across the country.

Requests for Assistance (ROA): Collaboration with International Partners

In addition to STRs, the SIC processed 384 Requests for Assistance (ROAs), further illustrating Lebanon’s commitment to international cooperation. The report reveals that 48% of ROAs were from local sources, while 21% came from foreign sources. Europe was the dominant region for foreign ROAs, accounting for 44% of the total, with France, Germany, and Cyprus being among the top countries requesting assistance.

Lebanon also received ROAs from the Middle East and Gulf region, making up 32% of foreign requests. Iraq was the leading country in this category, reflecting the interconnected nature of financial crime in the region.

On-Site Compliance Examinations: Ensuring Adherence to AML/CFT Regulations

Lebanon’s financial institutions underwent rigorous scrutiny in 2023 as part of the SIC’s risk-based compliance examinations. These examinations are essential in ensuring that banks and other financial entities comply with Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regulations.

In 2023, the SIC conducted on-site compliance examinations across various sectors:

– 19 banks were covered, out of the 60 operational in the country.

– 79 money dealers were examined.

– All 9 money remittance companies were assessed.

– 6 financial institutions and 14 insurance companies also underwent these examinations.

This robust compliance framework highlights Lebanon’s efforts to enhance its financial sector’s integrity and adherence to global standards. The SIC also conducted assessments of Designated Non-Financial Businesses and Professions (DNFBPs), further expanding the scope of its regulatory oversight.

Strategic Analysis: Trends in Financial Crimes (2019–2023)

The report concludes with a strategic analysis, identifying trends in financial crimes over the last five years. Notably, the incidence of cybercrime, fraud, and terrorism financing has increased, reflecting global trends. Corruption and embezzlement of private funds also remained significant issues during this period.

In 2023, cybercrime accounted for 17% of specified offenses, followed by terrorism financing (14%) and trade of narcotics (12%). Fraud (10%) and corruption (9%) were also prominent. These figures align with Lebanon’s efforts to prioritize the fight against both conventional financial crimes and new, evolving threats such as cybercrime.

Conclusion: Lebanon’s Commitment to Financial Transparency and Crime Prevention

The 2023 SIC annual report is a testament to Lebanon’s ongoing efforts to strengthen its financial crime prevention systems. With increased transparency through the lifting of bank secrecy, a focus on investigating high-priority cases like fraud and terrorism financing, and rigorous compliance examinations, Lebanon is taking decisive steps toward aligning with international AML/CFT standards.

Despite the challenges, Lebanon’s collaboration with foreign jurisdictions, combined with its internal regulatory reforms, signals a growing commitment to combating financial crime. As the country continues to evolve its financial oversight mechanisms, these efforts are crucial for restoring confidence in Lebanon’s financial system and supporting its reintegration into the global financial community.

By examining the details of the SIC’s 2023 report, it becomes clear that Lebanon is making strides in combating financial crime, though much work remains to be done. The steps taken in areas like bank secrecy and international cooperation are encouraging, particularly in light of Lebanon’s broader financial struggles. Moving forward, continued vigilance and enhanced regulatory frameworks will be essential in ensuring the country’s financial system is both secure and transparent.

Click here to know more.

Please read about our product: Dragnet Alpha

Click here to book a free demo