Lebanon tightens rules on money firms under US pressure to cut Hezbollah funding

Lebanon has ordered money changers and transfer companies to follow stricter regulations as US pressure mounts to curb the country’s cash-based economy and block funding to Hezbollah.

The move comes after a visiting US official vowed to cut Tehran’s financial support to the group, and following a US Treasury claim that Iran’s Revolutionary Guards have transferred more than $1 billion to Hezbollah this year, largely through money exchange firms, Caliber.Az reports via Al Arabiya.

Lebanese authorities, seeking to accelerate efforts to disarm Hezbollah after the group was severely weakened in its recent war with Israel, also fear potential escalation from Israeli forces. The central bank said the new steps aim “to remove Lebanon from the Financial Action Task Force (FATF) grey list... the central bank of Lebanon has taken the first step in a series of precautionary measures aiming to strengthen the compliance environment within the financial sector”.

Lebanon was placed on the FATF grey list last October. Under the central bank’s circular, starting December 1 all non-bank financial institutions — including money transfer companies and exchange bureaus — must “collect information and data linked to their customers and operations” for transactions of $1,000 or more and report them. They must also confirm the information has been collected before carrying out any transaction. The bank said the measures align with global standards to combat money laundering, terrorist financing, and the misuse of the financial system.

Hezbollah has denounced the tightening restrictions. On November 13, its parliamentary bloc condemned “US efforts to tighten the financial siege on Lebanon” and rejected what it called Washington’s bid to impose “financial guardianship” on the country.

Once known as the “Switzerland of the Middle East,” Lebanon’s banking sector collapsed during the 2019 financial crisis, prompting a surge in cash transactions despite repeated international warnings over money-laundering and financing risks.

By Sabina Mammadli