Lebanon Central Bank investigating politicians who have 'smuggled' money into foreign accounts

Lebanon Central Bank investigating politicians who have 'smuggled' money into foreign accounts
Lebanon's Central Bank has asked banks to identify politicians and government employees that transferred funds abroad during a period of informal capital controls.
3 min read
16 January, 2020
A mask of Central Bank Governor Riad Salameh features at a protest [AFP/Getty]

The Governor of Lebanon's Central Bank ordered all banks operating in the country to review the transfers of funds abroad by government employees and politicians, a circular revealed Thursday.

The note comes amid a nationwide protest movement demanding an end to endemic corruption and the wholesale removal of Lebanon's political elite.

Four months into protests, demonstrators have channelled their exasperation at the banks, most of which have imposed informal capital controls to stave off a liquidity crisis.

Governor Riad Salameh requested banks examine transfers dated between 17 October and 31 December - the period in which banks enforced informal capital controls that blocked such transfers.

A circular from the bank's anti-money-laundering unit dating 9 January orders banks to identify funds deposited in overseas accounts within that period. Banks must comply by 31 January, The New Arab's Arabic-language service reported.

A separate circular from Tuesday asks Lebanon's banks to to identify money transfers to Swiss accounts since mid-October, Reuters reported, although it does not ask the bank to provide customers' names.

Lebanon's banking control commission has requested this information be provided within a week.

Hundred protesters held

Lebanon is facing its worst economic crisis in decades. Since September, banks have limited the number of dollars customers can withdraw or transfer abroad.

With little change in sight, protesters angered by a financial crisis they blame on Lebanon's oligarchs resumed their rallies with renewed determination Tuesday after a holiday lull.

Protesters vandalised several banks on the central Hamra Street on Tuesday evening and hurled rocks at anti-riot police, who responded with volleys of tear gas canisters.

Read more: Lebanese anti-bank protests continue for second night

Gathered in front of the Central Bank again on Wednesday, the protesters then moved to a police station where some of their comrades had been detained the previous night, leading to clashes that left dozens lightly wounded.

Demonstrators accuse banks of holding their deposits hostage while allowing politicians, senior civil servants and bank owners to transfer funds abroad.

Lebanon's security forces were holding at least a hundred anti-government protesters Thursday, lawyers told AFP, after the two nights of demonstrations that turned violent in Beirut. A fresh demonstration is planned on Thursday to demand he release of those held.

'On the doorstep'

Meanwhile, Lebanon is on the brink of forming a government, caretaker Finance Minister Ali Hassan Khalil said Thursday.

"Today I think that we have progressed to a very big extent and we can say that we are on the doorstep of forming a new government," said Khalil in comments quoted by Reuters, adding that the cabinet would be made up of 18 specialist ministers.

Prime Minister Saad Hariri resigned under pressure from the street less than two weeks into the wave of protests but a new government has still not been formed.

Read more: Lebanon protesters declare 'week of anger' amid ruling-class indifference

After a long search for a suitable candidate, former education minister and university professor Hassan Diab was nominated and tasked with picking a new cabinet.

Protesters have demanded a government of technocrats excluding the household names that have symbolised Lebanon's sectarian-based politics for generations.

Government formation talks have proved tough however and despite pressure from Lebanon's foreign partners and donors, Diab has yet to announce his government.

Agencies contributed to this report.

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