On Thursday, April 24, Parliament will vote on a draft
law to amend banking secrecy.
The law needs to pass while preserving key amendments.
MPs also need to address three remaining loopholes.
This law is a crucial reform for Lebanon’s recovery
- Ensures
transparency, curbs corruption and limits illicit financing
- Is a
prerequisite for bank restructuring
- Allows
to rebuild confidence in the banking sector
- Vital
for exiting the FATF grey list
- Enables
Accountability
This law is essential, alongside
the bank restructuring and gap resolution texts, to address the 2019 financial
crisis
The law includes key amendments
to Article 7 of Law 306 (October 2022)
and Article 150 of the 1963 Code of Money and Credit
- Includes
a 10-Year retroactivity clause, running from the
law’s adoption date, that allows for scrutiny of past financial
engineering & post-2019 transactions.
- Grants
unrestricted access to banking info, including the names of account
holders, to the Central
Bank (BDL), the Banking Control Commission (BCC), and the National Deposit
Guarantee Institution (NDGI).
The current version still
includes 3 loopholes
FIRST
In Article 3, the joint parliamentary committees have removed the section
pertaining to the ability of the BDL and BCC to delegate their authority to
access information to third parties (like audit firms).
However:
- Granting
auditors access is essential. Without BDL/BCC sharing authority, proper
bank audits are impossible
- This
delegation is needed for both restructuring and supervision.
To meet reform commitments,
the original version, as suggested by the Council of Ministers should be
reinstated.
SECOND
Article 3 grants the Minister of Finance the authority to enforce one of the article’s provisions via decrees when necessary.
While this clause does not
halt the law’s enforcement, it should be removed to avoid granting unnecessary discretionary powers to the Minister of
Finance, and to preserve BDL independence regarding such matters.
THIRD
Article 2grants account holders the right to challenge
banking secrecy waiver requests from restructuring authorities (BDL, BCC, and
NDGI). This objection mechanism is unavailable for Special Investigation
Commission requests in anti-money laundering cases.
This objection mechanism must be
removed, as it creates a loophole for potential judicial obstruction and would
enable delays via abusive appeals.
