Lebanon parliament passes amendments to banking secrecy law

Lebanon’s parliament on Tuesday passed long-awaited amendments to a banking secrecy law, according to a Reuters witness, in the first step towards reforms required by the International Monetary Fund (IMF).

However, the amendments were watered down from the original proposal, leading one of the architects of the country’s economic recovery to say he would seek feedback from the IMF.

Lebanon and the IMF signed a staff-level agreement in April for $3 billion in funding to ease the country’s economic crisis, described by the World Bank as among the top three financial meltdowns since the Industrial Revolution.

The aid package is conditional on prerequisites including a banking restructuring strategy, capital controls, a 2022 budget and a reformed banking secrecy law.

The bill, read out in parliament’s first general session since elections in May, does not lift banking secrecy as a whole.

It allows some government bodies to lift secrecy specifically in cases of criminal investigations, including in illicit enrichment, money laundering and terrorism financing.

The original bill would have allowed banking secrecy to be lifted to investigate “all financial crimes,” but parliament voted to remove that language thus limiting the law’s scope.

Deputy prime minister Saade Chami, the architect of the country’s financial recovery roadmap, said he didn’t agree with the version of the law passed on Tuesday.

He tried to speak several times during the session but was drowned out by lawmakers.

Chami told Reuters he would send the law to the IMF to confirm whether it met its expectations.

The IMF’s staff level agreement had called for a new law “in line with international standards to fight corruption and remove impediments to effective banking sector restructuring and supervision, tax administration, as well as detection and investigation of financial crimes, and asset recovery.”