Banks in Lebanon warned of the “gravity” of judicial accusations leveled against a number of them for “money laundering” and said that this will have repercussions on banking transactions.
In a first, a new lawsuit affected an Arab bank operating in Lebanon, which is the National Bank of Kuwait (NBK).
Mount Lebanon Public Prosecutor Judge Ghada Aoun charged two senior bankers from Bank Audi and Audi Group with money laundering for failing to lift banking secrecy on the accounts of senior figures at the firm.
The two bankers are Bank Audi Group CEO Samir Hanna, and Deputy Group CEO Tamer Ghazaleh.
Aoun’s move was based on a complaint filed by civil society group The People Want to Reform the System against banks “breach of trust and fraud against depositors,” as well as “misuse of public funds.”
Aoun called on several banks to lift banking secrecy from the chairmen and members of their boards of directors, supervisory commissioners, and auditors, under penalty of being prosecuted for the crime of money laundering.
The Association of Banks in Lebanon (ABL) had issued a short statement warning against Aoun’s decision.
The ABL said the move may push major international banks to completely stop their dealings with Lebanon by closing the accounts of the Lebanese banks with them.
“Regret will not work if Lebanon is financially isolated from the world,” warned the association.
These accusations mean closing Lebanon’s financial outlets abroad, as correspondent banks can freeze Lebanese financial operations as a precaution due to filed lawsuits, banking sources explained to Asharq Al-Awsat.
“This means that no money transfers from Lebanon will be received by correspondent banks abroad,” sources added.
The move was described as “vengeful” by the ABL.
“Aoun’s move could transform the economy into a cash economy, which threatens, at a later stage, local money transfer companies as well,” banking sources warned.
The People Want to Reform the System said that BLOM Bank and Credit Libanais Bank, going against the ABL, had cooperated with Aoun’s request so far.
As for the lawsuit against NBK, a banking official told Asharq Al-Awsat that Aoun’s decision will be received as a negative sign by the Arab bank.
According to the official, this comes to worsen a decade-old trend of diminishing activity by foreign banks in Lebanon.
An indefinite strike by banks was announced last week following a general meeting of the ABL, although ATMs have remained open.
