Lebanon: Central Bank Prevents Entry of Funds from Entities Subject to International Sanctions

SadaNews - The Central Bank of Lebanon announced on Tuesday the issuance of a circular prohibiting the entry of any funds into the banking sector from Lebanese entities or organizations subject to international sanctions, particularly U.S. sanctions.

The bank stated in a statement: "The issuance of circular number 170 prohibits the entry of any funds into the Lebanese banking sector directly or indirectly if they originate from entities or organizations in Lebanon that are subject to international sanctions, especially those issued by the Office of Foreign Assets Control of the U.S. Department of the Treasury (OFAC)."

The bank added that allowing these funds to enter would jeopardize the relationships of Lebanese correspondent banks, particularly with American banks that oversee U.S. dollar transactions.

The statement noted that any entity or organization subject to international sanctions and not licensed by the Central Bank of Lebanon does not fall within its direct jurisdiction, emphasizing that the bank's role in such cases remains limited while the Lebanese state and the relevant ministries bear full responsibility for intervention within their legal powers.

It emphasized that "any reference to the Central Bank of Lebanon having powers not stipulated in the Money and Credit Law is considered inaccurate," pointing to the attribution of responsibilities that do not fall within its jurisdiction.

The U.S. Office of Foreign Assets Control (OFAC) has imposed sanctions for years on Lebanese figures and entities, including financial institutions and associations, accusing them of providing support to the activities of "Hezbollah," which Washington designates as a "terrorist organization."

Lebanese monetary authorities fear that dealing with entities subject to sanctions could isolate local banks from the global financial system, especially as Lebanon relies heavily on foreign remittances to meet its foreign currency needs.