BDL appoints K2 Integrity to help it exit FATF's gray list

The Banque du Liban (BDL) announced Monday the signing of a cooperation agreement with K2 Integrity, an American risk and compliance consulting firm specializing in financial crime.

This move is part of BDL's efforts to "combat the expansion of the informal economy and counter all forms of illegal and fraudulent activities," it said in a statement.

"This initiative comes in the context of BDL's desire to exit the Financial Action Task Force (FATF) ‘gray list’," the BDL continued. The latter had placed Lebanon under increased monitoring on Oct. 25, 2024, with the country having committed to quickly resolving the identified strategic deficiencies within the agreed deadlines, in order to avoid being included in the "blacklist" of non-cooperative countries, after which it could be excluded from the global financial system.

As part of its mandate, K2 Integrity "will provide the necessary technical and advisory support for the adoption and implementation of measures to strengthen Lebanon's anti-money laundering and counter-terrorism financing systems," BDL specified.

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K2 Integrity was co-founded by brothers Jules and Jeremy Kroll, the former also the founder of the audit firm Kroll, sold in 2004. Kroll had been shortlisted in 2020 to conduct a forensic audit of BDL's accounts before being set aside in favor of Alvarez & Marsal, partly due to political pressure related to its alleged ties with Israel.

BDL "will rely on K2 Integrity's specialized expertise and international presence to develop and implement a rigorous action plan aimed at identifying systemic gaps, filling regulatory voids, and working to restore confidence in the Lebanese financial system, both nationally and internationally," the central bank concluded.

"This is good news for Lebanon," noted one industry expert on condition of anonymity. "Jurisdictions that use such firms usually speed up the implementation of required reforms, increasing their chances of getting off the FATF gray list," added another.