Acting against entities sanctioned by OFAC is the state’s responsibility, says BDL

Lebanon’s central bank stressed in a statement on Tuesday that its authority to block financial flows from entities or individuals sanctioned by the U.S. Treasury remains limited by the Code of Money and Credit, and that the state also bears responsibility in this issue.

Banque du Liban’s (BDL) statement came as an indirect response to remarks made the previous day by Finance Minister Yassine Jaber in an interview with al-Hadath. Jaber was asked how the state planned to handle the case of al-Qard al-Hassan, the financial institution linked to Hezbollah and sanctioned by the United States.

“BDL has begun addressing the problem. We, as the Finance Ministry, have no authority over the matter,” Jaber replied, adding that he had “no information about the measures taken by BDL.”

In its statement, the central bank recalled that on July 14, it issued Basic Circular No. 170, which prohibits banks, financial institutions, brokerage firms, collective investment funds and any entity it regulates from dealing, directly or indirectly, with unlicensed companies, “especially those sanctioned by the U.S. Treasury’s Office of Foreign Assets Control (OFAC).”

Stressing that this measure aims to protect Lebanese banks’ relations with their foreign correspondents “who handle dollar transfers,” BDL added that its role “remains limited in terms of powers and scope.” 

It continued, “In such situations, responsibility falls entirely on the state and the relevant ministries, which themselves hold the authority and means to intervene,” without explicitly mentioning any obligation or failure by the Finance Ministry in particular.

“Any claim to the contrary would wrongly imply that Banque du Liban holds powers it does not possess and that are not granted by law — especially under the Code of Money and Credit,” BDL concluded.

Al-Qard al-Hassan was first sanctioned by the United States in 2007, and its branches were targeted by Israel during the war against Hezbollah last fall. 

Over the summer, OFAC imposed new sanctions on seven senior officials and one entity linked to al-Qard al-Hassan. Jaber is close to the Amal Movement, an ally of Hezbollah, within Nawaf Salam’s government. However, he has distanced himself from his party on certain positions, notably on the issue of Hezbollah’s disarmament — a critical issue that pits the duo and their allies against other political parties in the country.

According to the Financial Action Task Force (FATF), which placed Lebanon on its list of non-compliant countries in 2024 due to its failure to adequately tackle money laundering and terrorist financing, the country has fairly robust regulations in place, but falls short in terms of the resources deployed to enforce them — particularly within the police and judicial sectors.

La BDL souligne que l’État a une responsabilité en matière de lutte contre les entités sanctionnées par l’OFAC