BDL raises withdrawal limits on blocked deposits, adds safeguard

BEIRUT — Banque du Liban (BDL) published two circulars on Friday raising withdrawal limits for "fresh" (U.S.) dollars from bank accounts blocked by restrictions in place since 2019. Initially announced on Nov. 6 as a project under review by Governor Karim Souhaid, the measure comes less than six months after the last increase.

The amendments introduced by two new texts (intermediary Circulars No. 746 and 747) take effect Dec. 1 and raise the withdrawal limit of Circular No. 158 from $800 to $1,000, and that of No. 166 from $400 to $500.

Approved Wednesday by the central council, they impose a safeguard, however, to avoid injecting more dollar liquidity into the market. Although deposited into their 'fresh' dollar accounts, the additional amounts cannot be immediately withdrawn by their beneficiaries, who may, however, make payments by bank card.

According to an anonymous BDL source, these will indeed be fresh dollars and the person or company receiving the card payment may withdraw them as usual. The circulars specify that the additional amount will be distributed among eligible joint account holders, in proportion to their entitlement, which is in principle determined beforehand.

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The introduction of this new method appears motivated both by the need to exit as quickly as possible from the Financial Action Task Force's gray list, by realigning the Lebanese judicial and financial system with anti-money-laundering standards, and by the need to satisfy the U.S. Treasury, which in recent weeks has demanded that Beirut regain control over a cash economy that has flourished since the start of the crisis.

Since a visit to Beirut by a U.S. Treasury delegation in early November, BDL has imposed new controls on money changers, identifying for the U.S. administration “a large part of the problem” related to Hezbollah’s financing.

Another change in form: the two circulars amend the requirement for beneficiaries of the mechanisms to waive banking secrecy vis-à-vis BDL and the Banking Control Commission regarding “derived special accounts, and not ordinary accounts,” by providing them with two internal form references, one for individuals and the other for legal entities.

Circulars No. 158 and No. 166 are part of the mechanisms gradually put in place by the BDL under former governor Riad Salameh to partially offset the illegal restrictions imposed by banks on blocked “dollar” accounts opened before the end of 2019.

The first had initially been published on June 8, 2021, while the second was published on Feb. 3, 2024 to replace a similar mechanism (Circular No. 151).

While BDL maintains these texts, the development of a bill to organize the restitution of tens of billions of dollars in deposits still inaccessible in banks that are virtually bankrupt remains deadlocked, mainly due to fundamental differences of opinion between the current BDL governor — who wants to deduct a portion of so-called “illegitimate” deposits before calculating the share owed by banks — and the International Monetary Fund, which calls for respecting the hierarchy of responsibility and for bank shareholders to be the first to pay before touching deposits.