Banque du Liban revokes license of Iranian bank Bank Saderat

BEIRUT — Banque du Liban (BDL) revoked the license of Iranian bank Bank Saderat this week amid increased U.S. pressure on countries to reduce their economic ties with the Islamic Republic.

The move aims to “send a clear signal to the outside world that we are determined to protect our banking sector from any entity that might cause it a risk of contamination,” BDL Gov. Karim Souhaid told Bloomberg.

The move comes amid a regional tightening of restrictions on Iran’s financial system, particularly in the United Arab Emirates and Turkey, as the U.S. steps up pressure internationally, attempting to isolate it economically into accepting its terms for ending the war.

Bank Saderat is one of Iran’s oldest commercial banks and operates several branches abroad, Bloomberg reported.

“We saw that all other bigger, stronger economies like the UAE and Turkey have complied with such requests in order to preserve the relationship of their banks with the international financial system,” Souhaid said on the sidelines of the International Monetary Fund’s annual meetings in Bangkok, Thailand. “Lebanon can’t sustain such a risk.”

“We have to take decisions sometimes that are politically sensitive because we want to protect our banking sector from any outside sanctions or outside pressure,” he added.

Exiting the 'gray list'

Souhaid also reiterated the need for Lebanon to leave the “gray list” of countries with shortcomings in combating money laundering, which the Financial Action Task Force (FATF) placed Lebanon on in 2024. The FATF is expected to announce a decision next week in Paris.

Souhaid stressed the need to “cleanse the economy of all illicit, illegal or laundered funds.” BDL has hired an American specialist firm to map Lebanon’s cash-based economy and detect suspicious activity, he said.

Lebanon is seeking to revive its economy after the financial collapse that led the country to default on about $30 billion in eurobonds in 2020. The country is negotiating with the IMF for a potential loan, which would be a key step toward recovery.

“This is going to be an important issue,” Souhaid said. While not part of the IMF’s conditions for a potential support package, “it is an unwritten rule that the lender and the donors who will join the program will insist on having a clean financial sector,” the governor said.