Report: Washington Pleased with Lebanon's Banking Sector Performance

The United States hailed the performance of Lebanon's banking sector describing it as “having a respect for the standards of international sanctions,” al-Akhbar daily quoted unnamed sources on Thursday.

The U.S. State Department conveyed a letter to Beirut assuring that Washington will not lay a finger on Lebanon's banking sector, the sources said on condition of anonymity.

The letter comes on the backdrop of the U.S. decision in April that sanctioned two Lebanon exchange firms, Kassem Rmeiti & Co. For Exchange and Halawi Exchange Co., on accusations of laundering millions of dollars in drug-smuggling money to support Hizbullah with some of the cash being routed through U.S. banks.

The U.S. Treasury believes both firms had been used to move money by the Ayman Joumaa narcotics network, a primary target in recent years of U.S. law enforcement, since the Treasury cracked down on the Lebanese Canadian Bank for its alleged money laundering activities.

In 2011, the U.S. Treasury Department and Drug Enforcement Administration said Lebanese Canadian Bank was designated a "primary money laundering concern" under federal law for allegedly helping a Lebanese-based drug trafficking organization launder as much as $200 million a month in drug profits.

The Lebanese subsidiary of Societe Generale (SGBL) acquired the assets of LCB in 2012.

The U.S. letter praised the performance of Lebanese banks, saying “it has respect for the standards of international sanctions,” but strongly stressed that “banks must be vigilant in this area, and strictly follow the international banking regulations.”

It also stated that the U.S. Treasury Department deliberately accused exchange companies in Lebanon, not banks, so it wont be interpreted as targeting Lebanon's banking sector.

Praising the sector comes after a significant development in “regulating the relation” between the the U.S. Treasury control and Central Bank of Lebanon to establish a mechanism to monitor the performance of Lebanese banks.

According to the agreement, the Central bank of Lebanon tasks a law firm office in Washington to be a mediator between Lebanon and the U.S. Treasury, to ensure that Lebanese banks do not violate U.S. sanctions on Syria and Iran and all related financial activities, the daily said.