Salameh: Banks Must Offer Justifications before Suspending Suspicious Accounts

Central Bank Governor Riad Salameh stressed Tuesday that Lebanese banks must “offer justifications” and consult with the Central Bank before suspending accounts suspected of violating the anti-Hizbullah U.S. sanctions law.

“The law issued in the United States is an American law that is supposed to be implemented globally and in Lebanon, and, accordingly, Memo 137 that was issued by the Central Bank on May 3, 2016 was a Lebanese legal obligation,” Salameh said in a statement.

“Article 70 of the Monetary and Credit Act required the Central Bank to ensure credit stability and credit stability cannot be secured without implementing this U.S. law. Our issuance of Memo 137 relieves the banks that deal with the Central Bank and confirms the compatibility of the work of banks in Lebanon with the international obligations,” the governor added.

“Our failure to do so would have risked isolating our banking sector from the world,” he noted.

Addressing Lebanese banks, Salameh pointed out that “except for accounts belonging to individuals or firms blacklisted by the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury, banks seeking to suspend the accounts of certain firms or individuals suspected to be violating the U.S. law must first offer justifications before resorting to suspension.”

“The justification must include the account's transactions in terms of frequency and size and the bank must await a response from the (Central Bank's) Special Investigation Commission before suspending the account. If it does not receive a response within 30 days, the bank would then be free to act on its own responsibility,” the governor explained.

He also noted that the Central Bank's measures are aimed at “achieving the interest of Lebanon and its economy, for the sake of the Lebanese and their savings.”

A Hizbullah minister had warned during a cabinet session on Thursday that a “red line” had been crossed after two Lebanese banks reportedly suspended three Hizbullah-linked accounts in conformity with the U.S. sanctions law.

“Two Lebanese banks have suspended the accounts of two Loyalty to Resistance bloc MPs and the account of the daughter of an ex-MP who was in the bloc,” MTV and LBCI reported.

Commenting on the banks' measures during the cabinet session, Industry Minister Hussein al-Hajj Hassan of Hizbullah warned that “a red line has been crossed” and that “the U.S. sanctions shall not pass.”

Reciting an official statement after the session, Information Minister Ramzi Jreij said “following extensive discussions, the cabinet decided to task the prime minister with following up on the issue with the Central Bank governor in coordination with the finance minister who is in the picture of the contacts and the taken measures.”

Earlier on Thursday, Hizbullah's parliamentary bloc said that U.S. sanctions on banks that knowingly do business with the group could threaten Lebanon's financial sector, hinting that supporters may withdraw their money from local banks.

The bloc also criticized Lebanon's Central Bank for saying it would abide by the U.S. law, which came into effect last month and which the Hizbullah lawmakers said violates Lebanon's sovereignty.

The bloc said the Central Bank and private banks would be participating in "a war of exclusion" against the group by upholding the law.

Salameh had said the bank will abide by the restrictions in the Hizbullah International Financing Prevention Act, which was signed into law in December.

The U.S. regulations say Washington will target those "knowingly facilitating a significant transaction or transactions for" Hizbullah or any individual, business or institution linked to the group.

Those under sanctions include Hizbullah leader Sayyed Hassan Nasrallah and slain top commander Mustafa Badreddine as well as some businessmen. The list also includes the group's al-Manar TV and al-Nour Radio.

Nasrallah said last year that his group won't be affected by the law because it doesn't deal with Lebanese or foreign banks. But a large network of social and educational organizations associated with Hizbullah provide services to its supporters and other Lebanese, and deal directly with the government.

When asked last month whether banks dealing with Hizbullah Cabinet ministers or legislators who get paid by the state would be affected, Salameh said that the law does not mention salaries.

Lebanese officials and lawyers say the impact of the law on the country's economy remains unclear.

U.S. Treasury officials are expected in Lebanon later this month to discuss its implementation.

Y.R.

M.T.