In Beirut, Lebanon’s newly appointed central bank governor emphasized the institution’s commitment to combating money laundering and preventing the financing of terrorism while ensuring that its operations remain free from political influence. In his inaugural address, Karim Souaid highlighted his dedication to restructuring the banking sector, managing public debt, and restoring depositor access to their funds.
Since 2019, Lebanon has been facing its most severe economic downturn in modern history. International reforms are imperative to secure global aid, especially after the extensive damage and economic losses estimated by the World Bank at $11 billion following the 14-month conflict between Israel and Hezbollah. This economic turmoil is exacerbated by Lebanon’s historic corruption issues among political and financial elites, which led to the depletion of state resources. Consequently, banks experienced a surge of withdrawals in 2019, with people losing access to their deposits. This situation deteriorated further due to the COVID-19 pandemic, the devastating Beirut port explosion in August 2020, and the ongoing Israel-Hezbollah conflict.
As a result of this sustained economic collapse, Lebanon has been functioning on a cash-based economy. In October, the Paris-based Financial Action Task Force (FATF), a global organization dedicated to combating money laundering, listed Lebanon on its “grey list.” Souaid assured, “We will adhere to international laws, prioritizing anti-money laundering measures and the prevention of terrorism funding.” The former asset manager stated that Lebanese banks should secure new capital and those unable or unwilling to do so may consider merging with other financial institutions. His primary focus will be on refunding deposits, starting with those holding smaller accounts. He asserted that returning deposits is a joint responsibility of the banks, central bank, and the state.
Souaid also expressed the central bank’s commitment to reviewing all economic recovery strategies proposed by previous administrations to devise a path forward for Lebanon. Wassim Mansouri, who served as acting central bank governor since July 2023, reported that the central bank’s reserves were $10.73 billion as of the end of March. Souaid takes over from Riad Salameh, the once-longstanding governor of 30 years, whose tenure concluded amidst various international corruption allegations, including embezzlement and other financial crimes. Salameh’s appointment dates back to 1993, a period when Lebanon was striving to rebuild itself post a 15-year civil war.