BEIRUT (Reuters) – The International Monetary Fund told Lebanon’s government on Thursday that its bank secrecy law had not addressed “critical flaws”, urging officials to make fresh changes in its first attempt at financial reform.
The assessment, believed by Reuters and confirmed by a government official to be accurate, is the first IMF comment on steps taken by Lebanon to complete a list of The list would give it $3 billion to ease the country from a 1975-90 civil war.
The revised Bank Secrecy Act, passed in July, is a watered-down version of the original proposal, sparking concerns over the IMF’s view that it is not strong enough to qualify.
Lebanese President Michel Aoun on Wednesday refused to sign it into law and sent it back to parliament for further changes.
On Thursday, Lebanese officials received a letter from the International Monetary Fund saying the law represented “a major reform … but few key flaws ain.”
It said more government agencies should have access to banking data, including for administrative functions, and not just as part of criminal investigations under the current draft.
It also said that criminal liability for breaches of bank secrecy “may have a disincentive for the detention and disclosure of criminal or suspicious activity.”
The IMF did not immediately Respond to requests for comment.
The financial crisis in Lebanon is in its third year, devaluing the currency by more than 90%, spreading poverty, paralyzing the financial system and freezing depositors’ savings.
Donors want Lebanon to implement reforms to address root causes
IMF staff-level agreement calls for a new The Bank Secrecy Act, “Consistent with international standards to combat corruption and remove obstacles to effective banking restructuring and regulation, tax administration, financial crime investigation, asset recovery, etc.”
