Lebanon’s central bank has issued a directive barring funds linked to Lebanese entities under international sanctions from entering the country’s formal banking sector, in a move aimed at safeguarding the financial system and maintaining correspondent banking relationships abroad.

Circular No. 170, issued by Banque du Liban (BDL), specifically targets entities subject to sanctions imposed by the U.S. Office of Foreign Assets Control (OFAC), warning that allowing such funds into Lebanese banks could endanger dollar transfers handled by U.S. correspondent banks.

The central bank stressed that its authority is limited when it comes to unlicensed or unsanctioned entities outside its jurisdiction. In such cases, responsibility rests with the Lebanese state and relevant ministries, which have the powers and capacity to intervene.

“Any interpretation that exceeds these powers is a misreading of the law, particularly the Code of Money and Credit, which clearly defines the bank’s scope of authority,” the central bank said in a follow-up clarification.

“We issued Circular No. 170 with a clear and explicit purpose: to prevent the entry of any funds — directly or indirectly — originating from Lebanese entities or organizations subject to international sanctions, especially those imposed by OFAC, into the Lebanese banking sector. Allowing such funds would expose Lebanese banks’ correspondent relationships abroad to risk, particularly with U.S. banks handling dollar transfers," the statement added.