The Hezbollah-linked Al-Qard Al-Hassan Association has not only issued a statement rejecting Central Bank of Lebanon (BDL) Circular No. 17, which bans banks from dealing with several entities, most notably the association itself, but has gone even further in its defiance of state authority. In a direct affront to the legitimacy of the Lebanese government, the association announced that it has expanded its network of branches from 36 to 40 since the war Hezbollah waged in support of Gaza.

In a direct challenge to the central bank’s authority, the association openly declared that it “does not fall under the jurisdiction of the Central Bank of Lebanon,” affirming its continued commitment to carrying out its social and financial services “at an accelerated pace and with greater effectiveness.”

In light of this brazen defiance of state sovereignty and financial authority, the pressing question becomes: What comes next after banning all dealings with Al-Qard Al-Hassan?

Banking and financial expert Dr. Ghassan Ayache, a former Deputy Governor of the Central Bank, told Kataeb.org that BDL had taken a necessary and long-overdue step by prohibiting banks and financial institutions from working with the association.

Ayache explained that Al-Qard Al-Hassan is in clear violation of the Code of Money and Credit, which strictly prohibits any institution from accepting deposits or issuing loans without a license from the Central Bank. He underscored that this requirement is a foundational element of public order, enshrined in Lebanese law since the Code’s enactment in August 1963.

“The intent of the legislature in imposing these core conditions was to protect the banking sector from chaos and to safeguard the rights of depositors,” he said.

“Beyond this fundamental legal violation, Al-Qard Al-Hassan has contributed to Lebanon’s international isolation, serving as a vehicle for money laundering and expanding the cash-based economy—both of which have deeply harmful effects on the Lebanese economy and its ties to the global financial system.”

Asked whether the Central Bank had the authority to take further action, Ayache clarified that BDL’s powers are limited to issuing directives to banks and financial institutions under its direct supervision.

“The next logical step should be to revoke Al-Qard Al-Hassan’s license, as the association has flagrantly violated the law by transforming itself into a de facto bank without BDL authorization, in clear breach of the license granted to it by the Ministry of Interior,” he said.

However, Ayache stressed that revoking the license falls outside BDL’s jurisdiction and is the responsibility of the Ministry of Interior and the Cabinet.

On whether BDL’s circular could positively impact Lebanon’s efforts to be removed from the Financial Action Task Force (FATF) grey list, Ayache was cautious. 

“It is unlikely that this move alone will have a decisive effect in removing Lebanon from the grey list,” he said. “The FATF’s conditions are particularly tied to the extent of Lebanon’s reliance on the cash economy. To achieve delisting, the country must return to conventional banking mechanisms such as wire transfers, checks, and payment cards.”

As the situation unfolds, the central question remains: Will the Lebanese government take the necessary steps in the coming days to reclaim its financial sovereignty and enforce the rule of law?