Lebanon’s central bank has moved to tighten oversight of non-bank financial institutions, issuing a new circular requiring updated “Know Your Customer” (KYC) procedures for cash and exchange operations, Nidaa Al-Watan newspaper reported.

The directive targets money transfer companies, licensed currency exchangers, and firms offering electronic wallet services. International institutions have repeatedly urged Lebanese authorities to regulate these entities more strictly, warning that gaps in oversight have allowed some to become conduits for money laundering. A recent example cited by financial sources was Whish Money’s closure of the accounts of the “Wataawano” association in compliance with Circular 170.

While most money laundering in Lebanon occurs through unlicensed actors or increasingly via digital currencies, officials argue that tightening compliance within the formal sector is a necessary first step to improving the country’s international standing. The move aligns Lebanon with global anti-money laundering (AML) standards and comes as part of efforts to improve the country’s reputation, especially as it seeks removal from the Financial Action Task Force (FATF) grey list. Authorities say shutting down illegal operators will have to follow in parallel or at a later stage.

Similar to banks, which years ago established compliance departments to apply KYC and AML rules, money transfer firms and exchange houses are now required to gather detailed information on cash operations worth $1,000 or more and to submit that data electronically to Banque du Liban (BDL) within two days.

Some money transfer companies and electronic wallet providers already operate compliance units and monitor suspicious activity. These firms routinely close questionable accounts, block high-risk transactions, and report irregularities, according to a source at one such company. The source described cases where individuals repeatedly sent small transfers—sometimes as little as $50—to dozens of recipients using forged Lebanese or foreign identity documents.

“Our compliance team detected the pattern and shut the accounts,” he said, adding that larger suspicious transfers are prevented in a handful of companies that actively protect their reputations, though similar transactions go through “smoothly and without oversight” at others.

The new circular raises several questions: Can Lebanon’s non-bank institutions fully meet AML compliance standards? Do they have the capacity to establish compliance departments similar to those in the banking sector? Or will BDL and the Banking Control Commission assume that role? Industry observers also question whether the directive will lead to the closure of additional accounts and electronic wallets.

Officials familiar with the decision told Nidaa Al-Watan that BDL is “racing against time,” seeking to impose an AML compliance framework quickly to help Lebanon exit the FATF grey list. They described the circular as “the first step in a long road” to creating a unified digital platform that would integrate all electronic transactions, including e-wallets, under central bank oversight. The system is still under development and requires significant technical preparation.

For now, the circular aims to gather full data on individuals and entities conducting inbound or outbound transfers through these firms. BDL will audit the information initially, they said, because most non-bank institutions lack dedicated compliance teams and therefore do not track high-risk or suspicious transactions. Over time, authorities expect to train these firms to perform their own due diligence once the new electronic systems and mechanisms are in place.

Officials added that implementing KYC requirements will classify all transactions conducted through licensed money transfer firms and exchange houses as formally legitimate—leaving those who resort to unlicensed operators more exposed to suspicion, scrutiny, and legal risk.

Exchange Houses Say Timeline Too Tight, Mechanism Unclear

Sources within the Syndicate of Money Changers said only a few days remain before the circular takes effect, yet there is still no clarity on how the rules will be implemented. They told Nidaa Al-Watan that BDL has not yet provided the required mechanisms, nor explained which types of transactions or clients will fall under the new obligations.

According to the syndicate, the Banking Control Commission and BDL’s Special Investigation Commission have said they will meet in the coming days to finalize implementation procedures and provide guidance to the industry. Exchange houses, the syndicate insisted, support measures that restore transparency and confidence, but the deadline is “extremely tight” and firms lack the necessary technology and staff training. The requirements will impose significant new operational costs on licensed exchangers already struggling to stay afloat.

The syndicate also warned that unlike banks, which customers cannot avoid even when asked for extensive documentation, money transfer clients can easily turn to unlicensed exchangers if formal firms request detailed KYC forms, identity documents, and source-of-funds statements.

“People will simply go to the nearest illegal exchanger who will execute the same transaction without any paperwork, even without an ID,” one source said.

The circular also requires companies to send client forms and supporting documents by email within two days of each transaction. Exchange houses said they still do not know whether this applies only to transfers to and from Lebanon or also to ordinary currency-exchange operations. They stressed that completing the process will require new digital systems and software that many do not yet possess.

Despite the uncertainty, industry representatives say they are committed to filling out Form RF1 and complying with the rules once authorities provide a clear implementation mechanism. For now, licensed operators warn that the lack of guidance, combined with the short timeline, may drive clients further into the informal market, undermining the very transparency the circular seeks to establish.