Lebanon’s newly formed government faces a critical test as it works to address the deficiencies that led to the country’s inclusion on the Financial Action Task Force (FATF) grey list. In a key first step, Justice Minister Adel Nassar has established a legal committee tasked with implementing corrective measures required by the Ministry of Justice to facilitate Lebanon’s removal from the list.

The committee, chaired by lawyer Karim Daher, includes Judge Rana Akoum, former Judge Jean Tannous, lawyers Lara Saadeh and Mohammad Moughabit, and financial expert Mohammad Fahili. A source familiar with the committee’s work told Asharq Al-Awsat that it has three primary objectives: proposing legal amendments requested by the International Monetary Fund (IMF) to enhance financial transparency, ensuring that non-regulated financial entities—such as Al-Qard Al-Hassan—comply with legal financial procedures, and developing a legal framework to reduce reliance on cash transactions while restoring confidence in the banking sector.

“The committee’s work is the first step in establishing the legal foundations necessary to remove Lebanon from the grey list and prevent future financial crises,” the source said.

Lebanon was officially placed on the FATF grey list in October 2024, with the global watchdog citing “weak measures by the Lebanese government in combating money laundering and terrorism financing.” The designation has further complicated the country’s economic recovery, restricting access to international financial markets and deterring foreign investment.

Financial and economic expert Mahmoud Jabaai described the justice minister’s initiative as “a step in the right legal direction” but warned that it remains insufficient without broader structural reforms.

“Removing Lebanon from the grey list requires comprehensive action, including the legal reforms outlined by the FATF, which must be implemented by January 2026,” Jabaai told Asharq Al-Awsat.

He noted that Lebanon’s financial challenges run deeper than economic collapse, pointing to customs evasion, illicit smuggling, financial corruption, and an expanding cash-based economy as factors exacerbating the crisis and hindering a resolution.

The previous caretaker government failed to implement IMF-mandated reforms due to ongoing political deadlock and, later, the Israeli war on Lebanon. However, Prime Minister Nawaf Salam’s new administration has pledged in its ministerial statement to establish a fresh program with the IMF to address financial distress, restructure public debt, and overhaul the banking sector in line with international standards, all while safeguarding depositors’ rights.

Jabaai urged Lebanese authorities to “follow through on their commitments to the international community,” noting that the central bank and commercial banks have already taken steps to limit cash transactions and enhance financial transparency.

“Unfortunately, the only entity failing to fully perform its role is the state, which has yet to properly secure the borders, combat smuggling, and tackle customs evasion,” he added.

However, he welcomed a recent initiative by Finance Minister Yassine Jaber to equip customs checkpoints with advanced scanning devices to improve oversight of goods entering and leaving the country.