Lebanon is set to be placed on a grey list of countries under special scrutiny by a financial crime watchdog at the end of this week, despite requests from Lebanese officials for leniency, four people familiar with the proceedings said on Monday.

Central bank governor Wassim Mansouri said in August he was working to keep Lebanon off the Financial Action Task Force's (FATF) grey list, which is likely to be a further deterrent to investment in the country.

But in the absence of sufficient progress to improve measures against financial crimes such as money-laundering, Lebanon is set to be grey-listed in a final decision announced at the FATF's plenary in Paris on Friday, the sources said.

Speaking on condition of anonymity because they were not authorised to speak publicly on the issue, the four sources said Lebanon would still be granted an extended deadline to work on some of the requested reforms, but that the decision was final.

Lebanon, which has been in a financial crisis since 2019, faces destruction from expanding Israeli military operations against armed group Hezbollah.

Nasser Saidi, a former economy minister and former central bank vice governor, told Reuters last week that Israel's bombing campaign has caused damage that will cost $25 billion to repair.

Reuters first reported in May 2023 that Lebanon had received a preliminary evaluation warranting grey-listing

Lebanon was granted a year to address gaps in areas, including anti-money laundering measures, transparency on beneficial ownership of firms and legal assistance in asset freezing and confiscation.

Mansouri is in the United States in the first half of this week for the annual meetings of the International Monetary Fund and World Bank, before heading to Paris for the FATF plenary at the end of the week.

France will host an international conference on Thursday to try to muster humanitarian aid for Lebanon and strengthen security in the southern part of the country.