Lebanon faces a crucial assessment by the Financial Action Task Force (FATF) later this month as it seeks to make progress toward removal from the global financial watchdog’s gray list, with the outcome depending not only on reforms adopted but also on the country’s ability to demonstrate that they are working in practice.

The FATF is expected to assess Lebanon’s progress between Oct. 26 and 30, 2026, reviewing measures taken since the country was placed on the gray list in October 2024. Lebanon was given a three-year period to address deficiencies in its anti-money laundering and counter-terrorism financing framework.

The listing followed years of weaknesses in oversight and enforcement, compounded by Lebanon’s financial, banking and economic crises, weakened institutions and the expansion of cash-based and informal economic activity.

Lebanon has made progress over the past two years, including efforts to strengthen banking compliance, improve financial monitoring and enhance coordination among government agencies. However, significant gaps remain in enforcement, transparency and the prosecution of financial crimes.

Prof. Fouad Zmokhol, dean of the Faculty of Management and Administration at Saint Joseph University of Beirut and president of the International Movement of Lebanese Business Leaders (MIDEL), told Nidaa Al Watan that the FATF had acknowledged positive steps in the financial sector, including stronger anti-corruption measures and closer monitoring of unauthorized financial transactions.

But adopting laws and regulations is not enough, he said.

“The international community is no longer satisfied with the issuance of laws and circulars. It wants tangible, measurable results, particularly in investigations and prosecutions, the recovery of illicit funds, combating terrorist financing, and controlling financial activities conducted outside the legal framework,” Zmokhol said.

He said the decisive question was whether Lebanon could demonstrate that its reforms were being implemented effectively and consistently, rather than simply counting the measures adopted.

Cash economy and weak enforcement remain obstacles

Lebanon has tightened banking compliance procedures, strengthened customer identity checks and scrutiny of the sources of funds, and improved efforts to identify ultimate beneficial owners and detect suspicious transactions.

Coordination among public institutions has also increased. In August 2026, the prime minister chaired a meeting with financial, judicial and security officials to follow up on implementation of the action plan agreed upon with the FATF.

Nevertheless, Zmokhol said Lebanon still needed a broad reform effort involving monetary, banking, judicial, security and administrative authorities.

One major challenge is the country’s reliance on cash, which limits the visibility of financial transactions and makes it harder to monitor potentially illicit flows. Lebanon must reduce that dependence and gradually bring more transactions back into legitimate, regulated banking channels, he said.

Authorities must also strengthen oversight of money changers, money transfer services, unlicensed financial activities and non-financial sectors exposed to money laundering risks.

Judicial enforcement is another key test. Lebanon must demonstrate concrete results through investigations, prosecutions and court rulings involving money laundering and terrorist financing, rather than relying solely on administrative measures.

Other priorities include ensuring that accurate, up-to-date information is available on the ultimate beneficial owners of companies and other entities; improving international information-sharing and mutual legal assistance; and recovering assets derived from criminal activity.

Lebanon must also ensure that targeted financial sanctions are implemented without delay and that risk-based monitoring covers certain non-bank institutions and higher-risk associations, without disrupting legitimate activities.

These areas remain central to the FATF’s concerns about Lebanon’s financial safeguards.

Removal is not automatic

Lebanon’s removal from the gray list is not guaranteed this year or next. The process depends on completing the agreed action plan, demonstrating that the measures are effective and establishing that reforms can be sustained.

The FATF’s next meetings are scheduled for Oct. 26-30, 2026, followed by further meetings in February and June 2027, Zmokhol said. Each meeting could provide an opportunity to assess progress, but he cautioned against predicting when Lebanon might be removed.

A move to the FATF blacklist would be a separate and more serious development, associated with major strategic deficiencies and potentially more stringent international measures. Failure to meet some commitments on time does not automatically trigger a move from the gray list to the blacklist, he said.

For Zmokhol, Lebanon’s priority should be to address the structural weaknesses that led to its listing, rather than focus exclusively on securing a quick exit.

Formal removal without lasting reforms, he warned, would not restore the confidence Lebanon has lost.

Potential benefits for banking, trade and investment

Removal from the gray list would nevertheless mark an important step for Lebanon’s financial sector and its broader economic ties with the world.

It could improve the country’s standing with correspondent banks, ease some compliance and due diligence burdens, and gradually facilitate international transfers and cross-border financial transactions.

It could also help reduce the reputational risks associated with Lebanon’s financial system, strengthening confidence among foreign investors and international institutions in the country’s ability to meet global standards.

Lebanese businesses could benefit from smoother financial transactions related to imports and exports, as well as lower costs and fewer complications in dealing with overseas partners.

More broadly, removal would signal that Lebanon was beginning to rebuild its institutional capacity to manage financial risks and comply with international rules.

But the benefits should not be overstated. Leaving the gray list would not automatically restore normal banking relations, resolve the country’s financial and banking crisis, return depositors’ funds or trigger an influx of investment.

The challenge will be to turn removal, if achieved, into a broader opportunity to reconnect Lebanon with the global financial system, attract investment and revive productive economic activity.