Lebanon’s progress on anti-money laundering and counter-terrorism financing reforms will come under renewed scrutiny with the expected release of a Financial Action Task Force (FATF) update, as the country remains under “enhanced monitoring” on the global watchdog’s grey list.

No date has been set for the report, which is expected to assess the progress of countries implementing corrective action plans. Lebanon has been working under a 2024–2025 roadmap designed to address strategic deficiencies in its financial oversight framework, but officials and observers acknowledge that progress has so far fallen short of what would be required for a decisive breakthrough.

Attention is now focused on how FATF will evaluate Lebanon’s situation, particularly amid the economic and institutional strains linked to the ongoing regional conflict involving Lebanon and Iran-aligned Hezbollah, and its impact on regulatory enforcement and compliance capacity.

Despite the outbreak of hostilities, Lebanon has formally maintained the implementation of its anti-money laundering and counter-terrorism financing system. Key supervisory bodies, including the Banque du Liban and the Special Investigation Commission, have continued core functions such as monitoring financial transfers and reporting suspicious transactions, in line with international obligations set by FATF.

Officials say this reflects continued legal and regulatory compliance aimed at preventing Lebanon from being downgraded to the FATF blacklist. However, they acknowledge that wartime conditions typically shift state priorities toward security, displacement management, and humanitarian relief, which can weaken broader judicial and financial oversight, including efforts to combat illicit financial flows.

The situation is further complicated by the expansion of cash-based and informal economic activity during conflicts, including money flows through NGOs and parallel channels used to support affected populations. This trend poses additional challenges for a fragile economy that has been trying to reduce reliance on cash transactions in order to limit money laundering risks, particularly through intermediaries such as exchange houses, lawyers, and notaries.

Lebanon now has roughly one year before its next FATF evaluation cycle in 2027, which will determine whether it remains on or exits the grey list. Inclusion on the list is widely seen as an international warning signal, placing countries under increased financial scrutiny and raising the risk of isolation from the global financial system if reforms are not fully implemented.

In Lebanon, anti-money laundering procedures overseen by the Ministry of Justice, in coordination with the Beirut Bar Association and notaries, remain in effect even amid the conflict. These efforts are supported by the Special Investigation Commission at the central bank, which serves as the main interface with FATF and coordinates with banks, money transfer companies, exchange houses, lawyers, and notaries.

The system is largely based on routine administrative reporting, requiring professionals to collect information and flag suspicious transactions. However, officials say a growing reliance on informal financial channels during wartime makes tracking cross-border and domestic money flows significantly more difficult, increasing exposure to illicit financial activity.

Ahead of the recent escalation and subsequent ceasefire period, training sessions for members of the Beirut Bar Association had been scheduled but were delayed due to the outbreak of hostilities. Former Bar Association president Fady Masri, who has been closely involved in implementing anti-money laundering regulations, said preparations were also underway for a broader training programme supported by the United Nations Office on Drugs and Crime (UNODC), initially planned for 2026.

Masri said that although the conflict disrupted field activities and delayed certain initiatives, the Bar Association has continued its daily compliance work based on frameworks developed during 2024 and 2025. A key priority, he said, has been ensuring that lawyers do not engage with individuals listed under international sanctions or designated as terrorists under applicable standards.

He added that the Beirut Bar Association’s compliance committee continues to work with both local and international partners to safeguard the legal profession and Lebanon’s financial system from legal and reputational risks.

In November 2025, the association identified law firms operating in financial, commercial, and real estate sectors and distributed a detailed compliance questionnaire. Most firms responded with comprehensive disclosures, which were later used by Germany’s development agency GIZ to help structure a sector-wide risk assessment.

Masri also said that under the current leadership, a 2026 training programme has been prepared, alongside inspection teams tasked with visiting law offices to verify compliance on the ground, reinforcing the association’s regulatory oversight role.

Institutional cooperation and FATF roadmap

Among the key measures implemented by the Bar Association is close cooperation with the Special Investigation Commission and the German development agency (Deutsche Gesellschaft für Internationale Zusammenarbeit – GIZ), with support from the European Union. This collaboration is part of Lebanon’s FATF action plan, particularly in relation to Immediate Outcomes 3 and 4, which assess the role of legal professionals in anti-money laundering frameworks.

The joint work focuses on assessing sector-specific risks affecting the legal profession, especially in relation to money laundering and terrorism financing, while strengthening mechanisms to ensure compliance with professional obligations.

The association also maintains ongoing coordination with the Special Investigation Commission to implement FATF requirements and ensure adherence to Law No. 44/2015, as well as internal compliance guidelines issued by the Bar Association.

In parallel, officials confirmed that discussions were held with the prime minister to outline efforts aimed at removing Lebanon from the grey list and preventing its transfer to the blacklist.

As Lebanon awaits its next FATF assessment, the outcome will be closely watched as a key indicator of whether the country is able to strengthen financial governance or faces deeper isolation from the international financial system.