Lebanon banking secrecy law suspended, paving way for central bank audit

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Lebanon’s parliament Monday approved a bill that suspends banking secrecy laws for one year to allow for a forensic audit of the central bank, a key demand of international donors, state media said.

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“Parliament approved a draft law... that suspends banking secrecy for one year,” the official National News Agency reported.

The vote came in accordance with a November decision by parliament to clear hurdles obstructing a forensic audit of the central bank and public institutions, the NNA added.

The International Monetary Fund and France are among creditors demanding the audit as part of urgent reforms to unlock financial support, as the country faces a grinding economic crisis.

But the central bank has claimed that provisions including Lebanon’s Banking Secrecy Law prevent it from releasing some of the necessary information.

“After approving a law that lifts banking secrecy... we can begin a forensic audit,” said Hasan Fadlallah, a lawmaker affiliated with the powerful Shiite Hezbollah movement.

The damaged grain silo is seen at the site of the blast in Beirut's port area, Lebanon, August 7, 2020. (Reuters/Mohamed Azakir)
The damaged grain silo is seen at the site of the blast in Beirut's port area, Lebanon, August 7, 2020. (Reuters/Mohamed Azakir)

But lawyer and activist Nizar Saghieh argued that Monday’s decision would only be “window dressing” in the absence of a clear intention from government to carry out the audit.

“Implementation is a whole sperate matter,” he told AFP.

New York-based Alvarez and Marsal, a consultancy firm formerly tasked with the audit, scrapped its agreement with the government in November because the central bank had failed to hand over required data.

The move sparked widespread criticism of Lebanon’s authorities.

The country, which defaulted on its debt this year, is experiencing its worst economic crisis in decades and is still reeling from a devastating explosion at Beirut’s port that gutted entire neighborhoods of the capital on August 4.

The dire economic straits and the explosion have both been widely blamed on government corruption and incompetence.

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