Lebanon’s new central bank chief pledges crackdown on money laundering and terror financing

Karim Souaid, Lebanon’s newly appointed central bank governor, officially assumed office in Beirut on Friday, pledging to lead the institution with transparency and independence. In his first public remarks, Souaid emphasized his commitment to battling financial crimes, particularly money laundering and the financing of terrorism, while keeping the bank free from political interference.

He outlined a roadmap that includes restructuring Lebanon’s fragile banking sector, addressing the country’s mounting public debt, and ensuring depositors begin to regain access to their funds — starting with those holding small accounts. He also stressed that the responsibility for returning deposits lies collectively with the banks, the central bank, and the Lebanese state.

Economic Collapse and Road to Recovery

Lebanon has been grappling with a devastating financial collapse since 2019, triggered by decades of corruption and mismanagement by political and financial elites. The crisis, marked by a freeze on bank deposits and the erosion of public trust, has only deepened due to compounding factors like the COVID-19 pandemic, the catastrophic Beirut port explosion in 2020, and the prolonged conflict between Hezbollah and Israel.

Adding to the urgency, the international watchdog FATF placed Lebanon on its grey list in October, citing deficiencies in preventing illicit financial flows. Souaid assured that Lebanon will implement international regulations, reinforcing compliance as part of the central bank’s reform strategy.

The governor also mentioned the need for banks to inject fresh capital into the system, and suggested mergers for those unable or unwilling to recapitalize. He promised to evaluate previous economic recovery proposals to identify viable strategies for steering the country out of its prolonged crisis.

Souaid follows Wassim Mansouri, who served in an acting capacity since mid-2023. At the end of March, the central bank’s reserves were reported at $10.727 billion. Souaid replaces former governor Riad Salameh, who led the bank for three decades before leaving office under the weight of multiple international corruption investigations and criminal charges. Salameh, once a powerful figure in Lebanon’s post-civil war recovery, is now imprisoned and facing a slew of financial crime allegations.