Lebanon's Internal Security Forces (ISF) during recent raids in Beirut shut down currency exchange bureaus and money transfer companies suspected of transferring funds to the "Islamic State of Iraq and the Levant" (ISIL).
An unspecified number of people, including several Syrians, were arrested during the March 7th and 8th raids, and the offices were sealed.
The detainees -- some reports say up to 24 people -- are currently undergoing investigation under the supervision of judge Danny Zeenni, deputy government commissioner to the Military Court.
The raids, carried out in Beirut's Tariq al-Jadideh, Hamra and Rehab areas, were part of Lebanon’s push to implement international laws related to anti-money laundering and combating the financing of terrorism (AML/CFT).
The ISF conducted the raids after a full month of monitoring money transfer activity from Lebanon to Syria through a number of bureaus and businesses run by individuals suspected of transferring funds to ISIL, local media reported.
Money was being deposited illegally at the currency exchange and transfer bureaus and sent to al-Qalamoun and al-Raqa in Syria, security sources said.
In a March 8th statement, the ISF said the detainees had confessed to belonging to networks that have transferred huge sums of money to terrorist groups in the outskirts of Arsal, and from there to al-Qalamoun in Syria.
Regulating the profession
The raids targeted "unlicensed money exchange companies and financial services bureaus after they came under suspicion for conducting financial transactions for the benefit of ISIL", said Money Exchange Union chief Elias Srour.
The Money Exchange Union supports security efforts to stamp out unlicensed companies and those operating outside the law "because they tarnish our and Lebanon’s reputation", he told Al-Mashareq.
These entities have multiplied in number recently as a result of the fallout of the war in neighbouring Syria and the heavy influx of Syrian refugees, he said.
Lebanese money exchange companies "are licensed by the Central Bank and comply with the laws and circulars issued by the latter", he said.
The staff at these companies undergo AML/CFT training, he said, and "our accounts are subject to monitoring and auditing by the Central Bank’s Compliance Officer, who checks all incoming and outgoing remittances".
"We have programmes to cross check names that are periodically placed on terrorism watch lists," he said.
Commitment to AML/CFT laws
The recent raids are in keeping with Lebanon's commitment to comply with AML/CFT laws , including Law No. 44 of November 24, 2015 on combating money laundering and terrorist financing, economist Jassim Ajaka told Al-Mashareq.
The success of these operations boosts the international community's confidence in Lebanon and its regulatory and security institutions, he said.
It also benefits the banking sector, which has demonstrated it is committed to adhering to all international laws pertaining to AML/CFT and the automatic exchange of tax information, he added.
"Some corrupt individuals employed by currency exchange companies and financial services institutions did not verify the identities of senders and recipients as required by the circulars issued by the Central Bank of Lebanon, which allowed these funds to reach ISIL," Ajaka said.
The biggest challenge, he said, is "controlling cross-border fund transfers pursuant to Law No. 42 of November 2015 on declaring the cross-border transportation of money".
Security forces cannot fully control overland smuggling routes due to the ruggedness of the terrain and an insufficiency of border-monitoring equipment, he added.
"Lebanon's commitment to combat terrorism and dry up its sources of funding is of essential importance" but by itself it is not enough, he said, adding that international support and equipment are needed to maintain security.
Monitoring the flow of funds
Lebanon "is working with the international community on combating money laundering and terrorism financing", Arab Economic News editor-in-chief Violette Ghazal Balaa told Al-Mashareq.
"Lebanon committed to combating money laundering in 2001 by ratifying Law No. 318, and in 2004 contributed to the establishment of the Middle East and North Africa Financial Action Task Force (MENA FATF)," she said.
It is not surprising that tracking mechanisms detected money transfers reportedly going to finance ISIL, as the process of monitoring the flow of funds into and out of Lebanon is ongoing, Balaa said.
"Security and judicial authorities in Lebanon have the prerogative to shut down establishments that are involved in such activities, seal them with red wax and ban them from operating again for violating the rules and regulations that govern their work," she added.
The Central Bank of Lebanon, as the guardian authority over the financial sector, "is rigorous in verifying compliance with international standards and keen on continuing to meet international requirements", she said.
Balaa said the Lebanese banking and financial system "is based on financial legislation that is in line with international requirements and its practices meet good governance and compliance standards".
"The Central Bank imposes restrictions and maintains tight controls on money transfer companies by enforcing established international AML/CFT standards," she said.