Cash Transfers according to the Hawala System

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Basic Circular No. 111
Addressed also to financial institutions, financial intermediary institutions, leasing companies, exchange houses, and the public

We enclose herewith a copy of Basic Decision No. 9708 dated 2007/9/24 concerning cash transfers according to the Hawala system.

Beirut, on September 24, 2007
Governor of the Central Bank of Lebanon
Riad Toufic Salamah

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Basic Decision No. 9708

Cash transfers according to the Hawala system

The Governor of the Central Bank of Lebanon,
Based on the Monetary and Discount Law, particularly Articles 70 and 174 thereof, Based on Law No. 133 dated 1999/10/26 concerning the tasks of the Central Bank of Lebanon, particularly Article 1 thereof, Based on the decision of the Central Council of the Central Bank of Lebanon taken at its meeting held on 19/9/2007,

Decides as follows:

Article 1: For the purposes of applying the provisions of this Decision, "Hawala" refers to informal systems for transferring funds that fall outside the recognized financial sector and are carried out by institutions and persons, including Hawala brokers and intermediaries (Hawala Dar).

Article 2:
The right to carry out cash transfers via "Hawala", whether on their own account or on behalf of others, is restricted exclusively to Category A exchange houses. Consequently, these institutions are prohibited, in the course of executing "Hawala" operations, from carrying out any type of banking operation stipulated in the Monetary and Discount Law, particularly receiving deposits. They are also prohibited, based on Law No. 347 dated 2001/8/6 concerning the regulation of the exchange profession, from carrying out operations that fall outside the scope of exchange activities, such as commercial financing, lending, asset management, etc.

1 - This Article was amended by Article 1 of Interim Decision No. 11544 dated 2013/9/20 (Interim Circular No. 337).

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Article 3: Each Category A exchange house wishing to carry out transfers via the "Hawala" system must:
a- Notify the Central Bank of Lebanon in writing in advance. b- Maintain special records for "Hawala" operations, including at a minimum the information indicated in the form attached to this Decision and copies of official documents belonging to the concerned clients, for a period of no less than five years.

Article 4: The value of a single transfer (incoming or outgoing) must not exceed $20,000 or its equivalent in other currencies, provided that the total sum of all transfers at any time during the year does not exceed ten times the capital of the exchange house.

Article 5: Each exchange house conducting "Hawala" operations must take all measures and procedures related to applying the obligations imposed upon it under the prevailing legal provisions, particularly the anti-money laundering law and all systems issued by the Central Bank of Lebanon, the Banking Control Commission, and the "Special Investigation Authority". It must specifically comply with the obligations stipulated in Basic Decision No. 11323 dated 2013/1/12 concerning the establishment of a compliance department, in addition to putting in place procedures and measures based on risk when verifying the details of each transfer (incoming or outgoing).

Article 6: Exchange houses are prohibited, when receiving payment orders for cash transfers according to the Hawala system from their correspondents, from settling the value of these transfers via barter or by checks or bank transfers to the account of the beneficiary of the transfer.

1 - This Article was amended by Article 2 of Interim Decision No. 11544 dated 2013/9/20 (Interim Circular No. 337).
2 - This Article was added by Article 4 of Interim Decision No. 11544 dated 2013/9/20 (Interim Circular No. 337).
3 - This Article was added by Article 5 of Interim Decision No. 11544 dated 2013/9/20 (Interim Circular No. 337).

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And these institutions must open a sub-account (Sub Account) from their main account dedicated to executing clearing operations with foreign correspondent companies resulting from Hawala operations.

Article 7: Institutions found in violation of the provisions of "Article 5" of this Decision are granted a deadline until March 31, 2014, to comply with its provisions and regularize their status.

Article 8: This Decision shall take effect immediately upon its issuance.

Article 9: This Decision shall be published in the Official Gazette.

Beirut, on September 24, 2007
Governor of the Central Bank of Lebanon
Riad Toufic Salamah

1 - This Article was added by Article 6 of Interim Decision No. 11544 dated 2013/9/20 (Interim Circular No. 337).
2 - The numbering of this Article became "Eighth" instead of "Fifth" by Article 3 of Interim Decision No. 11544 dated 2013/9/20 (Interim Circular No. 337). 3 - The numbering of this Article became "Ninth" instead of "Sixth" by Article 3 of Interim Decision No. 11544 dated 2013/9/20 (Interim Circular No. 337).

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Form
Special records for Hawala operations
Outgoing Transfers
Beneficiary Name
Purpose of Transfer Destination Country
Value of Transferred Amount
(Outgoing)
Passport Number
Nationality or ID
Full Name of the Orderer

Incoming Transfers
Purpose of Transfer Country of Origin Name of Orderer Value of Transferred Amount (Incoming) Passport Number or ID Nationality Full Name of the Beneficiary