Conditions for the Establishment of Persons Governed by Articles 183 and 184 of the Code of Money and Credit

Central Bank Decision No. 13462
Regarding Persons Governed by the Provisions of Articles 183 and 184 of the Code of Money and Credit "Lending Accounts"

We wish to attach a copy of Central Bank Decision No. 13462 dated July 19, 2022 concerning the amendment of a copy of the Basic Decision No. 12174 dated January 21, 2016 concerning the conditions for practicing lending operations in accordance with the provisions of Articles 183 and 184 of the Code of Money and Credit, attached to this basic circular "Lending Accounts" No. 2.

Beirut, July 19, 2022
Governor of the Central Bank of Lebanon
Riad T. Safieh

Central Bank Decision No. 13462
Amending Basic Decision No. 12174 dated January 21, 2016

The Governor of the Central Bank of Lebanon, pursuant to the provisions of the Code of Money and Credit, particularly Articles 70, 79, 183, 184, and 200 thereof, and pursuant to the provisions of Anti-Money Laundering and Counter-Terrorist Financing Law No. 44 dated November 24, 2015, particularly Article 4 thereof, and pursuant to Basic Decision No. 12174 dated January 21, 2016 concerning the conditions for practicing lending operations in accordance with the provisions of Articles 183 and 184 of the Code of Money and Credit, and pursuant to Basic Decision No. 7818 dated May 18, 2001 and its amendments concerning the system for monitoring financial and banking operations to combat money laundering and terrorist financing, and pursuant to the recommendations of the "Financial Action Task Force (FATF)", and pursuant to the decision of the Central Council of the Central Bank of Lebanon taken in its meeting held on July 18, 2022, has issued the following:

Article One: The text of the paragraph "fifth" from Article 12 bis of Basic Decision No. 12174 dated January 21, 2016 is repealed and replaced with the following text:
"Lending accounts" shall retain all records obtained through due diligence procedures regarding the "client" and the "beneficial owner", particularly their full name, profession, place of residence address, and registered business premises address. For legal entities, if the main business premises differ, their financial status and account files shall be kept for a minimum of five years after the closure of the account or termination of the business relationship, along with all documents related to all operations including commercial correspondence and results of any analysis performed, for a minimum of five years after the completion of the operation. The operation records shall be sufficient to allow the reconstruction of individual operations so that they can serve as evidence for criminal prosecution and investigation, if any of these activities are deemed necessary.

Article Two: The text of paragraph (5) from the paragraph "ninth" of Article 12 bis of Basic Decision No. 12174 dated January 21, 2016 is repealed and replaced with the following text:
"5- Adopting a specific policy, controls, and procedures by senior management based on the requirements stipulated in this article, to classify and mitigate risks."

Article Three: The text of paragraph (6) from the paragraph "ninth" of Article 12 bis of Basic Decision No. 12174 dated January 21, 2016 is repealed and replaced with the following text:
"6- Documenting risk assessment results when necessary and retaining them to provide the competent authorities with them when required."

Article Four: The text of paragraph (4) from the paragraph "tenth" of Article 12 bis of Basic Decision No. 12174 dated January 21, 2016 is repealed and replaced with the following text:
"4- Applying due diligence procedures to existing clients based on relative risk and materiality, as well as taking due diligence measures regarding current business relationships at appropriate times, taking into account whether due diligence procedures have been previously taken and when, and the adequacy of the obtained data."

Article Five: The text of paragraph (7) from the paragraph "tenth" of Article 12 bis of Basic Decision No. 12174 dated January 21, 2016 is repealed.

Article Six: The text of paragraph (4) from the paragraph "thirteenth" of Article 12 bis of Basic Decision No. 12174 dated January 21, 2016 is repealed and replaced with the following text:
"4- Ensuring that branches and subsidiaries operating abroad in which the lending accounts hold a majority stake apply anti-money laundering and counter-terrorist financing measures in Lebanon when the minimum requirements in the host country are less stringent than those applied in Lebanon, to the extent permitted by the laws and regulations of the host country. If the host country permits the effective implementation of specific anti-money laundering and counter-terrorist financing measures consistent with Lebanon's procedures, the financial group shall apply appropriate risk management and supervisory measures."

Article Seven: The paragraph "fifteenth" is added to Article 12 bis of Basic Decision No. 12174 dated January 21, 2016 with the following text:
"Fifteenth: Regarding financial groups, anti-money laundering and counter-terrorist financing programs must be applied at the group level as a whole, including all branches and subsidiaries in which the group holds a majority stake. These programs shall include the following measures:

• Appointing a compliance officer at the group management level.
• Policies and procedures for exchanging information related to due diligence regarding clients, and managing anti-money laundering and counter-terrorist financing risks.
• Providing information related to clients, accounts, and operations from branches and subsidiaries to the group-level compliance officer when necessary for combating money laundering and terrorist financing, which should include information, analytical reports, and reports on activities that appear unusual. Furthermore, branches and subsidiaries should receive such information from the group-level compliance officer, in a manner consistent with risk management and the analysis of information, reports, and unusual operations.
• Providing adequate guarantees regarding the confidentiality and use of exchanged information, including guarantees against tipping off or alerting the client."

Article Eight: This decision shall take effect upon its issuance.
Article Nine: This decision shall be published in the Official Gazette.

Beirut, July 19, 2022
Governor of the Central Bank of Lebanon
Riad T. Safieh