Monitoring Civil Servants’ Accounts

Basic Decision No. 163 for Banks

We enclose a copy of Basic Decision No. 13439 dated 27/5/2022 concerning the monitoring of civil servants’ accounts.

Beirut, 27 May 2022

Governor of Bank of Lebanon

Riad Tawfiq Souki

Basic Decision No. 13439

Monitoring Civil Servants’ Accounts

The Governor of Bank of Lebanon,
Pursuant to the Monetary and Loans Law, particularly Articles 174 and 70 thereof, Pursuant to the provisions of Law No. 44 dated 24/11/2015 on combating money laundering and terrorist financing, Pursuant to Law No. 175 dated 8/5/2020 on combating corruption in the public sector and establishing the National Anti-Corruption Authority, Pursuant to Law No. 189 dated 16/10/2020 on declaring financial status and interests, and penalizing unjust enrichment, Pursuant to the Special Investigation Commission (SIC) Resolution No. 25 dated 18/9/2019 on the National Assessment of Money Laundering and Terrorist Financing Risks, which indicates that corruption tops the list of risks threatening both the economy and society, Pursuant to the decision taken by the Central Council of Bank of Lebanon in its meeting held on 20/5/2022,

Decrees as follows:

Article One: For the purposes of applying the provisions of this Decision, the definition of "Civil Servant" set forth in paragraph (1) of Article 1 of Law No. 189 dated 16/10/2020 shall be adopted.

The provisions of this Decision apply to "Civil Servants" and to employees of the Ministry of Finance, customs officers, real estate departments, traffic administration staff, and members, employees, and users of the administrative committees and independent regulatory bodies established by law, from all ranks and categories, provided that financial consequences arise for them. Employees of the fourth category or below (or their equivalent) not assigned to higher-category duties, and academic staff at the Lebanese University, official schools, and institutes are exempted from the above.

Article Two: Banks, regardless of their classification, shall apply a risk-based approach according to the risk level of the operation applicable to him/her under the text and content of Article One of this Decision. They shall, with respect to salary deposit accounts, without prejudice to other procedures followed and applied pursuant to the decisions of Bank of Lebanon (particularly Basic Decision No. 7818 dated 18/5/2001 (subject of Circular Basic for Banks No. 83)), which exhibit unseasonable movement from employment (i.e., deposits or transfers from real estate or commercial investments, or from other sources outside the scope of employment income), implement enhanced due diligence procedures including:
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• 2. • Strict monitoring of accounts and operations, and conducting continuous follow-up on the business relationship.
• Obtaining senior management approval for transactions and executing operations.
• Conducting periodic reviews of the business relationship.
• Obtaining more detailed information about the client and the beneficial owner (Beneficial Owner).

It is also required to open a sub-account for operations unrelated to employment, subjecting the sub-account to enhanced due diligence and continuous monitoring.
Furthermore, the "Know Your Customer" (KYC) model must contain all specified information in Special Investigation Commission Resolution No. 13, and information related to the client's or civil servant's employment (particularly the institution where he works, rank, salary, and allowances), in addition to all information regarding other income sources derived from outside employment, with the data and supporting documents required to be periodically updated.

Article Three: Upon the emergence of any operational corruption indicator, reference shall be made to recognized corruption indicators, including (by way of example and not limitation):

• Discrepancy between wealth/source of funds and employment history, experience, or age.
• Holding bank accounts with high balances without providing supporting documents to justify them.
• Making unexplained transfers abroad in high and atypical values, particularly to tax haven countries.
• Conducting atypical cash operations with large values without providing supporting documents to justify them.
• Receiving payments from companies, individuals, or non-governmental entities that benefited or will benefit from public contracts/purchases.
• Drawing checks issued by public bodies and depositing their value in special accounts.
• Issuance of negative cross-referenced reports from multiple media sources regarding bad reputation, unethical or illegal conduct.
• Convictions or ongoing/prior official investigations related to corruption.
• Receiving payments contrary to income, or receiving repayments for facilities from others without justification.
• Receiving international transfers of high values from companies and/or personal accounts without justification.
• Receiving funds in bank accounts belonging to natural or legal persons known to be under the control of or linked to the civil servant, without providing justification.
• Representatives or agents (lawyers, accountants, or third parties) acting on behalf of a civil servant conducting banking operations with the intent to circumvent due diligence procedures.
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Article Four: The existence of one or more indicators shall, by itself, constitute corruption. If so, a review and evaluation of the available information regarding the relevant operations, client data, and account movement shall be conducted, and the necessary decision shall be made to notify or not notify the Special Investigation Commission (SIC) in accordance with the provisions of Law No. 44 dated 24/11/2015. In case suspicion or doubt arises regarding an operation or accounts linked to corruption activities, the notification shall include at least:

• a) Suspicion indicators: by citing one or more of the aforementioned indicators upon which the notification is based.
• b) Suspected operations or accounts: by identifying discrepancies between the relevant operations and information compiled in "Know Your Customer" (KYC), or those for which the civil servant declined to provide the bank with any additional clarifications.

Article Five: Enhanced due diligence procedures shall also apply to other bank clients who are found to have significant banking operations with the civil servant or linked operations, to ensure they are justified. Article Six: The provisions of Article 13 of Law No. 44 dated 24/11/2015 shall apply to banks in violation of the provisions of this Decision. Article Seven: This Decision shall take effect upon its issuance. Article Eight: This Decision shall be published in the Official Gazette.

Beirut, 27 May 2022

Governor of Bank of Lebanon

Riad Tawfiq Souki