Lebanon’s Central Bank Imposes Sweeping Ban on Dealings with Hezbollah-Affiliated Al-Qard al-Hasan

In a landmark regulatory move, Banque du Liban (BDL) has issued Basic Decision No. 17335, introducing strict measures to protect Lebanon’s financial and economic sector from illicit dealings. The directive explicitly prohibits all Lebanese banks, licensed financial institutions, money transfer companies, and investment entities operating under BDL or the Capital Markets Authority from engaging in any form of direct or indirect transactions with Al-Qard al-Hasan Association, a financial arm linked to Hezbollah, as well as any unlicensed or internationally sanctioned entities.

The circular underscores Lebanon’s urgent compliance with FATF (Financial Action Task Force) obligations, targeting money laundering and terror financing risks that have placed the country under scrutiny. The decision follows years of warnings that Lebanon risked being placed on the FATF “blacklist,” which would further isolate its banking sector from the global financial system.

Key provisions of the directive include:
• Complete ban on facilitating financial services, currency exchanges, remittances, or investment activities for entities such as Al-Qard al-Hasan and Bayt al-Mal.
• Suspension of licenses, freezing of accounts and assets, and potential legal prosecution for violators.
• Referral of non-compliant institutions to the Special Investigation Commission (SIC) for further enforcement.

Governor Karim Hobeiche stated that these steps are designed to “preserve the stability of Lebanon’s financial system, restore international confidence, and prevent the exploitation of banking channels by illicit networks.”

This move comes amid Lebanon’s worst financial crisis in decades, coupled with international pressure to dismantle Hezbollah’s shadow economy and comply with U.S. and European sanctions. The decision also reflects a broader strategy to revive Lebanon’s access to correspondent banking relationships and international markets.

Failure to comply will subject violators to severe penalties, including criminal charges and regulatory sanctions.