Kenneth Rijock

Kenneth Rijock

Sunday, October 2, 2011

IS LEBANON NOW HIGH RISK ?


The present government in Lebanon has reportedly abolished all visa requirements for Iranian nationals, and this development, which has been reported in a number of Middle East media, is cause for serious concern. The Comprehensive Iran Sanctions Accountability and Divestment Act, which became effective on 1 July, 2010,  more commonly known as CISADA, imposes a due diligence requirement higher than banking best practices. If information is "knowable," meaning that it exists as open-source, then US persons or entities are charged with that knowledge, whether they happen to have it or not.

If I am an Iranian PEP committed to evading UK, US, EU, UN and all other existing ballistic missile & WMD global sanctions against  Iran, I hop a flight to Beirut, without the inconvenience of obtaining a visa, and process my purchases through one or more of its commercial banks. Since a number of Iranian banks have correspondent relationships with Beirut banks, either directly or indirectly through third parties, I will not have a problem obtaining my funds.

 I may even be using a passport I acquired legitimately, several years ago, in a nation within the Schengen Zone. At the other end, the Western banker handling the matter has no clue that payment for goods en route to  a "safe" Middle East destination, will ultimately end up in Tehran. Identity of Beneficial owner, or Source of Funds ? You're kidding, of course; bank secrecy is the order of the day, frustrating any enquiry.

Unfortunately, the Western banker, and his bank, could be liable for major sanctions under CISADA, because he is charged with the knowledge that all transactions originating from Lebanese banks could be Iranian purchases, and need to be thoroughly vetted. But he has no answers and that's the problem.

Has Lebanon now reached the point where you must classify it as high risk ? We cannot say, but you need to give it some serious thought the next time a large transaction from or to that country crosses your desk; think about it.
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* 75 Fed. Reg. 49836 (16 August 2010). 

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