A Compliance general meeting of all managers of the operating banks in Lebanon was held at the premises of the Association of Banks in Lebanon on Wednesday July 10th, 2013. The meeting was marked by a large attendance.
The meeting was chaired by Dr. Makram Sader, ABL Secretary General and Mr. Chahdan Jebeyli, Chairman of the ABL Compliance and Anti-Money Laundering advisory committee. The meeting’s objective was to discuss both Anti-Money Laundering (AML) policies and procedures and U.S. law Foreign Account Tax Compliance Act, known as FATCA, and during which views and concerns were raised and the participants’ questions relating to those topics were answered.
Mr. Jebeyli started the meeting by drawing attention to the participants that the Compliance work activity falls within the framework of cooperation and good collaboration between banks and not in competition with each other, recalling that the Association of Banks in Lebanon pledged commitment to International Best Practices, including of course the application of “FATCA”.
The audience was also briefed of the action taken by the Association of Banks to make available the “Policies and Procedures Manual” in the area of both Anti-Money Laundering and US Tax FATCA. Also, Deloitte was mandated to elaborate the Manual in tight collaboration with the working team designated by ABL Compliance and Anti-Money Laundering advisory committee.
The manual will cover a lot of basic subjects, and takes into account the Lebanese laws, the International laws and regulations, and the international standards, as well as the size and nature of risks in Lebanon. Moreover, this manual comes under the interest of all banks, large and small ones in particular, noting that the assignment had started and is expected to be released soon. Mr. Jebeyli explained that the manual should be a road map/ generic basis to all operating banks in Lebanon and is not tailored strictly to each bank. Therefore, emphasis was made not to rely only on the manual, but each bank should proceed in its work, especially when existing deadlines must be respected.
It’s worth noting that the FATCA manual that Deloitte is currently developing will cover the following key points:
• Responsible Officer: qualifications or competencies.
• Checklist for all pre-requisites actions for a Bank to become compliant.
• Required amendments to the Code of Ethics.
• Guidelines required from CEOs to be addressed to all employees as awareness on FATCA.
Also, the BDL circular n° 128 relating to the establishment of a compliance department based on the principles of the Basel Agreement was also discussed. The participants agreed on the importance of the said circular despite the need to amend some of its requirements. In this context, it was agreed that the banks have to develop an Effective Compliance Program that takes into consideration not only the form, but the substance of BDL circular n°128, knowing that the Banking Control Commission is actually preparing the implementation and operational version model of that circular.
Some aspects of the U.S. Tax Compliance Act “FATCA” were also raised during the meeting. Banks were reminded the need to set, as soon as possible, their internal policies in the field of implementation of the “FATCA” law. It is also important to designate a Responsible Officer “R.O.” for this process. There are no compulsory specific qualifications or competencies for that job description, but it is preferable to appoint an experienced person fully dedicated to this responsibility with a position of non less than a Senior Officer who will have the necessary authority to properly manage the “FATCA” application law in his bank. It is noted here that the manual prepared by Deloitte will cover this point.
Also, on the FATCA subject, and as part of his answers to some questions, Dr. Makram Sader added that the Association is in the process of preparing two documents to banks’ customers that should be circulated soon. The first one is the FATCA acknowledgment letter, and the second one is the FATCA Banking Secrecy Waiver. Participants were also reminded that each bank in Lebanon must accept the terms of the FATCA agreement (which has not been circulated by the IRS yet); this will take place electronically on a system set by the U.S. Internal Revenue Service IRS. The Central Bank of Lebanon indicated that the Lebanese government will not sign a FATCA bilateral treaty with the USA; thus Lebanese banks are left with the only choice of signing each an agreement with the IRS.
Finally, the Association of Banks expressed its willingness to answer all kind of general queries or future inquiries through its advisory committees, regarding the FATCA Act and the Fighting of Money Laundering and Terrorism.