Towards the dismantling of the privilege of “banking secrecy”

Rola Ibrahim – News

The amendment to the Bank Secrecy Act passed yesterday’s session of the Parliamentary Finance and Budget Committee fairly smoothly. It was confirmed that the judiciary, the Anti-Corruption Authority and the Tax Administration were given powers to lift bank secrecy for those involved in corruption cases without refers to the Banque du Liban. The foyer of the Banque du Liban – the Association of Banks only refused to pass the law retroactively without any support from the committee’s deputies, so the approval of the amendments was a major advance towards the dismantling of the privilege in whose name financial crimes and embezzlement were committed 66 years ago to this day.

In its session yesterday, the Finance and Budget Committee approved a draft amendment to the Bank Secrecy Act, through parliamentary consensus on the basic articles, including Article VII, which withdraws the exclusive powers granted to the Special Investigation Commission on the removal of bank secrecy. , in exchange for the granting of similar powers to the competent judiciary, the tax administration and the National Commission To combat corruption without the need for the approval of this body, led by the Governor of the Banque du Liban, Riad Salameh. With regard to the application of the retroactive effect in the lifting of confidentiality for those involved in cases of corruption, financial crime or tax evasion, the committee studied two proposals: the first was submitted by the Association of Banks and aims to cancel any retroactive effect and the Act shall enter into force on the day of its publication. As for the second, it is proposed by the Beirut Bar Association to apply the retroactive effect with the introduction of controls that determine what authority is authorized to use it to prevent discretion and extortion. But the two proposals did not succeed, as most of the delegates agreed to keep the original formula contained in the draft government, that is to say without mentioning the retroactive effect so that it remains linked to the issue of corruption in line with the terms of the passage of time. For example, if the investigation is related to tax evasion, the Tax Procedures Act specifies a retroactive effect that varies between 4 and 7 years, taking into account that the effect of the passage of time in the Trade Act is 10 years. The competent judge may apply the effects of the law relating to each case separately.

The discussion that took place in the session reflects a clear struggle between the deep state represented by the banking lobby that wants to preserve its privileges despite the collapse, and efforts to reform according to the terms of the International Monetary Fund. In the first place, the interventions of the representatives of the banks did not oppose any specific detail in the extent of their opposition to the amendment, on the grounds that it would strike the last basis of confidence in the banks and the existing tax law. undermine. On the other hand, no MP has dared to publicly support the banks as has happened in the past, especially as the amendment to the Bank Secrecy Act is an international demand that the IMF insists on, noting that some MPs had opinions that did not fully support edits. Al-Fawati MP George Okais has expressed concern over the granting of the judiciary wide powers in his current “politicized” situation, while MP Michel Moawad wishes “the adoption of this law and others within the financial recovery plan,” which may never will see light of day. Side talks with them, especially from the Bar Association, led to their reassurance, and they did not object yesterday. In turn, the Deputy Prime Minister, His Excellency Al-Shami, rejected the banks’ argument, pointing out that the reliance on attracting capital to boost investment in the state was a useless issue, and the evidence is what we have. reached today. He pointed to the need to establish a new system based on reform.
On the other hand, the 4-hour session included a discussion on Section 8 relating to fines and penalties for violators of the Bank Secrecy Act. After the government project only imposed financial fines (between £ 50m and £ 500m) on offenders without jail time, the Finance and Budget Committee introduced amendments allowing offenders to be jailed from 3 months to a year, and increased fines to ‘ a range between 300 million and 500 million pounds. However, even these amended penalties were considered by lawyer Karim Daher to be completely unstoppable, which is why he and MP Halima Kaakour were instructed to prepare a new proposal to present to committee chair Ibrahim Kanaan today.

Attorney Daher told Al-Akhbar he was working to distinguish between the punishment of the one who discloses information and the one who hides or conceals it. The fine for the one who reveals will remain as it was in the old law, i.e. between 3 months and a year. As for the punishment of the information concealer, it will be regarded as an intrusive and facilitator of money laundering activities, and therefore the same penalty as in Act 44 will be imposed on him, amounting to 7 years imprisonment. In addition, the juristic person, ie the bank, can be held liable and prosecuted in terms of the Monetary and Credit Act, with a fine that could amount to the bank writing off if its involvement and lack of cooperation is proven. Daher adds that, in the remarks at the end of the Act, Daher and Qaqour will add a paragraph that will give preference to the provisions of this Act over the rest of the Acts, in particular Act 32/2008, which gives the power to to freeze limited. and remove bank secrecy on bank accounts at the Special Investigation Commission; With a request to permanently revoke this article.

Among the notable amendments are the abolition of Article Three, as set out in the draft government, which prohibits the opening of numbered accounts and deposits, and the leasing of iron safes to customers whose owners are known only to bank managers or their agents. Its replacement by subjecting accounts, deposits and safes to the same procedures approved for the opening of regular accounts, that is, the provisions of the established law.
Adoption of the law in the Finance Committee, followed by its referral in its final form to the General Assembly to be an item on the agenda of the next plenary session. Perhaps this is one of the few times that a reform law has gone as smoothly as amending the Bank Secrecy Act, while all the powers of the government have previously complied with it as one of Lebanon’s privileges and a key factor in attracting foreign depositors. Despite this, the fear of the mechanisms of implementation from now on hovers around him; Member of the Opposition Bloc Loyalty MP Hassan Fadlallah said: “The most important thing in approving the law is the judiciary or the bodies that will implement it. This does not mean, according to Fadlallah, that what happened is a positive step and a major transgression in the framework of lifting secrecy against corruption and including everyone who used this privilege to cover up their illegal activities. At least the existence of this law will serve as a deterrent so that there is no longer a hiding place. ”

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