Lebanon's new central bank chief pledged to combat money laundering and terror financing, and to rebuild trust in the country's much-maligned banking sector as he formally assumed office on Friday.
Karim Souaid, a former asset manager, said work must be done to ensure that depositors who were locked out of their life savings after Lebanon's 2019 economic collapse have their money returned, albeit gradually, with priority given to holders of smaller amounts.
Financial institutions including the central bank “and the Lebanese state must assume their responsibilities” in this matter, Mr Souaid said.
“The Bank of Lebanon will work to eliminate the illegal economy by combating money laundering and terrorist financing,” he said. The bank would work independently, without political interference, he added.
The 2019 economic collapse was blamed on decades of financial mismanagement and corruption by Lebanon's ruling elite. Mr Souaid's predecessor, Riad Salameh, has been accused of helping to embezzle hundreds of millions of dollars from the central bank.
Mr Souaid replaced interim governor Wassim Mansouri, who has overseen the central bank since Mr Salameh stepped down at the end of his term in 2023 after 30 years in charge. Mr Souaid's appointment was favoured by Lebanon's banking sector and President Joseph Aoun, although not by Prime Minister Nawaf Salam.
Changes to Lebanon's banking sector are among key reforms demanded by international backers and lenders before the country can receive assistance.
In April 2022, Lebanon reached a staff-level agreement with the International Monetary Fund on a comprehensive economic reform programme supported by a 46-month extended fund facility, proposing access to about $3 billion. However, Lebanese authorities have been accused of dragging their feet on the required reforms.
The Lebanese cabinet on Friday discussed restructuring the banking sector and is expected to continue its deliberations next week.
As the central bank governor, Mr Souaid will play a key role in managing the restructuring, and in restoring international confidence in Lebanon's financial system.
His appointment comes as Lebanon seeks to recover from the financial losses incurred since the 2019 crisis, as well as the cost of the latest war between the armed Lebanese group Hezbollah and Israel, estimated at about $11 billion by the World Bank.
The financial sector will be expected, at least by some countries, to combat corruption and curb any illicit financing for Hezbollah through the banking system. However, the group is widely believed to have used parallel economic networks to finance its activities.
The new US administration of President Donald Trump has taken a hard line on the status of Hezbollah, seeking its complete disarmament – a highly delicate and sensitive issue in Lebanon.
US envoy Morgan Ortagus arrived in Beirut on Friday for talks with Lebanese leaders, Discussions are expected to include contested border points between Israel and Lebanon in the south. Israeli troops continue to occupy five points on Lebanese soil, in violation of the ceasefire deal that ended the war in November.