Lebanon tightens grip on exchange houses with new e-KYC rules

Source: Nidaa El Watan

Lebanon is set to see a new circular from Banque du Liban tightening oversight of exchange houses and financial institutions through a revamped electronic Know Your Customer (e-KYC) system. According to informed sources, the circular will introduce stricter controls than those currently applied by exchange houses and financial institutions, excluding banks.

Under the upcoming rules, anyone conducting a currency exchange or money transfer exceeding $1,000 must complete a unified electronic form, which will be stored digitally and linked directly to Banque du Liban.

The move is part of Lebanon’s effort to comply with the Financial Action Task Force (FATF) and gradually exit the gray list. The new measures, considered among the strictest globally, aim to curb money laundering and terrorism financing in Lebanon’s cash-dominated economy, which has grown since the banking sector’s collapse.

A source explained: “The circular will be mandatory for money transfer companies and exchange houses. Failure to comply would make Lebanon’s removal from the gray list extremely difficult, given the surge in untraceable cash transactions since the financial crisis.”

In addition to the e-KYC requirement, Banque du Liban plans to announce further measures in the coming weeks to strengthen oversight and improve Lebanon’s financial image.

Regulatory committee meeting

Last week, the Regulatory Committee of Banque du Liban met with licensed exchange houses and money transfer companies, warning that new procedures via the updated e-KYC form will be implemented this week. The goal is to enforce stricter controls than those required internationally, in line with FATF standards. No further details were provided about the form’s electronic implementation.

Currently, 297 licensed exchange houses comply with strengthened regulations, including ID verification for transactions as low as $50. Some citizens have resisted this requirement, opting instead for unlicensed exchangers who operate without verifying identities or tracking sources of funds.

Licensed exchangers allow “regular” clients to submit their ID once for small transactions but require proof of source for larger amounts. This approach has caused some frustration among customers. Exchange house owners are urging security forces to clamp down on unlicensed operators, who undercut legitimate businesses and bypass regulatory oversight.

Tracing the flow of funds

One exchange house owner noted: “Shutting down unlicensed exchangers leaves clients no choice but to comply with licensed exchangers’ procedures. The real risk comes from non-traceable cash that bypasses regulated institutions. Such transactions are considered high-risk.”

Licensed exchange houses can trace fund flows by adhering to regulations. For transactions exceeding $10,000, which are typically commercial, exchangers require ID, company documents, commercial registration, and invoices as proof of legitimacy.

From now on, any individual conducting a currency exchange or money transfer over $1,000 must complete the electronic form, ensuring compliance and traceability.