The Financial Action Task Force (FATF) kept Lebanon on its gray list of countries subject to enhanced monitoring, despite its acknowledgment of the steps taken by the Lebanese authorities since October 2024 to improve the anti-money laundering and terrorist financing system. The group called on Beirut to continue implementing the agreed-upon action plan, and identified ten areas in which progress must be made to address strategic shortcomings.
The group's position comes after its general assembly meeting in Paris in late October, which discussed efforts to combat money laundering and terrorist financing, and at a time when the Governor of the Banque du Liban, Karim Saied, participated in international meetings in Paris that dealt with combating money laundering and terrorist financing and the reintegration of countries affected by the control of terrorist organizations into the global financial system. He also held discussions with the Governor of the French Central Bank and officials in the US Treasury Department concerned with these files.
The FATF said, in a statement issued after its meetings, that Lebanon made a high-level political commitment in October 2024 to work with the group and the Middle East and North Africa Financial Action Task Force (MENAFATF) to enhance the effectiveness of its system to combat money laundering and terrorist financing, despite the social, economic and security challenges facing the country.
She indicated that Lebanon has since taken steps to improve its system, which included issuing instructions regarding the immediate implementation of targeted financial sanctions, in addition to organizing awareness and training programs directed at financial institutions and specified non-financial activities and professions, whose level of understanding of their obligations in this area remains low.
But the group called on Lebanon to continue implementing the action plan, and identified ten key areas in which it must make progress. These areas include conducting assessments of specific risks related to money laundering and terrorist financing, developing the necessary policies and measures to mitigate them, and strengthening mechanisms for implementing requests for mutual legal assistance, extradition, and asset recovery in a timely and effective manner.
The plan also calls for raising the level of understanding of non-financial risk-specific activities and professions, applying effective, proportionate and deterrent penalties to violating parties, ensuring that data on the beneficial owners of companies and legal entities is updated, and enhancing the competent authorities’ benefit from the information and products provided by the Financial Information Unit.
On the judicial side, the FATF stressed the need to demonstrate a sustainable increase in investigations, prosecutions and rulings related to money laundering crimes in proportion to the nature of the risks, improve asset recovery mechanisms, and monitor and control illicit cross-border movements of currencies, metals and precious stones.
Regarding terrorist financing, the group called for continuing investigations and exchanging information regarding them with foreign partners, and enhancing the immediate application of targeted financial sanctions, especially for non-financial activities and professions and some non-banking financial institutions. It also called for high-risk non-profit organizations to be subjected to targeted oversight based on risk assessment, without disrupting or discouraging their legitimate activities.
Paris meetings
In the context of these files, the Governor of the Bank of Lebanon, Karim Saied, participated in a high-level meeting hosted by the Central Bank of France in Paris, and focused on ways to reintegrate countries affected by the control of terrorist organizations into the international financial system, enhance the integrity of financial systems, and combat money laundering and terrorist financing.
The meeting included officials and rulers from countries including Saudi Arabia, Egypt, Syria, Palestine, Nigeria and South Africa, in addition to representatives of the FATF and the treasury ministries of the United States, France and Britain, the European Central Bank and the European Union, as well as representatives of the private financial sector.
The discussions addressed the institutional, regulatory and financial challenges facing the affected countries, and ways to enhance control over financial flows, restore confidence in banking institutions, and rebuild relations with correspondent banks in a way that facilitates the return of the concerned countries to dealing with the global financial system.
Saeed also held separate discussions with the Governor of the French Central Bank and officials in the US Treasury Department who handle anti-money laundering and terrorist financing files. During the same period, Paris witnessed the meetings of the FATF General Assembly between October 28 and 30, with the participation of representatives from more than 200 countries and international entities.
The meetings witnessed Syrian participation for the first time in more than 15 years, as the Governor of the Central Bank of Syria, Safwat Raslan, attended the group’s meetings and held banking meetings that dealt with rebuilding relations with correspondent banks and enhancing the transparency of transactions and financial governance.
Gray listing does not mean cutting off transactions
In a clarification of importance for Lebanon, the FATF confirmed that including countries on the enhanced follow-up list, known as the “gray list,” means their commitment to addressing strategic shortcomings within agreed upon time frames, and their subjection to additional follow-up by the group.
But it stressed that it does not call for imposing enhanced audit measures on these countries, nor does its standards encourage cutting off dealings with entire categories of clients or withdrawing from entire markets, but rather calls for adopting an approach based on risk assessment.
The group called on member states and stakeholders to take country-specific information into account when assessing transaction risks, while ensuring that flows of funds allocated for humanitarian aid, activities of legitimate non-profit organizations, and remittances are not disrupted.
Thus, the continued inclusion of Lebanon on the gray list does not mean calling on foreign banks to sever their relations with it, but it leaves the Lebanese authorities with specific obligations to prove the effectiveness of their measures in combating financial crimes and financing of terrorism, which are requirements linked to restoring confidence in the banking sector and strengthening its relations with international financial institutions.
Peter Casimir, Governor of the Slovak Central Bank, said that the European Central Bank will have to raise interest rates again to prevent high inflation from taking hold, warning that markets may underestimate the amount of monetary tightening needed to contain price pressures.
The European Central Bank kept interest rates unchanged last week, but a number of monetary policy makers have since called for a resumption of raising them sooner, in light of the sharp rise in energy costs, which they believe may ultimately lead to the emergence of inflationary effects from the second round, according to “Reuters.”
“For me, the question is increasingly less about whether more action is needed,” Casimir, one of the most hawkish voices on the bank’s 27-member board of governors, said Monday. Rather, it is about the size of the required increase.”
He added: “Markets may still be underestimating the scale of measures needed.” The issue is not related to one meeting or one step; Rather, it is the path required to return inflation to the target level and maintain it at that level.
Financial markets currently expect that the European Central Bank will raise interest rates two to three times over the next year, before starting to gradually reduce them, in light of inflation indicators derived from the markets indicating the possibility that price growth will remain much higher than the bank’s target of 2 percent for years to come.
The European Central Bank had left interest rates unchanged last Thursday, based on the fact that the inflationary effects of the second round had not yet appeared, and that wage growth was still limited, in addition to the possibility that economic growth would be negatively affected by the sharp rise in borrowing costs in the long term.
But Casimir saw that these factors do not necessarily provide the same amount of reassurance as some believe.
He explained that cost pressures may build before companies pass on increases to consumers, and inflation expectations may change before broader price pressures appear in economic data.
He said: “Waiting for certainty does not necessarily constitute a sound approach to policy-making.”
He added that slowing economic growth does not necessarily mean a decline in inflation, given that cost pressures have been building for months. He also pointed out that growth is still relatively stable, thanks to the role played by government budgets in supporting the economy, warning that the absence of financial discipline may in turn contribute to continued price pressures.
Casimir concluded by saying: “The pause witnessed last week was not the finish line. We must act before high inflation becomes normal in everyone’s eyes.”
The administration of US President Donald Trump is moving towards restoring Russian natural gas exports to European markets via pipelines crossing Ukrainian territory, in a proposal aimed at achieving calm on the energy front between Moscow and Kiev, and preparing the atmosphere for a broader agreement to end the war, but it clashes with a European position that refuses to return to dependence on Russian energy supplies.
According to what was reported by the Wall Street Journal, US envoys Steve Witkoff and Jared Kushner presented the idea during two visits to Moscow and Kiev last September. The vision is based on resuming the sale of Russian gas to Europe through an American intermediary, which would allow bypassing existing European sanctions, and at the same time create investment opportunities for American companies and investors.
The importance of the proposal goes beyond the commercial aspect, as Washington is betting that Russia's return to the European gas market will constitute an economic incentive for President Vladimir Putin to agree to an agreement to stop the escalation in the energy sector, while Ukraine can benefit from gas transit fees through its territory, which will provide it with a financial resource it needs in light of the war.
According to a senior American official quoted by the newspaper, White House officials proposed depositing revenues from Russian gas sales in an escrow account with a judicial authority in a third country, to prevent the Kremlin from using these funds to finance the war. The US administration also tried to market the idea to European leaders as a way to reduce energy prices before winter, at a time when European gas reserves declined to seasonal low levels compared to previous years.
A European position that is difficult to change
But the proposal faces a major obstacle represented by the European position, as the European Union has approved legislation requiring the gradual elimination of imports of Russian natural gas by the end of 2027. The leaders of the largest European countries have also confirmed their unwillingness to return to dependence on energy supplies from Russia, which has become considered a strategic threat to the continent’s security.
The Wall Street Journal quoted European Energy Commissioner Dan Jorgensen as saying, in an interview with a Hungarian newspaper in October, that the ban imposed on Russian gas imports should be permanent, adding that he does not trust Russia even if a peace agreement is reached.
While the Trump administration is betting that economic pressures and rising energy costs may push European capitals to reconsider their position, the newspaper quoted European officials with strong reservations about the idea. An official from one of the Nordic countries considered that resuming the purchase of Russian gas conflicts with the principles adopted by Europe, while a senior official from a major European country likened the proposal to former British Prime Minister Neville Chamberlain’s concessions to Nazi Germany in exchange for preserving commercial interests.
This trend represents a remarkable shift in Trump's position compared to his first presidential term, when he criticized former German Chancellor Angela Merkel over the Nord Stream 2 pipeline project, warning that Germany's reliance on it would make it a hostage of Russian supplies. Washington then imposed sanctions on the project in late 2019.
The current US administration believes that reopening Nord Stream lines in the future may be an important part of a broader settlement, which is not limited to ending the war in Ukraine, but also includes addressing the existing differences between Russia and Washington’s European allies. The newspaper quoted an American official as saying that Merkel's mistake was seeking to implement the project without first working on a broader security arrangement with Moscow.
Ukraine's lines are faster in resuming pumping
On a practical level, the pipelines crossing Ukraine appear more susceptible to rapid restart compared to the “Nord Stream” lines, which were subjected to explosions under the waters of the Baltic Sea in September 2022, and caused severe damage to the “Nord Stream 1” and “Nord Stream 2” lines. The first stopped transporting gas in August 2022, while the second never entered service at all.
In contrast, limited flows of Russian gas continued through the Ukrainian pipeline network until January 2025, when transit operations stopped. This network extends from gas fields in Siberia to Europe via Ukraine, with links to Slovakia and from there to Austria and Germany.
Russia and Germany had built the “Nord Stream 1” line to bypass the gas transportation networks through Ukraine, and it began operating in 2011, before it was later stopped with the escalation of the war and the deterioration of relations between Moscow and European capitals.
Data reported by the newspaper indicate that Russian gas currently represents about 11 percent of Europe's total natural gas consumption, compared to about 45 percent before the outbreak of war. In contrast, American liquefied natural gas supplies constitute about 30 percent of European consumption, while quantities of Russian gas reach some European markets via liquefied gas tankers or through the TurkStream lines that feed Hungary and Slovakia.
The Iran war puts pressure on Europe's accounts
The American moves come at a time when Europe is facing additional pressures on energy security as a result of the war on Iran, which led to the disruption of Qatari liquefied natural gas shipments into the Gulf and contributed to a global wave of rising energy prices.
According to the European Union, its countries incurred additional energy spending worth 100 billion euros (about 112 billion dollars) as a result of the war. The percentage of European underground gas reserves being filled has reached about 75 percent, with expectations that the continent will enter the winter at levels lower than the average of the past nine years.
European circles acknowledge that the repercussions of the war on Iran may make it more difficult to adhere to the position rejecting the resumption of Russian gas imports, especially with the rise in prices and the decline in supplies available from other sources.
In Germany, the far-right Alternative for Germany party has made resuming imports of low-cost Russian gas one of the main axes of its campaign in preparation for the national elections scheduled for 2028.
However, diplomats believe that a change in the European position may become more negotiable if Kiev supports the resumption of gas flows as part of an agreement to stop attacks on energy facilities, thus preventing power outages and a humanitarian crisis in Ukrainian cities that could prompt a new wave of refugees to leave the country.
This possibility gains additional importance in light of the decline in Ukrainian air defense capabilities, and US restrictions on the supply of Patriot interceptor missiles, amid a global shortage of these missiles as a result of the repercussions of the war on Iran.
Attention is turning to expected tripartite negotiations between the United States, Russia, and Ukraine in Abu Dhabi during mid-November, amid Moscow's continued rejection so far of Washington's attempts to reach a comprehensive agreement to stop attacks on energy facilities.
