Lebanon Offshore Bank Account

lebanon offshore bank account

The information below provides details about the Lebanon banking system, and details on opening a Lebanon offshore bank account. You will find details on the laws and regulations that govern the banking system, as well as a list of local and international banks that operate in Lebanon.



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The Lebanon Banking System

Starting with the independence of Lebanon in 1943 and continuing with the establishment of the Banque du Liban in 1964, the banking system in Lebanon prospered. The pronounced difference between foreign and domestic Lebanese banks had been relatively reduced as the former no longer greatly monopolized the foreign financing of Lebanon, contributed to its domestic financing, and began competing for local deposits. In fact, the Lebanese banking system witnessed the entry of 13 foreign banks — Arab Bank Ltd.

(Jordan), British Bank of the Middle East (Great Britain), Rafidain Bank (Iraq), Saudi National Commercial Bank (Saudi Arabia), Algemene Bank Nederland (Netherlands), Chase Manhattan (USA), The First National City Bank (USA), The Eastern Bank Ltd (Great Britain), Jordan National Bank (Jordan), Societe Tunisienne de Banque (Tunisia), Moscow Narodny Bank Ltd. (Great Britain), The Bank of America (USA), Habib Bank Overseas Ltd. (Pakistan)– and more than 40 Lebanese banks of which the Eastern Commercial Bank (currently known as the Banque de la Mediterrannee), Banque Libanaise pour le Commerce, Banque Sabbagh, Banque G. Trade (currently known as Credit Lyonnais), Banque du Liban et D’Outre Mer, Intra Bank, Federal Bank of Lebanon, Banque Belgo-Libanaise (currently known as Societe General Libano-Europeene de Banques), Banque Saradar, Bank of Beirut and the Arab Countries, Banque Joseph Lati et fils, Beirut Ryad Bank, Banque Pharaon et Chiha, Mebco Bank, Byblos Bank, Credit Libanais, Banque Beyrouth pour Le Commerce, Banque Audi, Bank of Kuwait and the Arab World, Banque Geagea, Banque du Credit populaire, Adcom Bank, Rif Bank, and Beirut Universal Bank.

In the period prior to the establishment of the Banque du Liban, banks operating in Lebanon were classified by the Ministry of Finance into three categories. The above mentioned approved banks whose guarantees were accepted by the Lebanese government, non-approved banks whose guarantees were not accepted, and discount houses. Since 1964, and by virtue of the Code of Money and Credit, a list of banks operating in Lebanon has been issued by BDL in January of every year.

Prior to that year, the Lebanese banking system was characterized by the absence of specific banking regulations and supervision. Banks merely abided by the Code of Commerce which regulated commercial business, with the exception of the Bank Secrecy Law enacted in 1956. Regulations, supervision, and control were only introduced with the enactment of the Code of Money and Credit and the establishment of BDL, which was granted regulatory and supervisory authority over the banking system as part of its function to safeguard its soundness.

Currently, regulations governing the establishment and activities of Lebanese commercial banks, branches of foreign banks, specialized banks, Lebanese financial institutions and foreign financial institutions, representative offices of foreign banks, and brokerage firms are available. All are supervised by the Banking Control Commission which is an independent supervisory body established at the BDL in 1967.

The banking system is sound and enjoys a high capital adequacy ratio of about 19 percent, more than double the recommended ratio set by Basel I (eight percent). The Central Bank- Banque du Liban and the Association of Banks have set up a committee to prepare the banking sector for compliance with Basel II recommendations concerning capital adequacy.

Encouraged by the Central Bank, the Lebanese banking sector continues to consolidate. Over twenty-five bank mergers have taken place in the past decade, and additional mergers are anticipated after Parliament approves a revised Bank Merger Law. International firms established in Lebanon such as BNP/Paribas, Credit Suisse, HSBC, Citibank and Merrill Lynch remain active. Many sectors are dominated by traditional businesses in the hands of commercially powerful families. The Government is trying to improve the
transparency of such firms in order to help solidify an emerging capital market for company shares.

As of September 2004, the total assets of Lebanon’s five largest commercial banks were estimated at USD 35.2 billion, or 60.5 percent of total bank assets in Lebanon. About 25.8 percent of total loans are estimated as non- performing according to September 2004 statistics.

However, banks continue to maintain more than two-thirds provisions against non-performing loans, while the remaining provision is covered by adequate collateral.
The Financial Action Task Force (FATF) decided to end formal monitoring of Lebanon in October 2003 in recognition of Lebanon’s sustained efforts to implement its anti-money laundering regime. In July 2003, Lebanon joined the Egmont Group of Financial Intelligence Units, which promotes international cooperation in the fight against money laundering. On November 30, 2004, a Lebanese Central Bank official was elected to a one-year term as President of the newly established Middle East and North Africa (MENA) Financial Action Task Force (FATF), which seeks to promote best practices in combating money laundering and terrorist financing in the region.

The Lebanese banking system is endowed with several characteristics that promote the role of Beirut as a regional financial center, in terms of ensuring protection for foreign capital and earnings.

Free Exchange System and Free Movement of Capital and Earnings

The Lebanese currency is fully convertible and can be exchanged freely with any other currency. Moreover, no restrictions are put on the free flow of capital and earnings into and out of the Lebanese economy.

Tax Exemptions

Both article 16 of law No. 282 dated December 30, 1993 and article 12 of decree No. 5451 dated August 26. 1994, offer exemptions from income tax on all interest and revenues earned on all types of accounts opened in Lebanese banks.

The Free Banking Zone

On the first of April 1975, decree No. 29 established a free banking zone by granting the Lebanese government the right to exempt non residents’ deposits and liabilities in foreign currency from:

  • the income tax on interest earned,
  • the required reserves imposed by the Banque Du Liban by virtue of article 76 of the Code of Money and Credit,
  • the premium of deposit guarantee imposed on bank deposits to the profit of the National Deposit Guarantee Institution.

Opening of Joint Accounts

The law of December 1961 allows for the opening of joint accounts. These accounts are opened in the name of several persons and can be used by any one of these persons. In case of death of any one of the account owners, his/her partner can use the account without being subject to heirs procedures. In case one of the account holders is declared bankrupt, the account becomes the ownership of the bankrupt party, unless it is proven otherwise.

The bank can’t do any clearing for the different accounts of any account holder without the written approval of all other partners. The lifting of bank secrecy on the account is non operational without it being declared by all partners. In case any litigation occurs among the different holders of the account, the bank shall freeze the account from the day it receives notification of the litigation and until it is settled by the courts.

Banking Secrecy in Lebanon

The banking secrecy, institution inherent to the Lebanese banking system, is governed by the provisions of the law dated September 3, 1956.This law submits to the “absolute” specific banking secrecy, all the banks duly authorized to undertake a banking activity in Lebanon as Lebanese joint-stock companies or as branches of foreign banks.

The banking secrecy is absolute in favour of the clients of the above-mentioned banks which cannot disclose to any private person or any administrative, military or judicial authority, the names of their clients, their assets and any fact brought to their knowledge relating to their clients’ operations (opening of a current account, safebox lease etc.).
This ban applies, not only to the banks’ directors and employees, but also to any person who, by reason of its quality or function, has knowledge of the books, operations and banking correspondence such as Notaries Public, lawyers or auditors. Accordingly, the banking secrecy can be opposed to the Lebanese tax authority and no distraint can be carried out on the assets deposited in the banking establishments without the written authorization of their owners.

The intentional breach of the banking secrecy – and even the beginning of such a breach- exposes its author to pursuits and penal sanctions, being noted that the criminal prosecution cannot be initiated unless the client institutes proceedings. However, there are some exceptions to the principle of the banking secrecy, which are restrictively provided for by the Lebanese law:

  1. The banking secrecy can be lifted by a prior written authorization of the bank’s client, his heirs, legatees. If this authorization is specified in an agreement between the bank and its client, it cannot be withdrawn unless by the common agreement of the contracting parties. The banking secrecy can be lifted as well in case the client is declared bankrupt, or in case there is a litigation between him and the bank with regard to their banking relations.
  2. Under the banking secrecy and for the safeguard of their investments, banks may communicate between themselves information relating to the debtor accounts of their clients.
  3. Furthermore, banks cannot oppose the professional secrecy to the requests of the judicial authorities in the scope of lawsuits relating to the pursuits against persons assuming public charges for illicit enrichment, under very restrictive terms determined by specific Lebanese law.
  4. As previously mentioned, the banking secrecy cannot be opposed to the heirs and/or legatees of the bank’s client, pertaining to non-joint accounts and other operations of the client with the bank. The residuary or particular devisees or legatees continue the person of the deceased and dispose of the same rights vis-à-vis the bank including the right to examine and request from the latter any information relating to the accounts (non-joint) held with the bank and to the operations undertaken over same, provided however that the banking secrecy covering the accounts and operations of other clients is not violated.

Joint accounts however, operating with the signature of one of their holder, remain covered by the banking secrecy vis-à-vis the heirs of the deceased whose rights in the joint account are not devolved to his heirs but to the co-holder of the account who is entitled to use freely all the account. Therefore, the bank is not authorized to provide the heirs of the deceased holder with any information unless expressly provided for to the contrary in the contract for the opening of the account.

The Banque du Liban

The Banque du Liban was established by the Code of Money and Credit promulgated on 1st August 1963, by Decree no. 13513. It started to operate effectively on 1st April, 1964.
BDL is a legal public entity enjoying financial and administrative autonomy. It is not subject to the administrative and management rules and controls applicable to the public sector. Its capital is totally appropriated by the State. The BDL is vested by law with the exclusive right to issue the national currency. As stipulated by article 70 of the Code of Money and Credit, the BDL is entrusted with the general mission of safeguarding the national currency in order to ensure the basis for sustained social and economic growth. This mission consists specifically in :

  • the safeguard of monetary and economic stability;
  • the safeguard of the soundness of the banking sector;
  • the development of money and financial markets;
  • the development and regulation of the payment systems and instruments;
  • the development and regulation of money transfer operations including electronic transfers.

Development and regulation of the clearing and settlement operations relative to different financial and payment instruments and marketable bonds.

List of banks operating in Lebanon:

  • FRANSABANK S.A.L.
  • BANCA DI ROMA S.P.A.
  • BANQUE MISR-LIBAN S.A.L.
  • ARAB BANK PLC.
  • BANQUE NATIONALE DE PARIS INTERCONTINENTALE.
  • HSBC BANK MIDDLE EAST.
  • RAFIDAIN BANK.
  • BANQUE LIBANO-FRANCAISE S.A.L.
  • B.L.C. BANK S.A.L.
  • NEAR EAST COMMERCIAL BANK S.A.L.
  • BLOM BANK S.A.L.
  • FEDERAL BANK OF LEBANON S.A.L.
  • SAUDI NATIONAL COMMERCIAL BANK.
  • SOCIETE GENERALE DE BANQUE AU LIBAN S.A.L.
  • BANK MED
  • AUDI SARADAR PRIVATE BANK S.A.L.
  • BBAC S.A.L
  • BANQUE LATI S.A.L.
  • SYRIAN LEBANESE COMMERCIAL BANK S.A.L.
  • BANQUE PHARAON ET CHIHA S.A.L.
  • BANQUE DE CREDIT NATIONAL S.A.L.
  • BYBLOS BANK S.A.L.
  • LEBANESE CANADIAN BANK S.A.L.
  • BANQUE DE L’INDUSTRIE ET DU TRAVAIL S.A.L.
  • INTERCONTINENTAL BANK OF LEBANON S.A.L.
  • CREDIT LIBANAIS S.A.L.
  • BANQUE AUDI S.A.L. AUDI SARADAR GROUP
  • BANK OF KUWAIT AND THE ARAB WORLD S.A.L.
  • NORTH AFRICA COMMERCIAL BANK S.A.L.
  • LEBANESE SWISS BANK S.A.L.
  • BANQUE SADERAT IRAN.
  • SOCIETE NOUVELLE DE LA BANQUE DE SYRIE ET DU LIBAN S.A.L.
  • ALLIED BANK S.A.L.
  • NATIONAL BANK OF KUWAIT (LEBANON) S.A.L.
  • BANK OF BEIRUT S.A.L
  • JAMMAL TRUST BANK S.A.L.
  • AL-AHLI INTERNATIONAL BANK S.A.L.
  • HABIB BANK LIMITED.
  • ARAB AFRICAN INTERNATIONAL BANK.
  • EMIRATES LEBANON BANK
  • BANQUE BEMO
  • LEBANON AND GULF BANK S.A.L.
  • SAUDI LEBANESE BANK S.A.L.
  • STANDARD CHARTERED BANK S.A.L.
  • AL-MAWARID BANK S.A.L.
  • CREDITBANK S.A.L.
  • UNITED CREDIT BANK S.A.L.
  • BANK AL-MADINA S.A.L.
  • FIRST NATIONAL BANK S.A.L.
  • AL-BARAKA BANK LEBANON S.A.L. (B B L)
  • MEAB S.A.L.
  • CITIBANK N.A.
  • ARAB FINANCE HOUSE S.A.L.
  • LEBANESE ISLAMIC BANK S.A.L.

 


 

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