The recent amendment to Lebanon’s banking secrecy law, aims to grant authorized entities-including independent auditors, regulatory bodies, and the central bank-access to banking records dating back ten years, a key demand by the IMF to advance Lebanon’s economic reform agenda. Yet, the big question remains: Are these amendments sufficient? Do they mark a real shift toward building an accountable financial system, or are they merely a soft workaround that skirts the essence of genuine reform? Many observers argue that, despite progress, loopholes and limited retroactivity still undermine the fight against corruption and the restoration of public trust.
The recent amendments of the banking secrecy law ratified last week allows authorized bodies-including independent auditors, the central bank, and regulatory commissions-to access banking records retroactively over the past ten years. A global trend towards greater financial transparency has created pressure upon several countries with strict and long-standing bank secrecy laws. Countries with such laws in place are increasingly becoming the targets of international groups and global powers seeking financial accountability to combat international crime and corruption, as well as to curb tax evasion through offshore storage of wealth. That this pressure has led to reform of the financial institutions of countries like Switzerland, perhaps the most notorious pioneering country of bank account confidentiality, reflects a broader international movement towards freer global access and sharing of banking information.
In Lebanon, the move is different in scope. By lifting secrecy, authorities can investigate suspicious accounts, uncover illicit capital flight, and detect fraudulent transactions that contributed to the banking sector’s insolvency following the crisis of 2019 and further detect accounts that have made riches due to the crisis. The move is certainly a critical step toward addressing the depositor crisis. Historically, Lebanon’s strict banking secrecy laws have shielded account information, making it difficult to audit deposits, trace illicit transfers, and hold accountable those responsible for the financial collapse. The new amendments allow “banking supervisory and regulatory bodies” including the central bank “to request access to all banking information without linking the request to a specific objective.”
These bodies will now be able to audit customer accounts by name, access deposit details and look into possible suspicious activity. Regulators can scrutinize accounts comprehensively, which could help identify illicit transfers, hidden assets, and irregularities that contributed to the banking collapse. This could theoretically support efforts to recover stolen or illegally transferred funds, thereby increasing the pool of resources available for reimbursing depositors. However, depositors fear that such broad access may be used to justify forced write-downs or “haircuts” on deposits, effectively wiping out part of their savings under the guise of reform. The law also raises concerns among depositors who fear that broad access to their account information could be misused to justify forced “haircuts” or confiscations without due process.
A Law to protect investments or profiteering?
When Lebanon enacted its banking secrecy law on September 3, 1956, it sought to carve out a niche as the Middle East’s financial safe haven. Modeled after Switzerland’s system, Law No. 1/1956 was a strategic response to regional instability. Neighboring states like Egypt and Syria grappled with nationalization policies, socialist reforms, and political upheaval, were driving capital flight. Lebanon positioned itself as a bastion of “economic freedom,” offering ironclad privacy for depositors and tax-free wealth management. This law, championed by Finance Minister Raymond Edde, became the cornerstone of a banking sector that would grow to hold USD180 billion in deposits at its peak-nearly four times Lebanon’s GDP-earning the country the moniker “Switzerland of the Middle East”. The policy succeeded spectacularly. Gulf elites, Syrian businessmen, and even European investors flocked to Beirut’s banks, entrusting their assets to a system that promised discretion and stability. By the 1970s, Lebanon’s banking sector accounted for 9% of GDP, buoyed by secrecy laws that shielded accounts from prying eyes, even during the 1975–1990 civil war.
Over decades, the law’s original intent eroded. While global financial systems adopted anti-money laundering (AML) standards and transparency measures, Lebanon’s banking secrecy remained largely untouched. Amendments in 1975 and 1999 introduced minor exceptions-allowing limited disclosures for terrorism or drug trafficking cases-but these were poorly enforced.
By the 2000s, the law had morphed into a shield for Lebanon’s political and economic elite as public officials, including former PM Najib Mikati, exploited secrecy to hide assets offshore, as revealed in the Pandora Papers. Banks turned a blind eye to suspicious transactions, with the FATF later noting systemic failures in combating illicit flows. An estimated USD4.5 billion annually (14.2% of GDP) leaked from Lebanon’s economy via illicit finance by 2020, facilitated by secrecy laws. The financial crisis that erupted in 2019 laid bare the law’s destructive legacy. As banks froze deposits and imposed ad hoc capital controls, ordinary citizens lost access to their savings, while elites leveraged secrecy to move funds abroad. Over USD100 billion in deposits remain trapped, with limited withdrawal access since 2019. Multiple exchange rates (official, Sayrafa, black market) enabled insider trading, with banks profiting from arbitrage while the pound lost 90% of its value. An estimated USD6 billion in deposits fled Lebanon in 2020 alone, much of it funneled through secrecy-protected accounts.
In 2024, the FATF grey-listed Lebanon, citing “strategic deficiencies” in AML frameworks. The designation isolated Lebanese banks from global correspondents, deepening economic paralysis. Facing international isolation, Lebanon enacted amendments to the secrecy law in 2022 and 2025, primarily to appease the IMF. In 2022 amendments allowed judicial authorities to access accounts retroactively to 1988 in corruption cases, also it exempted illicit enrichment investigations from secrecy.
Depositors worry
While the 2025 reform is intended to enhance transparency, combat corruption, and facilitate the restructuring of the banking sector, it also has complex implications for depositors still locked out of their funds.
Lebanon’s banking crisis and the challenge of depositors’ access to their funds have led to a new legal framework that classifies depositors based on whether their accounts were opened before or after the critical date of October 17, 2019-the start of the country’s financial collapse and widespread capital controls.
The government restructuration plan classifies depositors categorized into two main groups. The Pre-October 17, 2019 Depositors who hold accounts that existed before the financial crisis and the imposition of unofficial capital controls by banks. According to data from 2019, there were approximately 2.8 million accounts with total deposits around USD154.66 billion, of which USD116.87 billion were in US dollars and USD37.78 billion in Lebanese pounds. The majority of these accounts (99.2%) fall into a “lower bracket” with balances under USD3,300, collectively holding about USD81.7 billion. The remaining 0.8% of accounts, the “higher bracket,” hold nearly USD73 billion, reflecting a highly unequal distribution of deposits. Dollarization of deposits was high, reaching over 75% overall, and even higher in larger accounts (over 95% in accounts above USD100 million).
The second category are: “Post-October 17, 2019 Depositors”, these are accounts opened after the crisis onset are treated differently, reflecting the changed banking environment and the need to manage liquidity risks. These new depositors face stricter limits and different repayment conditions, as their deposits entered the system after the collapse and capital controls were effectively in place. This classification underpins the government and central bank’s proposed restructuring and repayment plans. For example, depositors with accounts opened before October 17, 2019, are proposed to receive repayments up to USD100,000, while those with accounts opened after that date might be eligible for up to USD36,000, both disbursed over a maximum period of 15 years. This approach reflects an attempt to prioritize smaller, older depositors and limit exposure to large, potentially politically connected accounts.
Lifting secrecy without justification
According to the new amendments, the range of entities authorized to lift banking secrecy under Article 150 has been expanded. Now, auditing firms appointed by the Central Bank of Lebanon or the Banking Control Commission are permitted to access banking information, whether for supervisory purposes or to carry out any other role, without the request for information needing to be tied to a specific objective. The law also allows for audits of accounts by name, not just by account number.
The reform is part of a broader package of measures Lebanon must implement to unlock billions in international aid and restructure its banking sector, which currently holds an estimated USD86–93 billion in frozen deposits across 1.26 million accounts. While Prime Minister Nawaf Salam and Finance Minister Yassine Jaber have framed the law as essential for restoring depositor rights and rebuilding confidence, they emphasize safeguards against arbitrary access, insisting that not “anyone can enter a bank and demand account details” indiscriminately. Yet, transparency advocates highlight loopholes such as the removal of provisions allowing independent auditors to access data via delegated authority, potentially weakening oversight and enabling political interference.
The reform also reflects Lebanon’s struggle to balance the need for transparency and anti-corruption efforts with protecting individual privacy and preventing abuse. The decade-long access to banking records is unprecedented in Lebanon’s history of strict banking secrecy, which once helped position the country as the “Switzerland of the Middle East” but also facilitated opaque financial dealings by elites. The law’s passage by a parliamentary vote of 87 in favor to 13 against signals political willingness to comply with IMF demands, yet ongoing debates about remaining loopholes and enforcement mechanisms underscore persistent mistrust in Lebanon’s institutions.
Loopholes persist
While these changes mark progress, critics argue they are cosmetic. Politicians can still stymie investigations via judicial delays. The 2025 law excludes real estate and non-bank financial sectors, key channels for money laundering. Also, depositors and watchdog groups lack access to audit findings.
True reform requires dismantling the culture of impunity, there is also a need to investigate pre-2015 transactions tied to Lebanon’s USD72 billion public debt and financial engineering scam and prioritize small savers in bank restructuring, as 80% of accounts hold less than USD10,000. There is also a need to shield prosecutors from political interference, as seen in the gagged case against Bank Audi’s Samir Hanna as former PM Mikati intervened directly to stop the subpoena against Hanna.
Kit for Kat game?
Without systemic overhauls, Lebanon’s secrecy law reforms risk becoming another parieto-style performance-a theatrical gesture that changes little for those trapped in the crisis. As the IMF negotiates a bailout, the world watches whether Lebanon’s elite will trade secrecy for survival or cling to a system that enriched them as the nation burned.
Lebanon’s banking secrecy reform is a landmark but double-edged measure: it is crucial for exposing corruption and enabling financial restructuring but also risks being perceived as a mechanism to “wipe” deposits under the guise of reform. Its ultimate impact will depend on how transparently and fairly it is implemented, whether it genuinely targets illicit funds rather than ordinary depositors, and if it is accompanied by broader legal and institutional reforms to restore trust in Lebanon’s battered financial system.
The new banking secrecy reforms in Lebanon carry several significant risks that threaten individual privacy, legal security, investor confidence, and the overall economic recovery. Central to the controversy is the broad expansion of access to clients’ financial data under Article 7, which allows not only the Central Bank and Banking Control Commission but also any authorized auditor to obtain detailed banking information-including names, account details, and transaction histories-without requiring specific suspicion or cause.
The reforms blur the line between a bank’s financial records and its clients’ personal. accounts, effectively dismantling the principle of banking confidentiality. This blanket access risks exposing sensitive personal and commercial information, undermining trust in the banking system. Past incidents of leaked confidential data, including judicial leaks spreading on social media, highlight the danger of inadequate safeguards and weak enforcement mechanisms.
Although individuals can appeal the lifting of banking secrecy to an emergency judge, the law does not clearly define the criteria for such appeals, rendering judicial protection largely ineffective. Moreover, appeals do not automatically suspend investigations, and the process can be lengthy and prone to political interference. The broad access granted to multiple administrative bodies-including the Central Bank, Banking Control Commission, and National Investigation General Directorate-without stringent procedural safeguards raises the risk of mass data collection being exploited for political or personal purposes rather than genuine oversight. The lack of clear mechanisms governing information access and sharing further increases vulnerability to misuse. In a fragile economy desperately needing foreign investment, the law signals instability and unpredictability. Lebanon risks alienating investors, expatriates, and entrepreneurs who may fear that their financial histories could be retroactively scrutinized or exposed, discouraging capital inflows essential for recovery.
Contradictions and Enforcement Challenges:
The law contains internal contradictions-for example, judicial authorities’ power to lift banking secrecy is complicated by dependence on the Special Investigation Commission (SIC) under anti-money laundering laws, creating confusion and potential delays in investigations. Penalties for unauthorized disclosure are severe but may paradoxically deter whistleblowing or reporting of suspicious activities.
The amendments did not address what some legal entities in 2022 considered a loophole: allowing affected parties to object before an urgent matters judge to requests for banking information made by supervisory bodies. Such objections would suspend implementation, potentially undermining the effectiveness of oversight the right to resort to the judiciary is a fundamental right (droit fundamental), and that suspending implementation is standard practice in the Code of Civil Procedure before courts of first instance, appeal, and cassation.
Yet, the big question remains: Are these amendments sufficient? Do they mark a real shift toward building an accountable financial system, or are they merely a soft workaround that skirts the essence of genuine reform? Many observers argue that, despite progress, loopholes and limited retroactivity still undermine the fight against corruption and the restoration of public trust.
Maan Barazy is an economist and founder and president of the National Council of Entrepreneurship and Innovation. He tweets @maanbarazy
The views in this story reflect those of the author alone and do not necessarily reflect the beliefs of NOW
