Lebanon’s financial sector has been under acute stress since the 2019 collapse. In 2025, building on IMF engagement and mounting domestic pressures, the Lebanese authorities have pushed through a number of high-impact regulatory changes. Below is a summary of the most important ones and what they mean for banks, depositors, and auditors.
Major Regulatory Changes
1. Revision of Banking Secrecy Law
One of the most significant reforms has been the parliamentary passage, in April 2025, of a revised banking secrecy law. IMF+3Reuters+3The New Arab+3
Key features:
- Regulatory bodies and independent auditors are now granted access to banking records covering the past ten years. Reuters+2Middle East Briefing+2
- The law aims to improve transparency, support anti-corruption efforts, and satisfy IMF demands for systemic reform. timep.org+2IMF+2
- The amendment removes certain prior safeguards that had restricted access, broadening the scope of permissible investigations. Nowlebanon+1
This change represents a major departure from Lebanon’s tradition of stringent banking confidentiality and is intended to shore up the credibility of financial oversight.
2. Bank Restructuring / Resolution Authority Law
In mid-2025, Lebanon approved a banking restructuring (“resolution”) law to revamp how failing banks will be treated and supervised. Arab News+4The New Arab+4Arab News+4
Highlights:
- The current Banking Control Commission is to be replaced with a new Bank Restructuring Authority endowed with powers to recapitalize, merge, liquidate, or restructure banks. The New Arab+2Nowlebanon+2
- The law contains around 39 clauses focused on governance, asset divestiture, removal of senior management, and interventions in weak banks. Arab News+1
- Critics, including the central bank governor, warn the law may encroach on central bank independence and lack sufficient conflict-of-interest safeguards. This is Beirut+2Nowlebanon+2
- The IMF has expressed concerns that certain provisions may deviate from international norms. Reuters+1
This restructuring legal framework is intended to facilitate resolution of distressed banking assets and restore depositor confidence, especially for smaller accounts.
3. Foreign Currency Transfer Restrictions (BD 13729)
In July 2025, Banque du Liban issued Basic Decision No. 13729 (BD 13729), introducing further limits on payments from foreign currency accounts held before November 17, 2019. hsfkramer.com
Key points:
- Banks are instructed not to honor withdrawal or transfer requests from accounts held prior to 17 November 2019 unless they fall under regulatory thresholds or have prior BdL written approval. hsfkramer.com
- The decision aims to protect bank liquidity in an environment of deep stress and ongoing legal pressure on banks from depositors seeking foreign-currency access abroad. hsfkramer.com+2Fitch Solutions+2
- Some analysts caution that while the measure may help preserve banking stability, it further worsens depositor trust and deepens the perception of capital control. Fitch Solutions+1
This regulatory intervention formalizes the informal capital control dynamics that have constrained dollar withdrawals for years.
Context & Motivations
These regulatory steps are not isolated; they tie into broader pressures:
- Lebanon has been under an IMF reform program underwriting conditional financial support. IMF+2State Department+2
- The country remains on the FATF grey list due to shortcomings in anti-money laundering and terrorism financing controls, which pressures the government to bolster transparency and regulatory oversight. Nowlebanon+2Middle East Briefing+2
- The 2025 reforms are part of a crucial credibility push: demonstrating that Lebanon can protect smaller depositors, reestablish oversight, and reset the banking sector’s legal foundations. Reuters+3The New Arab+3Global Finance Magazine+3
Implications for Banks, Auditors & Clients
For Banks
- They must develop compliance capabilities to respond to retrospective audits and open-access scrutiny of past transactions.
- The new resolution authority may require banks to defend their governance practices, capital adequacy, and asset quality under more aggressive oversight.
- Foreign currency liabilities and withdrawals will continue to be tightly controlled, constraining liquidity management.
For Auditors & Assurance Providers
- Demand will increase for forensic reviews, transaction tracing, and retrospective assurance over previously opaque activities.
- Auditors may face direct access to banking records under the new secrecy law, but must navigate sensitive confidentiality and legal boundaries.
- Valuation models, impairment assessments, and risk disclosures will be under heightened scrutiny in a restructuring environment.
For Depositors & Clients
- Small account holders grow hopeful for recovery pathways through restructuring provisions.
- But restrictions on accessing foreign currency accounts maintained since 2019 remain a serious limitation.
- Trust in bank safety and recoverability remains fragile until reforms translate into credible execution.
Risks, Challenges & Uncertainties
- Legal and constitutional challenges may arise regarding central bank independence and the separation of powers. This is Beirut+2Nowlebanon+2
- The effectiveness of the restructuring law depends heavily on governance, transparency, and enforcement — weak implementation may erode confidence.
- The divergence between Lebanon’s regulatory design and international best practices (as flagged by the IMF) could limit access to external funding. Reuters+1
- Deposit recovery is a political as much as technical issue: balancing burden-sharing between state, banks, and depositors will test social stability.
Conclusion & Outlook
Lebanon’s 2025 regulatory changes mark one of the most ambitious reform packages in its banking history. The lifting of banking secrecy, the establishment of a resolution authority, and formalization of foreign currency transfer limits all aim toward restoring confidence, unlocking external support, and recalibrating the banking system’s foundations.
Yet, legislative change is only the start. Success will depend on strong institutional execution, balancing depositor fairness and financial stability, and aligning Lebanon’s framework with international norms. For banks, auditors, and depositors alike, the coming months will be a critical test of whether reform rhetoric translates into tangible recovery in a system that has long been under siege.
