The Central Bank of Libya (CBL) sent a letter to the Head of the Audit Bureau, Khalid Shakshak, requesting his approval to start contracting procedures with a specialized company to review dollar trade operations, after the Federal Reserve Bank of New York threatened to suspend transactions with the CBL.
CBL confirmed in its letter dated December 16 that the Federal Reserve Bank will stop all dollar-related operations unless a review mechanism is implemented by a specialized and independent company that is responsible for monitoring dollar exchange operations in accordance with international standards related to combating money laundering and terrorist financing. This review includes data on suppliers and importers, most of which are published monthly on the website of the CBL.
CBL explained that failure to reach an agreement with the Federal Reserve Bank will disrupt all dollar operations, causing significant losses and exposing the CBL to reputational risks among international financial institutions. It also indicated that negotiations with representatives from the US Treasury Department resulted in postponing the implementation of the procedures until Libyan approvals are completed.
CBL said it was seeking to ensure compliance with international requirements and increase transparency in financial transactions, hoping to gain the support of the Audit Bureau to proceed with contracting a specialized company to ensure the continuity of the relationship with the Federal Reserve Bank.
CBL said that it had done everything in its power to dissuade the Federal Reserve Bank from taking this action, the last of which was in a meeting held in Tunis on December 13, in the presence of the Governor, his Deputy, and a number of members of the Board of Directors, in addition to a team from the Federal Reserve Bank and a representative from the US Treasury Department.
"At this meeting, it became clear that the US Treasury Department supports the position of the Federal Reserve Bank, and it was agreed to postpone the implementation of the procedures until the competent Libyan authorities approve the required review mechanism." CBL said.