Al-Qard Al-Hassan Operates in a Legal Grey Zone

Al-Qard Al-Hassan, formally registered as a charitable association, has increasingly assumed the role of a parallel financial institution in Lebanon since the country’s economic collapse began in late 2019. As the banking sector imploded and depositors lost access to their savings, the organisation stepped into an institutional vacuum. While its services address real needs in a context of state and financial failure, its growing footprint raises serious legal and systemic concerns.

Founded during Israel’s 1982 invasion of Lebanon, Al-Qard Al-Hassan was registered in 1987 with the Ministry of Interior as a non-profit association. It remains legally governed by the 1909 Ottoman Law on Associations, which restricts activities to non-commercial, non-profit purposes. Yet in practice, the organisation regularly grants loans and manages gold-backed guarantees—activities that go well beyond its declared legal mandate.

Banking functions without a banking licence

Al-Qard Al-Hassan primarily provides dollar-denominated loans secured by gold deposits, whose value is assessed in advance with an added risk margin. Since 2020, it has also operated ATMs allowing withdrawals in Lebanese pounds and foreign currencies. These operations fall outside the prudential rules applied to licensed banks and raise questions about compliance with Lebanon’s foreign exchange and currency circulation laws.

Under Lebanon’s 1963 Code of Money and Credit, the collection of funds, the granting of credit and the management of payment instruments are reserved exclusively for institutions licensed by the central bank, Banque du Liban. By performing these functions without authorisation, Al-Qard Al-Hassan operates in direct contradiction with the country’s banking legislation.

In 2021, Banque du Liban responded by issuing Circular No. 170, banning all Lebanese banks and financial institutions from engaging—directly or indirectly—with Al-Qard Al-Hassan. The circular prohibits account openings, transfers, payment services and any similar transactions.

While the measure implicitly acknowledges the organisation’s systemic relevance, it stops short of placing it under formal supervision. As a result, Al-Qard Al-Hassan remains active, but entirely outside the regulatory perimeter.

The emergence of “Joud”

This legal ambiguity has deepened with the emergence of a new entity, “Joud,” widely seen as a rebranding and structural fragmentation of Al-Qard Al-Hassan’s operations. Registered in 2025 in the Baabda and Nabatiyeh commercial registries, Joud reportedly conducts the same financial activities under a different legal identity.

According to available information, the restructuring was designed internally to reduce legal exposure and complicate enforcement efforts. While the name change preserves symbolic continuity, it creates a formal legal break that fragments liability and makes judicial action more difficult. Reports indicate that the new entity’s bank accounts are held at Bank Saderat Iran in Lebanon.

No supervision, no depositor protection

Banque du Liban holds exclusive authority over monetary and financial regulation, including licensing, oversight and sanctions. These powers, however, do not extend to Al-Qard Al-Hassan or Joud, which are not subject to central bank circulars governing credit, liquidity or foreign currency operations.

The absence of licensing also places these entities outside Lebanon’s anti-money laundering and counter-terrorist financing framework. Obligations related to customer due diligence, transaction monitoring and suspicious activity reporting—normally overseen by the Special Investigation Commission—do not apply.

A systemic legal failure

From a strictly legal perspective, the assessment is clear: Lebanon’s banking monopoly is being bypassed; central bank supervision is absent; the association’s legal status is incompatible with its activities; transparency and anti-money laundering safeguards do not apply; and depositors enjoy no formal protection.

This case illustrates how a parallel financial actor can expand rapidly within a fragile institutional environment. It also highlights the urgency of reinforcing Lebanon’s legal and regulatory framework to protect savers and prevent further erosion of the country’s already weakened financial system.