U.S. Assistant Secretary for Terrorist Financing Daniel Glaser arrived in Beirut today to discuss Lebanon's adherence to international sanctions on the Syrian regime. Since the start of the Syrian uprising, the U.S. and E.U. have been rounding up sanctions against the Syrian regime and freezing the assets of major Syrian officials. This has reportedly caused a huge inflow of Syrian funds into Lebanese banks, prompting U.S. officials to request of their Lebanese counterparts that they not accept inflows from theses Syrians who have been blacklisted.

On a visit that includes Moscow, Amman and Beirut, Glaser met separately with PM Mikati, Central Bank Governor Riad Salameh and Finance Minister Mohammad Safadi today. Reports indicated that Glaser warned the Lebanese officials that they could soon feel the weight of U.S. sanctions against Syria. Diplomats are also urging Lebanese officials to distance the Lebanese economy from the Syrian economy.

However, there is no clear indication of the size or direction of Syrian funds in Lebanon. The Financial Times reported last week that members of the Syrian business community are looking to Lebanon as a safe haven for their assets. Earlier this year, there were reports of an inflow of financial assets from Syrian businessmen to Lebanon. Many reports claimed that senior Syrian officials have smuggled an estimated $20 billion to the Lebanese banking sector. Accoriding to Now Lebanon, "One Syrian businessman said that cash is being smuggled across Lebanese-Syrian border 'every day, every hour,' and another source claimed that Syrian money is being stored in the 'grey economy' that has been  existing between the Beirut and Damascus for a long time."

The Lebanese bankers dismissed those reports as rumors, claiming that any such behavior would attract the scrutiny of the Special Investigative Committee of the central Bank. Makram Sader, Secretary General of the Association of Banks in lebanon, said that there was indeed signs of the spilling of Syrian money in Lebanon but that the figures  were exaggerated. Central Bank governor Salameh refuted the reports, saying that in fact, Lebanese deposits grew less in the first eight months of 2011 (5.4 percent) than in 2010 (7.3 percent).

The one channel they do not have control over, one banker told the Lebanese Daily Star, is smuggling through the Lebanese-Syrian borders. The Financial Times reported that last month, officials intercepted over $100,000 worth of Syrian pounds being smuggled across the Syrian-Lebanese border.

On PM Najib Mikati's visit to London last week, he was reportedly questioned about Lebanon's adherence to the sanctions on Syria issue. The international community has made it clear that Lebanon should respect its international obligations, not dealing with Syrians who are blacklisted and ensuring that the cabinet funds the STL for Lebanon. Whether Lebanon will be able to respect both demands remains to be seen.