FinCEN severs access to U.S. Financial System for FBME Bank Ltd

FBME, one of Tanzania’s largest commercial banks, has been cut off from accessing the US financial system on suspicions that the bank has facilitated money laundering, terrorist financing, and organized crime.

The action finalizes a 2014 ruling from the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) naming FBME “a foreign financial institution of primary money laundering concern” under the Patriot Act.

“[I]t demonstrates that the United States will not allow a compromised foreign bank to send dirty funds through the U.S. financial system,” FinCEN director Jennifer Shasky Calvery said in a statement.

The Tanzanian bank from its side commented that FinCEN’s decision “cannot withstand scrutiny. Although the Bank and its advisors made best efforts over the past year to explain the Bank’s AML and operational systems, transactions and activities, the serious factual and legal errors that permeate the supposed ‘final rule’ suggest that it was written by persons who disregarded the relevant submissions along with other information that was readily available to them”. The Bank intends to pursue all available redress to defend itself including by filing suit against the US Treasury Department in federal court in Washington DC.

On July 18 2014, the Central Bank of Cyprus issued a resolution order and placed the FBME (Federal Bank of the Middle East), branches in Cyprus under its control, following a report from the FinCEN. The intervention followed a notification report by the United States Treasury Department -Financial Crimes Enforcement Network (FinCEN) has cited the bank as a major money laundering player.

FinCEN’s final ruling strengthens and justifies the actions taken by the Central Bank of Cyprus in handling the situation which stem from the existing national and European legal framework and aim, inter alia, at maintaining financial stability, safeguarding public interest and protecting depositors.

* Our law firm along with international law firm DLA Piper provides legal support and represents the Special Administrator of FBME Bank Ltd (Cyprus branch) upon approval by the Resolution Authority of the Central Bank of Cyprus.