The reason for this move, it said, was to “ensure safety of customers’ deposits and safeguard the stability of the entire banking system”.
This follows the decision of the Central Bank of Cyprus to place two branches of FBME Bank under its supervision following a statement from Financial Crimes Enforcement Network of the US Treasury calling the bank “a primary money laundering concern”.
FBME Bank first established its Nicosia, Cyprus, operations as a subsidiary of the Federal Bank of Lebanon in 1982, but in 1986 changed its country of incorporation to the Cayman Islands.
In 1993, it established a representative office in Moscow, and in 2002 terminated its banking presence in the Cayman Islands and established its parent company and operational headquarters in Tanzania. At the same time, its Cyprus banking operations became a branch of FBME Bank, Tanzania.
Last month, FBME issued a statement saying that it was “shocked by the content of the US Department of the Treasury notice relating to the Bank, dated 15 July, that sets out unexplained allegations of weak AML controls. The Bank confirms that it had no prior notification of this announcement nor has it had the opportunity to comment on or refute the various allegations set out in it.”
It added that as a result of the financial uncertainty in Cyprus in the past two years, it commissioned a detailed assessment by "the German office of a leading international accountancy firm" into its operations and practices, which found that its services were compliant with applicable AML rules of the Central Bank of Cyprus and the European Union.
