Cyprus Controls Lebanese-Owned FBME over Money Laundering Concerns
The Cypriot Central Bank (CBC) said it has controlled the administration of Lebanese-owned FBME Bank’s operations in Cyprus after the United States Treasury Department blacklisted it over money laundering concerns.
“The Central Bank of Cyprus (CBC) announces that, under the powers conferred by law, starting today (Friday), it has taken over the administration of the FBME Bank branch’s operations in Cyprus,” the CBC said in a brief statement.
On Thursday, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) considered Tanzanian-based FBME Bank Ltd. a "foreign financial institution of primary money laundering concern".
FBME, formerly known as the Federal Bank of the Middle East, is based in Tanzania, but primarily operates in Cyprus since 1982 as a subsidiary of the Federal Bank of Lebanon SAL.
The two banks are part of “Saab's Financial Group," which wasn't named in the U.S. treasury’s report.
FBME is said to promote “itself on the basis of its weak Anti-Money Laundering (AML) controls in order to attract illicit finance business from the darkest corners of the criminal underworld.”
FBME transacts over 90 percent of its global banking business through branches in Cyprus, according to Washington.
FinCEN director Jennifer Shasky Calvery said in a statement earlier this week that FBME promotes itself "on the basis of its weak Anti-Money Laundering controls in order to attract illicit finance business from the darkest corners of the criminal underworld”.
Its declaration as a primary money laundering concern, she added, effectively shuts FBME off from the U.S. financial system and "is a necessary step to disrupt the bank’s efforts”.
“FBME changed its country of incorporation numerous times, partly due to its inability to adhere to regulatory requirements. It has established itself with a nominal headquarters in Tanzania,” said Calvery.
“FBME has taken active steps to evade oversight by the Cypriot regulatory authorities in the recent past,” she added.
The U.S. suspects that FBME facilitates “financial activity for transnational organized crime and Hizbullah.
In June, the U.S. House Foreign Affairs Committee approved unanimously a sanctions bill that prevents any financial and logistic institutions from funding Hizbullah.
The U.S. considers Hizbullah a terror group and accuses Syria and Iran of arming it.
In 2013, Obama renewed a “national emergency” which imposes a freeze on assets of people linked to Hizbullah, stressing that they still “undermine Lebanon's stability.”
In August 2007, President George W. Bush ordered a freeze on U.S. assets of anyone Washington deems to be undermining the Lebanese government.
H.K.
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