Tanzania will not close bank blacklisted by the US

Technicians making final touch ups at an FBME bank branch in Dar es Salaam. A report from the US Treasury says FBME Bank has been linked to many high risk transactions, including one involving a Hezbollah financier. Photo/LEONARD MAGOMBA 

By Business Daily reporter

In Summary

• A US financial crime unit report says FBME Bank has been linked to many high risk transactions, including one involving a Hezbollah financier.

Tanzania’s central bank has issued a statement saying it has no plans to take over the operations of FBME Bank or to close its branches in the country. This follows a United States government report that declared the Lebanese-owned bank a "primary money laundering concern" for its activities in Cyprus.

 

On Friday, the Cypriot central bank decided to seize the privately-held bank’s branch in Nicosia even as FBME’s owners expressed shock at US claims.

“The Bank of Tanzania has not taken over the operations of FBME Bank in Tanzania and (the bank) continues to operate normally,” the notice reads.

Regulators in Tanzania said they were responding to reports on the internet and social media saying that FBME Bank of Tanzania, which was blacklisted by the US Treasury on Thursday, would be closed to the public.

A US financial crime unit report says FBME Bank has been linked to many high risk transactions, including one involving a Hezbollah financier.

READ: Tanzanian bank denies links to terror, money laundering

The Financial Crimes Enforcement Network of the US Treasury says FBME has facilitated a "substantial volume" of money laundering through the bank for many years and had systemic failures in its controls. The bank has four branches in Tanzania and holds TShs400 million ($240,000) in customer deposits.

However, US regulators say it does most of its business in Cyprus. Its total asset base is about $2.7 billion (TShs4.5 trillion).

FBME Bank (formerly Federal Bank of the Middle East) was established in Nicosia, Cyprus, as a subsidiary of the Federal Bank of Lebanon SAL. In 1986, it changed its country of incorporation to the Cayman Islands.

In 2003, FBME Bank ended its 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.

The bank is co-owned by Ayoub F Saab and Fadi M Saab (50 per cent each).