Tanzanian bank denies links to terror, money laundering

Corporate News

A woman in Cyprus takes part in protests over a financial crisis that required an international bailout: Tanzanian headquartered FBME Bank came under scrutiny for circumventing currency controls set after the crisis. PHOTO/AFP 

By REUTERS and BDAfrica.com reporter

In Summary

• The United States Treasury has blacklisted a Tanzanian-based bank over money laundering in Cyprus.
• Bank was involved in 4,500 suspicious wire transfers through correspondent accounts, US says.
• FBME Bank, which is owned by a Lebanese family, said it was "shocked" at the allegations.

The United States Treasury has labelled a Tanzanian-based bank with Lebanese roots a "primary money laundering concern" over its activities in Cyprus.

 

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

The move prompted Cyprus's central bank to take control of the bank’s Cypriot branch on Friday. The Central Bank of Cyprus invoked authority given to it by law to assume the administration of operations of the branch in Nicosia.

FBME, which is headquartered in Tanzania, said it was "shocked" at the allegations, which the bank said it was not given an opportunity to address.

"We are running a clean operation on the island," FBME chairman Ayoub Farid Saab told local media in Lebanon at the weekend.

In a statement on its website, FBME said it had commissioned the German division of an international accountancy firm to carry out a detailed assessment into its operations and practices over the past two years. FBME, it said, was found in compliance with applicable rules on anti-money laundering regulations of both Cyprus and the European Union.

"FBME Bank welcomes the involvement of its regulator, is cooperating fully with it and reiterates its absolute continued commitment to full compliance with applicable laws and regulations," the bank said.

A spokeswoman for Cyprus's central bank declined comment.

The Financial Crimes Enforcement Network (FinCEN) of the US Treasury said on Thursday that FBME had facilitated a "substantial volume" of money laundering through the bank for many years and had systemic failures in its controls.

Although the bank is headquartered in Tanzania, most of its activities are carried out through its Cypriot branches, FinCEN said. The bank is co-owned by Ayoub Farid Saab (50 per cent) and F M Saab (50 per cent) and has branches in Cyprus and Tanzania and a representative office in Moscow.

FinCEN said a large shell company customer base facilitated international terrorist financiers and international narcotics trafficking, including the evasion of sanctions on countries such as Syria.

"FBME solicits and is recognized by its high-risk customers for its ease of use," FinCEN said in its report.

The report, dated July 15, listed a number of suspicious transactions and legal violations over the last decade, including allegations that a bank customer “received a deposit of hundreds of thousands of dollars from a financier for Lebanese Hezbollah.”

“FBME was involved in at least 4,500 suspicious wire transfers through US correspondent accounts that totaled at least $875 million between November 2006 and March 2013,” the report said.

Cypriot authorities found FBME's compliance with Cypriot banking laws and anti-money laundering regulations deficient on at least two occasions, the US agency said. It also said the bank came under scrutiny by Cypriot authorities in 2013 for allegedly circumventing currency controls, imposed by Cyprus in the wake of an international bailout in March of that year.