Under the hammer: $2 billion assets of terror-linked Dar bank to be sold off

WATCHDOG: The Bank of Tanzania (pictured) is investigating US claims linking Dar-based FBME bank to “wire transfers related to suspected shell companies” with ties to terrorists and organized crime. PHOTO | FILE 

By The Citizen Reporter

In Summary

• While FBME Bank is headquartered in  Dar, it transacts over 90 per cent of its global business in its two branches located in Cyprus.
• Data from the BoT show that by the end of 2013, FBME Bank had assets in Tanzania valued at $256 million (Sh431 billion). At the current exchange rate, $1 sells for Sh1,680.
• FBME Bank's twin branches in Cyprus hold an estimated 1.7 billion euros (roughly $2billion) in deposits.

Nicosia/Dar Es Salaam. As the Bank of Tanzania (BoT) places the FBME Bank under surveillance, Cyprus has decided to sell all assets of the troubled financial institution valued at $2 billion, The Citizen has learnt.

According to a report published by a Lebanese premier English paper, The Daily Star, the Central Bank of Cyprus (CBC) is looking for buyers to take over branches of Tanzania-based FBME Bank.

 The move comes nearly a week after Cyprus took over the control of the financial house following grave allegations levelled against it by the US authorities.

While FBME Bank is presently headquartered in Tanzania, it transacts over 90 per cent of its global business and holds over 90 per cent of its assets, in its two branches located in Cyprus.

Data from the BoT show that by the end of 2013, FBME Bank had assets in Tanzania valued at $256 million (Sh431 billion). At the current exchange rate, $1 sells for Sh1,680.

In a dossier entitled, “Notice of finding that FBME Bank Ltd, formerly known as Federal Bank of the Middle East, Ltd, is a financial institution of primary money laundering concern,” the US says:

“FBME facilitated a substantial volume of money laundering through the bank for many years.  FBME is used by its customers to facilitate money laundering, terrorist financing, transnational organised crime, fraud, sanctions evasion, and other illicit activity internationally and through the US financial system.”

In just one year, from April 2013 through April 2014, FBME conducted at least $387 million in wire transfers through the US financial system that exhibited indicators of high-risk money laundering typologies, including widespread shell company activity, short-term “surge” wire activity, structuring, and high-risk business customers.

For instance the US authorities say FBME bank was involved in at least 4,500 suspicious wire transfers through US correspondent accounts that totalled at least $875 million between November 2006 and March 2013.

The Lebanese paper reported yesterday that the move by the Central Bank of Cyprus late on Monday came after allegations by key European Union partners that the island’s once-bloated banking sector had been engaged in laundering money on behalf of some Russian interests.

“The Central Bank of Cyprus, as supervisory authority, recommended resolution measures ... relating to the sale of operations of FBME Bank Ltd, to protect depositors."

"The above actions demonstrate the commitment of the independent institutions of the Republic of Cyprus to safeguard financial stability," Cyprus government spokesman Nicos Christodoulides was quoted by the Daily Star as saying.