FBME Bank vows to fight sanction by US

By The guardian reporter

FBME Bank

 The Tanzanian-based FBME Bank has said it will challenge fresh accusations by the United States Treasury Department that it is continuing to serve as a hub for illicit financial activity.

 

The US Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a final rule on Friday last week to the effect that the bank’s anti-money laundering compliance efforts “remain inadequate to address the risks” it poses.

 

FBME therefore “continues to facilitate illicit financial activity,” according to the new FinCEN rule imposed under section 311 of the US Patriot Act. This in effect cancels an injunction granted by a US judge in November against FinCEN’s original rule issued against the bank earlier last year.

 

When granting the injunction, the judge gave FinCEN until the end of March 2016 to decide on a new final rule, which goes into effect 120 days after it is published in the US Federal Register.

 

But in a statement, FBME – which has its headquarters in Dar es Salaam - said the rule isn’t, in fact, final, because it’s still subject to a preliminary injunction by a federal court, and the bank “has every right and intention” to challenge its legality.

 

“We have every intention of challenging FinCEN’s latest ruling as procedurally and substantively defective, and [we] look forward to our day in court,” the bank said in its emailed statement.

 

It said FinCEN’s new rule “repeated the same mistakes and returned to the same flawed evidence” as the original, adding:

 

“We think it is all too obvious at this point that FinCEN has stubbornly committed itself to a foreordained conclusion and [it] won’t let evidence, facts, law, public comments or fundamental fairness stand in the way of that.”

 

A FinCEN spokesman declined to comment, deferring to the US Department of Justice, which didn’t immediately respond to a request for comment. 

 

The allegations against FBME date back to July 2014 when FinCEN said the bank was being used by customers involved in terrorist financing, transnational organized crime and sanctions evasion. 

 

FBME had shown a “willingness to service the global criminal element,” FinCEN said at the time. 

A year later, FinCEN issued a final rule effectively cutting the bank off from the US financial system. FBME sued, saying the rule amounted to a death sentence for the bank, and it won the injunction a day before that rule was set to go into effect.

 

FBME, though, isn’t the only bank challenging FinCEN on its use of section 311 of the Patriot Act. The Banca Privada d’Andorra has opted to continue its lawsuit against FinCEN even after the network withdrew its findings against that bank.

 

“They want their reputation, locally and globally, to be restored,” a lawyer for Banca Privada d’Andorra’s main shareholders told the Risk & Compliance Journal earlier in March.

 

The Bank of Tanzania (BoT) placed FBME under statutory management in 2014 after the US Treasury first prohibited American financial institutions from dealing with the bank.

 

The bank was established in Nicosia in 1982 as a subsidiary of the Federal Bank of Lebanon, then four years later it changed its country of incorporation to the Cayman Islands, before relocating its headquarters to Tanzania in 2003. 

 

FBME also maintains a representative office in Moscow. The bank is reportedly owned by two Lebanese brothers.