FBME Bank Issues and US Financial System Limitations

In 2014, the US government seized the assets of FBME Bank, a bank based in Cyprus, citing serious concerns about money laundering and terrorism financing. This event highlighted the limitations of the US financial system in detecting and preventing illicit activities.

The US Department of Justice alleged that FBME Bank had allowed its customers to launder millions of dollars in illicit funds. This was due in part to the bank's lax anti-money laundering policies and procedures.

The seizure of FBME Bank's assets by the US government was a significant blow to the bank and its customers. It also raised questions about the effectiveness of the US financial system in preventing illicit activities.

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FinCEN, the U.S. Department of the Treasury's Financial Crimes Enforcement Network, issued a final rule against FBME Bank Ltd. in 2014, imposing special measure five against the bank.

This measure prohibits U.S. financial institutions from opening or maintaining correspondent accounts or payable through accounts for or on behalf of FBME.

The final rule was finalized after a 60-day comment period, during which FinCEN received information from various sources, including public comments.

In 2014, the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) deemed FBME Bank Ltd. a primary money laundering concern.

The bank was found to be used by its customers to facilitate money laundering, terrorist financing, transnational organized crime, fraud, sanctions evasion, and other illicit activity internationally and through the U.S. financial system.

FBME Bank Ltd. had systemic failures in its anti-money laundering controls that attracted high-risk shell companies.

The bank performed a significant volume of transactions and activities that had little or no transparency and often no apparent legitimate business purpose.

FinCEN imposed "special measure five" against FBME Bank Ltd. in 2014, prohibiting U.S. financial institutions from opening or maintaining correspondent accounts or payable through accounts for or on behalf of the bank.

This measure was taken to protect the U.S. financial system from the bank's illicit activities.

FinCEN Director Jennifer Shasky Calvery stated that the finalization of this rule is significant, demonstrating that the United States will not allow a compromised foreign bank to send dirty funds through the U.S. financial system.

The final rule was published on July 17, 2014, and was the result of a careful and deliberative review of all available information.

About 6500 depositors have a total of around 1.6 billion EURO blocked with the bank since its banking license was suspended in July 2014.

The Central Bank of Cyprus took over FBME's Cyprus branch for alleged involvement in money laundering schemes.

On June 29, 2023, a liquidation order was issued for FBME Bank Cyprus LTD, allowing depositors to recover their blocked funds.

The Nicosia District Court ordered the liquidation of the branch based on an agreement between the Central Bank of Cyprus and the Deposit Guarantee Board of the United Republic of Tanzania.

Mr. Petros Ioannidis was appointed as an independent liquidator of the branch.

To recover their blocked funds, depositors should submit a claim to the liquidator with required specific details about their blocked funds, including account information, balances, and supporting documentation.

The Liquidator's instructions regarding the steps and procedures should be followed regarding the submission process and any additional documentation required.

As a depositor, it's essential to act quickly and follow the liquidator's instructions to ensure a smooth recovery process.

Lawyers with experience in bank insolvency procedures can assist depositors in submitting their claims and following up with the appointed Liquidator and the Central Bank of Cyprus.

The Bank of Tanzania took a serious step against FBME Bank in 2014, deeming it a money-laundering risk after a US report highlighted concerns.

This decision was made after an investigation by the US government into supposed money-laundering activities.

In 2012, FBME Bank was regarded as the largest bank in Tanzania, with a significant asset base of $2 billion.

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