Cyprus’s central bank has suspended efforts to find a buyer for branches of a Tanzania-based bank, pending the outcome of legal action seeking to block the sale, it said on Saturday.
Cypriot regulators seized control of two branches of the FBME bank in July, after a department of the U.S. Treasury alleged the bank engaged in money laundering.
FBME has denied the allegations and accused Cypriot authorities of a “hostile takeover” to seize control of the bank and its assets. The Cypriot central bank took effective control of the FBME branches on the island on July 21 with the stated intent of finding a buyer.
But it said it would not proceed with the matter until a verdict from the island’s courts, following a legal petition by FBME challenging the central bank’s move. A report from the U.S. Treasury’s Financial Crimes Enforcement Network described the bank as a “primary money laundering concern”.
On its website, FBME said its lawyers have been engaged with U.S. authorities. The bank also said it was vetted by Cypriot authorities this year, without being informed of anything untoward.
It also appointed external consultants to conduct anti-money laundering audits in 2013, it said. The central bank refused to discuss why it almost immediately moved to take over the bank branches after the U.S. released its report on July 17.
The management of Lebanese owned FBME Bank has been taken over by Bank of Tanzania (BoT), to secure local clients savings and smooth running of the troubled bank.
In a statement issue in the city on Friday, BoT said following management takeover of FBME in Cyprus where it transacts about 90 per cent of its business, the Central Bank has decided to take over the foreign bank to ensure stability.
“In view of the decision by the Central Bank of Cyprus (CBC) to takeover FBME Bank’s branch in Cyprus and the effects these developments may have on the banking system in Tanzania, the general public is hereby notified that Bank of Tanzania, in compliance with provisions of Section 56(1)(g) (iii) of the Banking and Financial Institutions Act, 2006, has taken over the management of FBME Bank Tanzania effective 24th July, 2014,” the BoT statement said in part.
CBC took over FBME management last week immediately after United States Treasury accused the Lebanese owned bank of engaging in money laundering activities. Last Monday, CBC started looking for buyers to take over branches of Tanzania-based bank FBME.
Originally published on Daily News Tanzania.
