Bank of Tanzania instructs FBME Bank to withdraw from appeal against FinCEN (Update-1)

1

(Adds background in ninth paragraph)

By Stelios Orphanides

Tanzania’s FBME Bank Ltd, the lender US authorities banned from accessing the US financial system, has withdrawn from a joint appeal against the decision citing instructions from the African country’s supervisor leaving the holding company as the single appellant, one of their lawyers said.

The appeal challenges the final rule of the US Financial Crime Enforcement Network (FinCEN), a division of the US Treasury, which in March 2016 prohibited US banks from opening and maintaining correspondent accounts with FBME Bank citing money laundering irregularities, and comes after a US court denied a motion for stay pending appeal 13 months later.

“On October 3, 2017, the Bank of Tanzania which is the central bank of Tanzania, suddenly instructed undersigned counsel to withdraw FBME Bank from this appeal,” lawyer Derek Schaffer of the of the Washington DC office of Quinn Emanuel Urquhart & Sullivan told the Court of Appeals in a letter on the same day. “That instruction comes as a considerable surprise at this stage of this proceeding (particularly in light of the counsel’s regular reporting and confirmation that FBME Bank was and should be continuing with the appeal) but is controlling as to FBME Bank”.

“The withdrawal of FBME Bank does not affect Appellant FBME Limited, which is the holding company that owns 100 per cent of FBME Bank,” said Schaffer. “FBME Limited has been a plaintiff in this action from the inception of the lawsuit. It is owned by the Saab family and is not controlled by the Bank of Tanzania.

Schaffer said that the bank’s counsel is “currently analysing the status of FBME Ltd as the sole remaining appellant and will report promptly if any additional action is appropriate for purposes of this appeal”..

FBME Bank operated a branch in Cyprus, FBME Bank Cyprus Ltd that had its licence revoked in December 2015, almost one-and-a-half years after the Central Bank Cyprus put the bank under administration and subsequently resolution after FinCEN described the bank as “a financial institution of primary money laundering concern”. In April last year, the Central Bank of Cyprus triggered the deposits guarantee scheme and is currently appealing a first instance court ruling which rejected its application to appoint a liquidator. Bank of Tanzania also decided to liquidate FBME Bank, which has customer deposits in excess of €1.3bn, and has applied for the recognition of the liquidator also in Cyprus.

Schaffer said that FBME Bank’s decision to leave the appeal comes after the Tanzania-based lender was instructed to do so by the Bank of Tanzania, the African country’s bank supervisor which in May ordered the liquidation of the bank and withdrew its banking licence.

“Undersigned counsel has conferred with counsel for the (US) government regarding the withdrawal of FBME Bank,” the US lawyer continued. “Counsel for the (US) government stated that the government takes no position on the issues addressed”.

The owners of the holding Cayman Islands company, which was struck off last year, are Lebanese brothers Ayoub-Farid Michel Saab and Fadi Michel Saab.

Schaffer and a Cypriot lawyer of the Saabs were not immediately available for comment.

Share.

About Author

Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • Bruno De Bonis

    As usual it’s the small guy that gets squashed first. The crooks continue to live a life of luxury off the back of the small man that has worked hard for the little he has. This is a mark of shame on all involved, The Owners of the FBME, the bank of Cyprus, The bank of Tanzania, and FinCem who all ignored the hard work of the clean money deposited on trust in the banking system. Shame on you all. My 45k euro was hard earned under 50Deg sun in the middle east.