Monday, July 28, 2014
BOT takes over the management of FBME bank in the country
A day after the local media reported plans by the Central Bank of Cyprus (CBC) to look for buyers to take over branches of Tanzania based Federal Bank of Middle East (FBME), the Bank of Tanzania (BoT) has officially announced its intention to take over the bank’s operations with immediate effect, it has been learnt. BoT confirmed this in a statement it issued yesterday in Dar es Salaam which clearly stated that, its decision is in line with the provisions of Sections 56(1)(g)(iii) of the banking and financial institutions Act 2006. According to the BoT, the objectives underlying this decision are to ensure safety of customers’ deposits and safeguard the stability of entire banking system. However, the statement is further quoted as saying that, “under the BoT management, the public has been assured that the bank’s operations will continue smoothly”. Earlier the report published by by a Lebanese premier English paper, The Daily Star, said that the Central Bank of Cyprus (CBC) was looking for buyers to take over branches of the troubled financial institution valued at $2 billion. The move comes nearly a week after Cyprus took over the control of the financial house following grave allegations leveled 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.
An investigative piece if information by the US government earlier disclosed that, the FBME Bank Ltd, formerly known as Federal Bank of the Middle East, Ltd, is a financial institution of primary money laundering. The Bank was alleged to have 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 mid this week 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.