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.
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