THE Bank of Tanzania (BoT) has revoked the business licence of the Federal Bank of the Middle East (FBME), placing it under liquidation after being accused by the United States government for involvement on money laundering.
According to the BoT statement issued in Dar es Salaam yesterday, the decision has paved the way for regulator to cancel all banks’ operations in the country.
“The Central Bank has discontinued all banking operations of the FBME Bank cancelling its banking business license and placed it under liquidation,” BoT said in the statement. Similarly, the regulator has appointed the Deposit Insurance Board (DIB) as a liquidator.
Every bank and every financial institution which is licensed to carry on banking business in Tanzania is required by law to be a member of the DIB.
The DIB mission is to effectively contribute to the country's financial stability by maintaining public confidence in the financial system through prompt payment of protected depositors to depositors of a failed member bank or financial institutions. The Central Bank put FBME under its surveillance in July 2014 following a report from the US Treasury's Financial Crimes Enforcement Network (FinCEN) describing the bank as a ‘primary money laundering concern’.
The Tanzanian-registered bank mounted a legal challenge against the allegations, but a US court ruled in favour of FinCEN in April, allowing it to shut the bank out of accessing the US financial system.
FBME Bank is registered in the East African country but has been conducting most of its business operations elsewhere, notably in Cyprus.
The bank was accused of laundering money through its Cyprus branch for a failed Indonesian bank, the Russian Mafia, the Lebanonbased Shi’a Islamist group Hezbollah, al Qaeda and a long list of others.
In 1982, FBME Bank established its Nicosia, Cyprus, operations as a subsidiary of the Federal Bank of Lebanon SAL.
In 1986, FBME Bank changed its country of incorporation to the Cayman Islands and its banking presence in Cyprus was transformed to that of a branch of the Cayman