Cyprus court rejects bid to block FBME branch sale -central bank

NICOSIA Fri Aug 8, 2014 9:24am EDT

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NICOSIA Aug 8 (Reuters) - A court in Cyprus has rejected an attempt to prevent the sale of local branches of a Tanzania-based bank accused of money laundering by the United States, the island's central bank said on Friday.

Cypriot authorities took over the two local branches of lender FBME 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" of the bank and its assets.

The central bank took effective control of the FBME branches in Cyprus on July 21 with the stated intent of finding a buyer. FBME sought to legally block the move, but a court on Friday rejected its bid for the issuance of a temporary injunction, the central bank said in a statement.

A report by the U.S. Treasury's Financial Crimes Enforcement Network described the bank as a "primary money laundering concern".

Cyprus's central bank said in July it had moved to take over the bank to protect its depositors, since as a result of the U.S. action correspondent banks had frozen FBME's dollar-denominated accounts and suspended transactions.

The specific allegations made in the U.S. report were the subject of a separate investigation, the central bank said.

Earlier this week FBME said its lawyers have been engaged with U.S. authorities, and that a team of U.S. forensic accountants appointed by FBME had arrived in Cyprus on July 30 to carry out checks on its compliance with anti-money laundering rules. (Reporting by Michele Kambas; Editing by Catherine Evans)

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