(Adds comment from the bank)
NICOSIA, July 18 Cyprus's central bank took
control of the Cypriot branch of a Tanzanian-based bank on
Friday, a day after the United States called it a "financial
institution of primary money laundering concern".
The Central Bank of Cyprus said that, acting under the
authority given to it by law, it had assumed the administration
of operations of the FBME Bank branch on the island from Friday.
FBME, which is headquartered in Tanzania, said it was
"shocked" at the allegations, which the bank said it was not
given an opportunity to address.
It rebuked money laundering allegations. It said it had
commissioned the German division of an international accountancy
firm to carry out a detailed assessment into its operations and
practices over the past two years. FBME, it said, was found in
compliance with applicable rules on anti-money laundering
regulations of both Cyprus and the European Union.
"FBME Bank welcomes the involvement of its regulator, is
cooperating fully with it and reiterates its absolute continued
commitment to full compliance with applicable laws and
regulations," the bank said in an announcement posted on its
A central bank spokeswoman declined comment.
The Financial Crimes Enforcement Network (FinCEN) of the
U.S. Treasury said on Thursday that FBME had facilitated a
"substantial volume" of money laundering through the bank for
many years and had systemic failures in its anti-money
Although the bank is headquartered in Tanzania, most of its
activities are carried out through its Cypriot branch, FinCEN
FinCEN said a large shell company customer base facilitated
international terrorist financiers and international narcotics
trafficking, including the evasion of sanctions on countries
such as Syria.
"FBME solicits and is recognized by its high-risk customers
for its ease of use," FinCEN said in its report.
Cypriot authorities found FBME's compliance with Cypriot
banking laws and anti-money laundering regulations deficient on
at least two occasions, the U.S. agency said.
It also said the bank came under scrutiny by Cypriot
authorities in 2013 for allegedly circumventing currency
controls, imposed by Cyprus in the wake of an international
bailout in March of that year.
It was not clear how long the Cypriot branch of the bank
would be under central bank management. The legal statute
invoked by authorities says "as long as the central bank deems
(Reporting by Michele Kambas; Editing by David Evans, Pravin
Char and Lisa Shumaker)