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BOT Revoke FBME Banking License And Place It Under Liquidation for Money Laundering

FBME bank Tanzania license revocation

The Bank of Tanzania (BOT) issued a public notice on 5th May 2017, revoking FBME Bank Limited banking business license, placing it under liquidation, and appointing the Deposit Insurance Board (DIB) as a Liquidator effective 8th May 2017.

On July 2014, BOT took over the management of FBME following the Notice of Findings of the USA’s Financial Crimes Enforcement Network (FinCEN) issued on 15th July 2014, identifying FBME as a Financial Institution of Primary Money Laundering Concern.

Since issuance of the Notice, FinCEN and FBME embarked on a court case at the US District Court for the District of Columbia, which was finally ruled in favor of FinCEN on 14th April 2017.

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The court ruling allowed FinCEN to proceed with implementing the Final Rule that effectively bans FBME from accessing the US financial system.

In view of this latest development, BOT in exercising its powers conferred upon it under the provisions of Sections 58(2)(a), 11(3)(i), 61(1) and 41(a) of the Banking and Financial Institutions Act, 2006, has discontinued all banking operations of FBME Bank Limited; revoked its banking business license; placed it under liquidation; and appointed the Deposit Insurance Board (DIB) as a Liquidator from the 8th of May 2017.

The bank was founded in 1952 in Lebanon. In 1982 Federal Bank of the Middle East was established in Cyprus as a subsidiary of the Federal Bank of Lebanon. In 1986 Federal Bank of the Middle East 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 Islands entity. Since 1993 it has maintained a Representative Office in Moscow.

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In 2003, Federal Bank of the Middle East terminated its banking presence in the Cayman Islands and established its parent company and operational headquarters in Tanzania. At the same time, its Cyprus operations became a branch of Federal Bank of the Middle East, Tanzania.

As of September 2013, FBME was the largest commercial bank in Tanzania, with a total asset base valued at approximately US$2.716 billion (TZS:4.4 trillion), with shareholders’ equity of approximately US$179.63 million (TZS:291 billion).

The shares of stock of FBME Bank are owned by Ayoub-Farid M Saab (50%) and Fady M Saab (50%).

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