Cyprus Mail
Cyprus

Forensic accountants scrutinising FBME transactions

By a Staff Reporter
SPECIALIST FORENSIC accountants from the US offices of international professional services firm Ernst and Young are in Cyprus to initiate an investigation into the anti money laundering policies and procedures of FBME Bank.
The bank said that the investigation is part of its engagement with the US treasury department following the Financial Crimes Enforcement Network (FinCEN) notice of findings, dated July 15.
FBME has a period of 60 days in which to respond to the issues raised in this notice, which has led it to the commissioning of this independent investigation by Ernst and Young, USA. The accountants arrived on July 30, but their presence was only announced this week.
FBME said that the investigation will be “thorough, cooperative and in line with requirements provided by the US treasury”.
“The work will have particular reference to FBME’s compliance with Anti Money Laundering and Know Your Customer regulations and best practice guidelines,” the statement read.
Meanwhile, the bank has appointed global legal practice Hogan Lovells in Washington in regard to issues raised by the US treasury department.
FBME bank’s shareholders have called for sufficient time to be allowed for the investigation to address the issues raised by the US Treasury.
At the same time, the Central Bank of Cyprus has started a new probe into the Cyprus branch of FBME, in line with normal regulatory practice.
This follows a recent investigation into the whole financial sector in Cyprus including FBME, conducted on behalf of the Central Bank by international consulting firm PwC between June 17 and July 4.
The findings of this investigation have not been released to either FBME or its shareholders.
The bank added that its financial position is sound and is fully in line with capital adequacy and solvency requirements of the European Central Bank.
At the time of the announcement by the US treasury department its short term liquidity ratio, at 104 per cent, was sufficient to cover deposits.
FBME’s Cyprus branch had been placed under administration by the Central Bank immediately after the FinCEN report was published, and on July 21 issued a decree for the bank’s sale.
FBME considered this move a “hostile takeover” and initiated legal proceedings to contest it.
The CBC-appointed special administrator kept the bank closed for four days – from July 23 to 28. Since July 29 payments have resumed, but the administrator’s approval is required for each transaction.

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