By Jean Christou
FBME Bank on Tuesday issued an advisory to customers given the current situation at the bank.
The central bank took over the branch in July after the US Treasury said Tanzania-based FBME had been deemed a “primary money laundering concern.” Since then there has been a partial unblocking of accounts.
On Tuesday Dinos Christofides Special Administrator of FBME Bank Cyprus Branch said that without access to the SWIFT banking transactions system, the only method currently available for clients to access their funds was by requesting a cheque drawn in their favour.
At the moment, only cheques drawn in euro are available with a daily limit of€10,000, non-cumulative, per customer.
Christofides said in a written statement that the Cyprus branch had experienced a number of severe operational and other problems which had prevented it from servicing its clients.
The July events, he said, had led to FBME’s name being formally or informally cast out by a number of domestic and foreign institutions. To effectively execute a payment instruction, the branch requires the cooperation of several different banks, which could be located in various countries. He said which, and how many banks were used to execute a transaction was not known at the initiation stage.
In the case of non-US based institutions, the decision to cooperate with FBME depended on the internal policies of each institution, domestically and abroad.
“For obvious reasons… there is a clear reluctance by institutions to continue their cooperation with FBME, resulting in significant challenges which affect the branch’s ability to transact in other currencies as well,” Christofides said.
“Therefore, as the banking community appears notably reluctant to carry out normal business with the branch, there are significant risks that transactions will be rejected by one of the several banks involved in executing a transaction, including by the final receiving bank.” He said that even payments initiated but not completed before the July announcement had been rejected and returned.
“Consequently, in order to execute transactions, even under a Special Administrator’s approval, other banks should be willing and able to accept them,” he added.
Christofides said that since his appointment in July his task has been to liaise with a number of domestic and foreign institutions to improve the ability of the branch to commence successful operations the soonest.
In parallel, the branch was striving for the SWIFT system to operate, which will enable it to recommence its efforts to implement customer transactions without the need for cheques, he said.
All inter-branch transactions, which do not require the use of SWIFT or other parties and can be processed internally, continue to be available to clients with no daily limits.
These include transfers between accounts held at the branch in the name of the same customer, to other branch customers, or for currency conversions, for example, clients wishing to convert dollars to euros. Clients are advised to continue contacting the branch.