By Stelios Orphanides
FBME Bank, the Tanzania-based lender which had its licence for its Cyprus unit revoked by the Central Bank of Cyprus (CBC), said the supervisory authority applied double standards by imposing a “light fine” on Hellenic Bank for failing to comply with anti-money laundering regulations.
“A basic tenet of democracy is that all stand equal before the law; everyone is entitled to fair treatment according to the same rules,” FBME said in an emailed statement on Wednesday. “Yet that tenet is now being violated in Cyprus, quite obviously and grossly. It is impossible to fathom how and why two such apparently similar sets of accusations – the first against FBME in 2014 and the second in 2016 against Hellenic Bank for misdemeanours that go back two years and longer – should yield such profoundly different treatment”.
“And it is tougher still to understand why it is that FBME should be facing the death penalty while Hellenic gets off with a light fine, even though the accusations against the former are questionable at best, while those against the latter are incontestable,” the FBME statement said.
CBC fined FBME last December €1.2m citing the bank’s failure to comply with anti-money laundering and terrorist financing legislation and subsequently revoked the banking licence of FBME Bank Ltd (Cyprus Branch). The Cyprus branch of FBME was put in administration and subsequently in resolution in July 2014 by the CBC, after the Financial Crime Enforcement Network (FinCEN), a division of the US Treasury described the bank as “of primary money laundering concern” with links to Hezbollah, which is considered a terrorist organisation by the US and EU.
FinCEN banned American banks from opening and maintaining correspondent accounts with FBME which denies the allegations and decided to challenge the US and Cyprus authorities’ decisions in the courts. In April, the CBC ordered the liquidation of the FBME Cyprus branch.
The CBC fined Hellenic Bank, the third largest Cypriot lender, €1.1m after a September 2014 investigation found omissions or weaknesses in its due diligence and customer identification practices. It had failed to create detailed customer business profiles and to monitor transactions. The bank supervisor said that the fine did “not constitute identification of incidents of suppression of proceeds from illegal activities” and offered the bank a 15 per cent discount if it agreed to pay the fine before July 20.
“Also silent on the Hellenic Bank case is FinCEN,” FBME said. “Observers of FBME’s case will note that it was FinCEN that sparked the allegations in July 2014 against FBME, only to refuse to disclose the evidence supposedly supporting its accusations. As things stand there is no available explanation for why FinCEN has failed to act in the case of Hellenic Bank and its acknowledged anti-money laundering deficiencies, even while FinCEN strives to impose the harshest possible sanction against FBME Bank without any discernible basis”.
FBME added that the Central Bank of Cyprus failed to provide evidence justifying its “draconian measures” against it. “It is also important to point out that the assumption of guilt made by the Central Bank of Cyprus against FBME is unsupported by various investigations conducted by international forensic accountants”.