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Appeal against FBME US ban runs out of appellants

By Stelios Orphanides

A US court denied an emergency joint motion filed by the lawyer of the dissolved Cayman Islands-based FBME Ltd on Thursday to keep proceedings in abeyance, effectively putting an end to the appeal filed by the owners of FBME Bank Ltd against a first instance ruling banning the bank from the US financial system.

The US Court of Appeals for the District of Columbia “ordered that the emergency joint motion be denied,” it said a day later in a statement obtained by the Cyprus Business Mail. “This case remains scheduled for oral argument on October 12, 2017. It is further ordered that if the appellant is not prepared to proceed with the oral argument as scheduled, then appellant should show cause why this appeal should not be dismissed”.

The rejection of the joint motion that sought to have the proceedings on hold for seven days, may put an end to the appeal which is running out of appellants unless the court agrees to accept the owners of FBME Ltd as appellants.

“Under Cayman law, a company struck off is effectively dissolved and cannot sue or be sued,” said lawyer Derek Shaffer of Quinn Emanuel Urquhart & Sullivan law firm, representing FMBE Ltd in the October 5, emergency motion.

While the FBME Ltd’s owners are seeking to have FBME Ltd reinstated which would ultimately mean that it had never been struck off, the process could take up to eight weeks, Shaffer said. “FBME Ltd intends to move to substitute its shareholders as additional plaintiffs-appellants. The status of FBME Ltd and the question whether other parties should be added may raise new questions regarding the status of this appeal”.

On Oct. 3, Shaffer informed the appeals court that the Bank of Tanzania which supervises FBME Bank Ltd, the only other appellant in the case, instructed that the lender should withdraw from the joint appeal.

On Friday, the appeals court “further ordered the supplemental briefing schedule and format remain in effect. The parties are directed now to address the standing and mootness questions in light of the emergency joint motion filed October 5, 2017 and the October 3, 2017 letter”.

FBME Bank and FBME Ltd challenged the March 2016 final rule of the US Financial Crime Enforcement Network (FinCEN), a division of the US Treasury, banning US banks from opening and maintaining correspondent accounts with FBME Bank which it described as “a financial institution of primary money laundering concern”.

Almost six months ago, a US court declined a motion for stay pending appeal.

Until Monday afternoon, Shaffer and one of the Cyprus-based lawyers representing FBME Bank and its owners, had not responded to requests for comment sent on Thursday.

The Central Bank of Cyprus fined the Cyprus branch of FBME Bank in December 2015 for failing to adhere to the provisions of the anti-money laundering and terrorist financing law. In the same month, it also revoked the licence of its branch. The central bank placed FBME Bank Cyprus under administration and subsequently under resolution after FinCEN published a damning report about the bank.

The Bank of Tanzania withdrew the licence of the parent bank in May and ordered its liquidation. The owners of FBME who deny any wrongdoing have resorted to the International Chamber of Commerce arbitration court in Paris seeking up to €1.5bn in damages from the Republic of Cyprus.

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