Monday, October 2, 2023 | Back issues
Courthouse News Service Courthouse News Service

Foreign Bank Fights|U.S. ‘Death Sentence’

(CN) - A new U.S. Treasury rule is a "death sentence" for a foreign bank, cutting it off from the U.S. financial system without proof of money-laundering claims, FBME Bank claims in Federal Court

FBME Bank filed the complaint Friday in Washington against the Department of the Treasury, Treasury Secretary Jacob Lew, the Financial Crimes Enforcement Network, and FinCEN Director Jennifer Calvery.

Headquartered in Tanzania but operating primarily out of Cyprus, FBME Bank claims that a rule set to take effect in two weeks will put it out of business the same day, Aug. 28.

The rule "will permanently cut off the bank from the U.S. financial system, including U.S. dollar transactions and U.S. correspondent bank accounts," the complaint states. "Because the vast majority of FBME's business consists of U.S. dollar transactions, so the Final Rule will fundamentally impair FBME's business and imperil its survival. Foreign regulators have informed the Bank that they are initiating procedures to liquidate or sell the Bank, citing the Final Rule as justification."

FinCEN, a bureau of the Treasury Department, announced the rule last month after investigating FBME and branded it a "primary money laundering concern."

The bank, formerly known as the Federal Bank of the Middle East, has shown a "willingness to service the global criminal element," FinCEN said in a press release.

FinCEN's investigation found that FBME actively advertised itself to high-risk shell companies used to finance terrorism, organized crime, evade sanctions and otherwise fund illegal activity worldwide.

It noted as an example that Teodoro Nguema Obiang Mangue - the son of the president of Equatorial Guinea - faces corruption claims by the U.S. Justice Department, accusing him of transferring $7.2 million out of his country's treasury via FBME to a British shell company.

FBME characterizes FinCEN's rule as "an adjudication of FBME" that amounts to "a death sentence."

Disputing the bureau's finding that it operates primarily as a money launderer, FBME claims it disproved much of FinCEN's evidence against it.

"This court will find no satisfying explanation for how FinCEN reasoned its way from the record before it to its astonishing conclusion that FBME devotes its business to money laundering," according to the complaint.

While it does not claim a spotless record, "the transactions referred to by FinCEN reflect little more than a series of isolated transactions, all predating 2012, that the bank itself identified and addressed at the time," FBME says.

"Over the course of the bank's long history, no regulatory authority has ever accused, much less convicted, the bank of recurrent anti-money-laundering failures," the complaint continues. "If FinCEN nonetheless has a basis here to impose the maximum penalty under § 311, then banks all around the world must tremble."

FBME seeks a permanent injunction against the rule, alleging violations of the Administrative Procedure Act and the bank's due-process rights.

It is represented by Derek Shaffer with Quinn, Emanuel, Urquhart & Sullivan, and by Peter Spivack with Hogan Lovells.

Categories / Uncategorized

Read the Top 8

Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.