Foreign Bank Locked Out of US Financial System

(CN) – A federal judge on Friday effectively cut off a Tanzania-based bank from the U.S. banking system, finding that a Treasury Department bureau adequately responded to its issues with data used to deem it a money-laundering concern.

Since 2014, Financial Crimes Enforcement Network, or FinCEN, a bureau of the U.S. Treasury Department, has been trying to penalize Tanzania-based FBME Bank, citing its alleged “willingness to service the global criminal element.”

After three years, the agency finally won a court order on Friday permanently cutting off the bank from the U.S. financial system, a move that FBME characterized in litigation as a “death sentence.”

The bank has vigorously fought FinCEN’s efforts in court, filing for a preliminary injunction after FinCEN published an item in the July 2014 Federal Register saying that FBME actively advertised itself to high-risk shell companies used to finance terrorism and organized crime, evade sanctions and otherwise fund illegal activity worldwide.

The U.S. agency specifically found that FBME had maintained accounts for the head of an international drug trafficking network and a designated Syrian proliferator of weapons of mass destruction, and had facilitated transactions for Hezbollah.

The agency reported at least 4,500 suspicious wire transfers to FBME through U.S. accounts exhibiting indications of money laundering that totaled $875 million between 2006 and 2013.

Last year, U.S. District Judge Christopher Cooper granted the bank a preliminary injunction, ordering to FinCEN adequately respond to FBME’s “significant comments” that the spike in certain transactions should be attributed to the Cypriot financial crisis, not money-laundering activity.

But Cooper lifted the stay on Friday, accepting FinCEN’s explanations for its analysis of the bank’s questionable transactions.

In light of the agency’s supplemental information, “it is now clear that FinCEN’s conclusions did not turn on the 2013–14 period,” Cooper said. “Rather, FinCEN’s various determinations about FBME’s weak AML controls and murky transactions were based on the agency’s analysis of an eight-year period that began well before the Cypriot crisis.”

The judge said the public interest in protecting the U.S. financial system outweighs FBME’s unsupported claim that it will be irreparably harmed absent a continued stay of proceedings against it.

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