FBME sues Cyprus after revocation of its license

The Federal Bank of the Middle East(FBME) has said that it is taking legal action contesting the revocation of the license of the bank's Cypriot branch by the Central Bank of Cyprus(CBC), a statement said on Tuesday.

FBME said the license revocation was communicated to the bank in a Central Bank of Cyprus nine-page document on Monday.

"CBC's illegal measures against FBME, of which this is the latest, have led to lawsuits in Cyprus and abroad, exposing the Cyprus authorities to a spiral of claims for substantial damages and compensation", FBME's statement said.

The Central Bank of Cyprus had imposed a fine of 1.2 million euros(1.31 million U.S. dollars) on FBME earlier this month, accusing it of omitting to comply with the provisions of laws and EU regulation against laundering revenues from illegal activities and failing to provide information about the payers in cases of money transfers.

The Central Bank said the omissions resulted from an audit conducted in 2014 and concern the degree of compliance by the bank's branch in Cyprus with the legal and regulatory framework on the prevention of money laundering and financing of terrorism.

The Bank was founded in Cyprus in 1982 as a subsidiary of the Federal Bank of Lebanon SAL, as the property of Lebanese brothers Ayoub-Farid Saab and Fadi Saab.

It later moved to the Cayman Islands before establishing its head office in Tanzania, where it opened a second branch.

Its troubles began after Cyprus and Tanzania took over both branches of the bank and placed them under resolution.

This followed a report by the United States Treasury Financial Crimes Enforcement Network in July 2014, to the effect that the bank was involved in money laundering and financing terrorist activities.

Cypriot authorities have put up for sale the local branch of FBME, with Bank of Cyprus, the islands largest lender, reportedly interested in its purchase. Endit