FBME Exec Says Bank, Accused Of Money Laundering, Was Unfairly Treated

LONDON—FBME Bank Ltd., a Tanzania-based lender accused of money laundering, says it is the victim of a witch hunt.

This summer the bank was putting the finishing touches on a gleaming 5,000-square-meter office in Cyprus, where it does most of its business, when it received two pieces of bad news. In July, the U.S. Treasury Department alleged that FBME was a money-laundering conduit for terrorist financiers and organized-crime figures among others. Then Cyprus's central bank, which is trying to overcome the island's reputation for turning a blind eye to allegations of money laundering, seized FBME's local operations.

FBME isn't happy.

The Cyprus Central Bank's July 21 move "was passed in a flagrantly illegal manner," said Michael Saab, a vice president at FBME, in an interview. "We were doing our business. Lending to small and medium businesses."

The central bank, which is trying to find a buyer for FBME's Cypriot branches, said it seized the operations in order to protect the bank's depositors, who were at risk after international banks largely ceased doing business with FBME due to money-laundering concerns.

FBME has described itself as "shocked" by the U.S. Treasury's allegations. The bank has until Sept. 22 to reply to the allegations and has hired consultants Ernst & Young to review its accounts. Asked whether FBME was engaged in money laundering, Mr. Saab demurred, pending the results of the internal review. "If I said we did or didn't is neither here nor there," he said.

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