Tanzania takes control of FBME, accused of money laundering

DAR ES SALAAM/NICOSIA, July 25 (Reuters) – Tanzania’s central bank said on Friday it had taken over the management of a bank accused by the U.S. government of large-scale money laundering.

The decision comes after the Central Bank of Cyprus (CBC) placed two branches of FBME Bank under its control following a report from the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) describing the bank as a “primary money laundering concern”.

Tanzania’s central bank said it took control of FBME Bank on Thursday because of the potential effect of the Cypriot move on Tanzania’s own banking system. It said FBME’s four branches in the east African country would remain open for business.

“The objective underlying this decision … is to ensure safety of customers’ deposits and safeguard the entire banking system,” it said in a statement.

Family-owned FBME Bank – which also has a representative office in Russia – has denied the U.S. allegations and accused the Cypriot Central Bank of a “hostile takeover”. It said its lawyers had already made contact with U.S. authorities.

It said FinCEN had compiled the report without its input. The bank could not immediately be reached for comment on the Tanzanian central bank’s decision.

FBME Bank’s Cypriot branches hold an estimated 1.7 billion euros ($2.29 billion) in deposits, according to local media reports. The Cypriot central bank said it planned to put the two local units of FBME Bank up for sale.

Bank of Tanzania said in its latest banking survey of 2013 that FBME Bank had assets of 299.6 billion shillings ($181 million) and deposits of 263 billion shillings in the country. ($1 = 0.7435 Euros) ($1 = 1655.0000 Tanzanian Shillings) (Reporting by Fumbuka Ng’wanakilala; additional reporting by Michele Kambas in Nicosia; writing by George Obulutsa; editing by Tom Pfeiffer)

Central Bank Probes Local FBME Deals

INVESTIGATIONS are going on against a 10 million euros (over 22.47bn/-) transfer made by an Italian politician (name withheld) through his FBME Bank account in Tanzania, last year.

Bank of Tanzania (BoT) and Treasury’s Financial Intelligence Unit have been investigating the money laundering allegations since last year and are yet to release a preliminary report.

“We are still investigating this and will soon release an official statement,” Prof Ndulu said as the troubled Lebanese bank which has already been placed under Cyprus central bank management since Friday.

Prof Ndulu did not give details as to whether the central bank will likely follow its Cypriot peer by putting FBME bank under its administration.

“We can only assure the bank’s clients in the country that everything is under control,” the BoT chief noted. In a statement released late on Friday, BoT said FBME which is headquartered in the country but conducts 90 per cent of its operations in Cyprus is under surveillance and not under direct central bank management.

The Cypriot Central Bank took over the operations of FBME Bank last Friday following the United States Treasury Department announced that it has blacklisted the bank.

“The Central Bank of Cyprus (CBC) announces that, under the powers conferred to it by the relevant legislation, [it] has taken over, as of today, the management of the operations of the branch of FBME Bank Ltd in Cyprus,” the Cypriot Central Bank said on its website.

Lebanese press reports however quoted FBME Chairman Ayoub-Farid Saab that the bank had requested the Cypriot action, in order to clear itself of the “unfounded allegations.”

“We are running a clean operation on the island,” he said. Last Thursday, the US Treasury accused FBME, which though chartered in Tanzania operates primarily in Cyprus, of facilitating financial activity for transnational organised crime and Hezbollah, labeling it a ‘primary money laundering concern.’

“FBME promotes itself on the basis of its weak Anti-Money Laundering (AML) controls in order to attract illicit finance business from the darkest corners of the criminal underworld.” Financial Crimes Enforcement Network, a department of the US Treasury, Director Jennifer Shasky Calvery said in a statement.

“Today’s action, effectively shutting FBME off from the US financial system, is a necessary step to disrupt the bank’s efforts.” Since 2003, FBME has been headquartered in Tanzania and is widely regarded as the largest bank in Tanzania based on its $2 billion asset size, but it has only four branches.

While FBME is presently headquartered in Tanzania, FBME transacts over 90 per cent of its global banking business and holds over 90 per cent of its assets in its Cyprus branch. FBME has always maintained a significant presence in Cyprus.

Last year when the Italian politician’s scandal was published, Prof Ndulu said the central bank can only act against FBME once investigations by Financial Intelligence Unit are concluded and find the locally registered bank at fault.

“We are cooperating with the FIU which is conducting the investigations which are important to us as regulators before we can take any action,” Professor Ndulu told Daily News then.

An official at FIU said investigations in the case are at an advanced stage but referred Daily News to FIU Commissioner, Herman Kessy.

“It’s an investigation which crosses borders hence needs more time and resources to conclude,” said the official who preferred anonymity.

Press reports said last month that Italy’s financial unit of the tax police in Rome is currently investigating a questionable 4.5 million euros (approx. 9.5bn/-) transfer to Tanzania, while 1.2 million euros went to Cyprus and 1 million euro was invested in Norwegian currency.

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FBME Tanzania linked to Italian mafia dirty money scandal

Tanzania security agencies are investigating how millions of euros from an Italian political party were transferred into the country through a foreign commercial bank and invested in the country.

Police have learnt that around 10 million euros ($13 million) were transferred to Tanzania in dubious circumstances. Information made available last week from Italy indicates that the treasurer of the Northern League political party (which is allied to former prime minister Silvio Berlusconi), Francesco Belsito, is under investigation for fraud, embezzlement and money laundering.

Italy’s Guardia di Finanza (the financial unit of the tax police in Rome) is presently investigating a questionable 4.5 million euro ($5.9 million) transfer to Tanzania, while 1.2 million euros ($1.5 million) were sent to Cyprus and 1 million euros ($1.3 million) were invested in Norway Crowns.

Investigation by The EastAfrican in Dar es Salaam showed that the money in question was sent to Tanzania through Federal Bank of the Middle East (FBME) in Cyprus and then to FBME Bank in Tanzania. Mr Belsito was apparently the one who deposited the money in the Tanzania bank.

Tanzania’s Financial Intelligence Unit (FIU) is investigating the case on suspicion of embezzlement, aggravated fraud committed against the state and money laundering.

The chief prosecutor of Milan, Edmondo Bruti Liberati, told The EastAfrican that three judicial offices, co-ordinated by Milan assistant public prosecutor Alfredo Robledo and public prosecutors Roberto Pellicano and Paolo Filippini, were investigating the case alongside the financial police.

The other investigators include prosecutors Henry John Woodcock and Vincenzo Piscitelli for Naples with the Carabinieri from the NOE ecological operational unit; Reggio Calabria prosecutor Giuseppe Lombardo with police officers from the DIA intelligence unit are investigating possible financial fraud on cheques going back and forth from Italy to FBME Bank in Tanzania.

Allegations

Mr Liberati said that the investigators are investigating the Northern League over a raft of charges of financial irregularities, fraud, embezzlement, and money laundering. The EastAfrican has been exclusively informed that some of the more explosive allegations have to do with links to a Tanzanian businessman who is in close contact with members of the De Stefano family, one of the most powerful clans in the ‘Ndrangheta, the organised crime syndicate based in Calabria, the toe of Italy.

Indeed, the investments made in Cyprus and in Tanzania are being examined for possible links to organised crime. According to Mr Liberati, all the transactions were done in the last week of December 2011.

Mr Liberati said the investigators started their investigation in April this year following allegations that Umberto Bossi, the charismatic leader of Italy’s Northern League, used taxpayers’ money to pay for improvements to his house and for travel, dinners and hotel accommodation for his children.

“The claims, based on evidence collected through wiretaps, came to light in a judicial warrant issued for the search of the party’s headquarters in Milan,” said Mr Liberati.

The money transferred to the FBME Bank in Tanzania was frozen and then sent back to Italy when the FIU and the Bank of Tanzania (BoT), which monitors foreign currency transactions, became suspicious of the large amount of money.

Investigators suspect the money was meant for buying diamonds, as one of the suspects was found to have diamonds from Tanzania at his home in Italy.

The investigators further said that the Italian mafia approached the Tanzania government proposing to invest $5.9 million in small scale mining for diamonds, but the government rejected the offer.