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The Arbitral Tribunal has advised the Republic of Cyprus not to take any further action with regard to the sale of the Cyprus branch of FBME, adding that no additional funds are to be taken from FBME, nor are further actions to be taken to secure its closure.
The halt on further actions that may still be taken by the Central Bank of Cyprus (CBC) as the Resolution Authority against the FBME Bank branch in Cyprus was placed while the Arbitral Tribunal studies the case and decides on the bank’s request for Interim Measure.
FBME Bank in Cyprus has been placed under resolution by the Central Bank of Cyprus (CBC) in July 2014, following a US treasury report that the bank was implicated in money laundering.
CBC issued an announcement at the time saying it had issued a decree by which it has placed the Tanzania-based bank’s branch in Cyprus under a state of resolution “with the aim of the protection of depositors.” The decree followed a suspension of the bank’s operations by the CBC and the taking over of its management.
The US Treasury report listed a number of suspicious transactions and legal violations from FBME, including allegations that a bank customer “received a deposit of hundreds of thousands of dollars from a financier for Lebanese Hezbollah.”
“FBME was involved in at least 4,500 suspicious wire transfers through US correspondent accounts that totaled at least $875 ml between November 2006 and March 2013,” the report said.
FBME has denied the allegations and accused Cypriot authorities of a “hostile takeover” of the bank and its assets.
At the same time, the Lebanese owners of FBME Bank made a request for arbitration to the International Chamber of Commerce (ICC) in Paris, which was filed on 28 October 2014. The owners asked the Tribunal to settle the dispute before irretrievable damage is caused to the FBME Bank branch in Cyprus by the Central Bank of Cyprus, the Resolution Authority and the appointed Special Administrator. The owners are seeking compensation for damages of at least US$500 million.