In relation to the adoption and implementation of resolution measures in FBME Bank Ltd Cyprus Branch (the Branch), the Central Bank of Cyprus (CBC), in its capacity as Resolution Authority (the Resolution Authority), announces that, with today's ruling, the Court rejected the application of FBME for suspending the decree for the sale of the Branch’s operations.
Furthermore, the CBC clarifies the following:
1. The decision by the Resolution Authority for the adoption and implementation of resolution measures in the Branch was not based on the actions and the announcement dated 17 July 2014 by the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) naming FBME Bank Ltd as a financial institution of primary money laundering concern, but based on the direct and drastic consequences of the said announcement on the capacity of the Branch to execute customer transactions, as a result of the immediate measures taken by the principle domestic and foreign correspondent banks of the Branch. Specifically, as a result of the action by FinCEN, the principle correspondent banks had frozen and/or closed the USD accounts of the Branch and suspended execution of customer money transfers in that currency, while serious difficulties existed also in executing customer money transfers in euro and other currencies.
2. The statements made by FinCEN in its announcement, as well as in the Notice of Finding which accompanies the aforementioned announcement, receive a separate examination and handling by the CBC, in its capacity as the Supervisory Authority, in cooperation with other competent Authorities.
3. The Resolution Authority considered the sale of the business of the Branch to another credit institution as the appropriate resolution measure, pursuant to the Resolution of Credit and Other Institutions Law, in order to, inter alia, protect depositors and prevent the spreading of risks which would have affected the stability of the entire banking system. Having the above as the sole objective and to address the impact of the announcement by FinCEN on the business of the Branch, the Sale of Business of the Cyprus Branch of FBME Bank Ltd Decree of 2014 (Κ.Δ.Π. 356/2014) was issued on 21 July 2014. It is noted that the said Decree applies to the Branch only and does not apply to any other subsidiary or associate company the FBME Bank Ltd of Tanzania has in Cyprus.
4. The Resolution Committee has appointed, as of 21 July 2014, a Special Administrator at the Branch, in order to facilitate the implementation of resolution measures. To achieve this goal, the Special Administrator exercises the functions and powers set out in the Resolution of Credit and Other Institutions Law including, inter alia, the temporary restriction of the Branch’s scope of business.