FinCEN Designates Foreign Private Bank Under Patriot Act

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On July 17, FinCEN named FBME Bank Ltd., formerly known as the Federal Bank of the Middle East, as a foreign financial institution of primary money laundering concern pursuant to Section 311 of the USA PATRIOT Act. As detailed in a notice of finding, FinCEN asserts that the bank attracts illicit finance businesses by soliciting high-risk customers and promoting its weak AML controls. FinCEN explains that the bank changed its country of incorporation numerous times, partly due to its inability to adhere to regulatory requirements, and has established itself with a nominal headquarters in Tanzania. However, according to FinCEN, it transacts over 90 percent of its global banking business through branches in Cyprus and has taken active steps to evade oversight by the Cypriot regulatory authorities in the recent past. FinCEN is proposing a rule that, once final, will prohibit covered U.S. financial institutions from opening or maintaining correspondent or payable-through accounts for FBME, and for other foreign banks being used to process transactions involving FBME. The proposal also would require covered financial institutions to apply special due diligence to their correspondent accounts maintained on behalf of foreign banks to guard against processing any transactions involving FBME. Comments on the proposed rule are due 60 days after publication in the Federal Register.

Topics:  Banks, FBME Bank, FinCEN, Foreign Banks, Money Laundering, Patriot Act

Published In: Finance & Banking Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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