Central Bank of Cyprus (CBC) reportedly deferred the planned disposal of the Cypriot branch of the Federal Bank of Middle East (FBME) pending the outcome of a court decision.
CBC said that it will not proceed with the sale of FBME until the court pronounces its judgment; however, the FBME will remain under its administration.
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With the planned divestiture of the FBME, the central bank wants to protect depositors in Cyprus.
The Tanzania-based bank FBME was placed under the control of the Central Bank of Cyprus on 18 July, following an accusation by the US Financial Crimes Enforcement Network, a department of the US Treasury, of its involvement in money laundering practices.
FBME denied the charges and accused the Cypriot regulators for seizing control of the bank and its assets. It also said it has been complying with anti-money laundering regulations of both Cyprus and the European Union (EU).
However, the US authorities accused the lender that it carried most of its activities through its Cypriot branch and "facilitated international terrorists’ financiers and international narcotics trafficking."
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By GlobalDataFBME has petitioned the country’s courts, seeking to block the sale by CBC.
In 1982, FBME was initially established as a subsidiary of the Federal Bank of Lebanon; although, it subsequently moved its headquarters to Tanzania.
