US accuses Lebanese-owned bank of money laundering

BEIRUT: The United States Treasury Department announced Thursday that it was listing the Lebanese-owned FBME Bank as a primary money laundering concern, accusing it of facilitating financial activity for transnational organized crime and Hezbollah.

“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 U.S. Treasury, Director Jennifer Shasky Calvery said in a statement Thursday. “Today’s action, effectively shutting FBME off from the U.S. financial system, is a necessary step to disrupt the bank’s efforts

FBME, which was established as the Federal Bank of the Middle East in 1982 as a subsidiary of the Federal Bank of Lebanon SAL, is now chartered in Tanzania, according to its website. The bank lists A-F M Saab as its chairman and F M Saab as chief executive director.

According to the Federal Bank of Lebanon’s website, the two firms are "part of the Saab’s financial group." Federal Bank of Lebanon, owned by Ayoub-Farid Michel Saab and Fadi Michel Saab, is not named in the Treasury Department report.

The Treasury report, dated July 15, listed a number of suspicious transactions and legal violations from FBME over the last decade, 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 U.S. correspondent accounts that totaled at least $875 million between November 2006 and March 2013,” the report said.

The finding of the bank as a “primary money laundering concern” opens the process to institute special measures against the bank and all of its subsidiaries. The Treasury Department has proposed applying the “Fifth Special Measure” under the U.S. Patriot Act, which blocks U.S. financial institutions from carrying out any transactions with the sanctioned bank. There is a 60-day comment period from the publishing of the Treasury Department report before any final action can be taken.

The United States has sought to increase pressure on Hezbollah, which it considers a terrorist network, by cutting it off from any access to international financing. Several Lebanese money changers have been targeted over informal fund transfer activities, while the Lebanese Canadian Bank was wound down after being designated a primary money laundering concern by the U.S.