Depositors at FBME yet to receive cash after closure

Dar es Salaam. At least 48.23 percent of depositors with the closed FBME Bank have not yet received their refunds, the Bank of Tanzania (BoT) has said.

In July 2016, the FBME Bank was placed under management of the central bank following allegations by the Financial Crimes Enforcement Network (FinCEN) of the US Treasury that the bank (FBME) had facilitated a “substantial volume” of money laundering for many years and that it had systemic failures in its controls.

BoT subsequently revoked the bank’s licence in May 2017 and appointed the Deposit Insurance Board (DIB) of Tanzania as the liquidator. A statement, posted on the BoT’s website on May 23 by the DIB, says that disbursement of depositors’ funds were still going on at what used to be FBME Bank’s head office in Dar es Salaam.

“By this reminder notice, the DIB reminds all eligible depositors who are yet to collect their insured deposits to collect their deposit at the Kinondoni office premises of the former FBME Bank Limited,” the statement reads.

It states that until end of April, 2020, it was only 51.77 percent of all eligible depositors that had been reimbursed.

Established in 2003 as Federal Bank of the Middle East in Cyprus, FBME which had its headquarters in Tanzania and a majority of its operations in Cyprus, was accused in the US of, among other things, money laundering and facilitating the payment of thousands of dollars from a financier of the Lebanon’s Hezbollah Islamist militants. In January 2018, the BoT also revoked business licences and put the five banks under its supervision for being undercapitalised and violating the Banking and Financial institutions Act of 2006 and its regulations.

The five banks were Covenant Bank for Women Tanzania Limited, Efatha Bank Limited, Njombe Community Bank Limited, Kagera Farmers’ Cooperative Bank Limited and Meru Community Bank Limited.

The government said in March this year that a total of Sh3.7 billion was yet to be reimbursed to depositors of funds in FBME and the five banks.

Until March, the BoT had paid out Sh7.3 billion, which accounted for 66 percent of the total of Sh11 billion that has to be reimbursed.

Mr Richard Malisa from the DIB said in Arusha in March this year that Sh2.4 billion out of the Sh7.3 billion was paid out to FBME Bank depositors.

The seven banks had a total of 25,050 depositors and the maximum coverage per depositor is Sh1.5 million.

Depositors for Meru Community Bank had been reimbursed Sh1.4 billion, while Njombe Community Bank depositors received a total of Sh963 million.

Depositors in other banks (with the moneys they received shown in brackets) were Kagera Farmers Cooperative Bank (Sh737 million), Mbinga Community Bank (Sh722 million), Covenant Bank for Women (Sh570 million) and Efatha Bank (Sh472 million).