The CBC announced on Friday that it was extending the suspension for another two working days – Friday and Monday.
“The FBME branch in Cyprus will not execute any customer orders for money transfers and payments during this period,” the CBC said in a statement.
Last Friday, the Central Bank said it had taken control of FBME’s operations in Cyprus, following a report from the Financial Crimes Enforcement Network (FinCEN) of the US Treasury describing the bank as a “primary money laundering concern.”
Tanzania’s Central Bank followed suit, announcing on Friday that it had taken over the management of the lender.
Tanzania’s central bank said it took control of FBME Bank on Thursday because of the potential effect of the Cypriot move on Tanzania’s own banking system. It said FBME’s four branches in the east African country would remain open for business.
“The objective underlying this decision … is to ensure safety of customers’ deposits and safeguard the entire banking system,” it said in a statement.
FinCEN accused FBME, which though chartered in Tanzania operates primarily in Cyprus, of facilitating financial activity for transnational organised crime and Hezbollah.
FBME has denied the allegations, saying the US Treasury had compiled the report without its input.
The bank also claimed that the CBC’s action was a hostile takeover and that the authorities seemed to have forgotten that it took part in a quarter million euro bond issue last year as part of the island’s bailout.
Meanwhile, the suspension is causing problems to businesses which deal with FBME.
One company official said his outfit had outstanding phone and electricity bills and were due to be cut off because they could not make the payments.
“Without internet and electricity obviously we cannot function and we are in the process of finalizing transactions, which have taken us over a year and with proceeds in the millions from legitimate business,” the official said, speaking on condition of anonymity.
The CBC said its action aimed at protecting the bank’s depositors but the official was unconvinced.
“I fail to see how seeing our company fall into insolvency and also be subject to breach of contract litigation, also in the millions, due to our inability to function as a business, protects us in the least.”
The company is asking the CBC to at least provide it with a letter to use with the utilities to ensure their operation.