9 February 2016
Comments have been submitted to the US agency FinCEN in respect to its Notice of Proposed Rulemaking against FBME Bank Limited. These follow FinCEN’s request for a voluntary remand to revisit its allegations and proposed actions, which it sought from Judge Cooper of the US District Court for the District of Columbia.
Once this was granted, FinCEN opened a new period for comment which ran until 26 January 2016. FBME’s lawyers have provided their Public Comment – available on this website – and there have been a number of others who have sent in their views, both as individuals and as representatives of organisations.
Access to these comments is publicly available on: http://www.regulations.gov/#!docketBrowser;rpp=25;po=0;dct=PS;D=FINCEN-2014-0007;refD=FINCEN-2014-0007-0057
One to have contributed is Professor William H Byrnes, an acknowledged and leading authority on the subject of anti money laundering. In his submission he stressed these are his own views and do not necessarily represent those of any organisation to which he is connected. Professor Byrnes is a lecturer at Texas A&M University School of Law, and the author of many well regarded legal treatises on anti money laundering as well as a person who has spent 20 years lecturing on the subject.
He wrote: “Precisely because of its powerful, positive potential, I consider it imperative that Section 311 be employed consistent with its specific purposes, premises, and provisions … Needless to say, FinCEN’s authority under Section 311 should not be wielded lightly or cavalierly.
“I am therefore dismayed to observe that FinCEN appears to be violating the Administrative Procedures Act (APA), not to mention due process, particularly in the following three ways: a) by withholding certain unclassified, non-privileged information; b) by failing to make a conscientious effort (whether through summaries, affording limited access to an attorney with clearance, or affording a hearing before a neutral decision-maker) to accommodate concerns surrounding classified information that may be central to FinCEN’s analysis; and c) by failing to identify and evaluate appropriate alternatives. I look forward to this opportunity for FinCEN to right its previous wrongs, and urge the agency to examine the relevant evidence, submissions, and law with fresh and careful eyes before reaching a conclusion.”
Professor Byrnes goes on to stress that complying with the APA is essential. He discussed the original allegations made (in July 2014) against FBME Bank by FinCEN and wrote: “As weighty as those allegations were, the specific warrant for them claimed by FinCEN was conspicuously light and sorely lacking.”
He commented that while FinCEN has agreed to disclose four items of substantial evidence, it did not agree to reveal the other evidence, “… which naturally leads to more questions surrounding the evidence it refuses to disclose.
“FinCEN’s staunch opposition to revealing the evidence it relied upon seems reminiscent of the lawless and oppressive Star Chamber that American law has consistently recoiled from and denounced.”
While the measures proposed by FinCEN are a ‘death sentence’ in themselves, Professor Byrnes writes that other regulators “ … must evaluate their involvement with FBME in light of FinCEN’s determination, as the Central Bank of Cyprus has already done on grounds that appear spurious”.
He adds: “The severity of the sanctions FinCEN proposed to impose, along with its repeated reluctance to provide unclassified information, reveals a difference in its treatment of FBME versus other larger banks accused of far worse wrongdoing.”
The posting of this letter along with others and the opportunity given to FBME’s lawyers to make their Public Comment is testimony to the pursuit in the USA of fairness and equality before the law, something that all nations should emulate. The comment period came to an end on 26 January, and it is now incumbent on FinCEN to review the observations that have been made, the evidence put before it, including the submissions made by forensic accountants on FBME’s AML practices and procedures, with a view to revisiting its decisions over the next 60 days or so.
Watch this space! We will keep readers informed of new developments.