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- Twelve years after the US Treasury’s Financial Crimes Enforcement Network (FinCEN) designated the notorious FBME Bank Ltd as a “financial institution of primary money‑laundering concern” and the Central Bank of Cyprus put the Cyprus branch out of business, not a single prosecution for money laundering or any other crime has resulted, and creditors in the UK reportedly have taken their own lives out of frustration, jilted depositors say.
“More than 90 percent of FBME depositors were legitimate businesses, most of whom are still waiting for their money back,” said James Sutherland, chairman of Zetland Fiduciary Group, a Hong Kong-based global corporate services provider, which has US$100 million tied up out of the €1.3 billion still frozen in foreign banks abroad, with client funds tied up that could run up to US$300 million. “The Cyprus authorities have grossly mishandled the bank which was perfectly solvent and could have been sold. The depositors are now being milked by the liquidator and lawyers. In short, Cyprus, a member of the EU, is worse than a third world country.”
In a 2022 letter to the Sunday Mail, a group of UK-based depositors who said they wished to remain anonymous, urged the Cyprus central bank to take control of the funds in FBME, owned by Lebanese brothers Ayoub-Farid Saab and Fadi Saab, and return them to their rightful owners, blaming Cyprus for the deaths of several savers who committed suicide.
Instead, Sutherland charged, the Cyprus administrative court has appointed as liquidator Petros Ioannides of BDO Cyprus, a professional services firm, who allegedly has been throwing roadblocks in front of the creditors for the better part of four years, ignoring provisions of the agreement including deducting 1 percent of distributions as an additional fee despite remuneration totalling €1.35 million stipulated in the agreement for the first three years of the liquidation process, potentially producing as much as €13 million in additional fees, and delaying an initial dividend of 45 percent of claims with little allegedly disbursed to date. Lawyer says charges are false “Our client strongly denies these allegations,” said Maria Macridou, Ioannides’s lawyer in a broadly-based reply to Sutherland’s charges. “Our client was appointed at a time when the bank had been inactive for approximately 10 years. Upon assuming this role, he was required to undertake the complex task of re-establishing operational systems and gathering the necessary information and records. These were inherently time-consuming and technically demanding processes. At no point did our client delay the procedure, whether intentionally or otherwise. Any time taken was solely attributable to the complexity and circumstances of the matter. This was identified objectively by the court, and relevant extensions have been provided by the Nicosia District Court to the deadlines contained within the LFA, as this was not anticipated at the time of establishing the liquidation plan 10 years ago, when the bank ceased its operations.”
The liquidator hasn’t improperly deducted 1 percent on distributions, Macridou said, including in acceptance letters the specific provision of the 1 percent deduction to accommodate increased costs of the liquidation, “in light of the challenges faced that have not been foreseen in the original plan submitted 10 years ago. The subject provision has been approved by the Inspection Committee and is communicated to every single creditor who has the right to object within a period of 21 days directly to the Liquidator or via the Court, as per the applicable legislation.”
Although Sutherland said many banks have the same kind of dodgy depositors that FBME did, the bank was actually one of the world’s most corrupt. In the middle of the past decade, the Cyprus branch of the bank was the subject of a series of stories by Asia Sentinel that described the alleged laundering of hundreds of millions of US dollars out of the Indonesia-based Bank Mutiara, formerly known as Bank Century, which was looted by its owner, Robert Tantular, during the global financial crisis of 2009. The Cyprus unit of the Tanzania-based bank was described as one of the most infamous money-laundering operations in the world, with depositors allegedly including Russian Mafia suspects, central African satraps, pornographers, internet scam artists and a long list of other outlaws.
Hundreds of millions of dollars, alleged to have been siphoned out of Hermitage Capital, the Moscow-based investment concern headed by William Browder, were said to have been directed into FBME, making it a player in one of the world’s most infamous financial scandals. Sergei Magnitsky, an associate of Browder’s, was said to have been beaten to death in a Moscow jail when he tried to investigate the theft of Browder’s funds. Browder was forced to leave Russia. Eventually, the US Congress passed the Magnitsky Act banning a list of Russian individuals believed complicit in the killing from using the US financial system to move funds around the world, in effect freezing them. FinCEN bar In 2017, US district court granted a motion by FinCEN to bar FBME Bank from US operations, effectively barring it from access to the global financial system, sending the decision to the Central Bank of Cyprus and the Central Bank of Tanzania, which were supposed to begin disposing of US$2.6 billion in depositors’ funds. Depositors were given 90 days to file claims for the return of their money although sources told Asia Sentinel at the time that hundreds of millions were likely to go unclaimed because coming forward to do so would identify them.
However, Tanzania and Cyprus became embroiled in a contest for jurisdiction over the dissolution of the bank, with the Cyprus central bank refusing to talk to the authorities in Tanzania, where FBME was headquartered, until pressured by lawyers for depositors. In 2020 the deadline for claiming US$111 million in bonds issued by the International Bank of Azerbaijan was almost missed by the special administrator. Under pressure from depositors, an agreement was quickly reached and portrayed as a “triumph” in the Cyprus press.
In February 2022, the Cyprus administrative court ruled that the Central Bank had acted improperly in placing the branch into administration, which eventually led to the agreement of a Liquidation Framework Agreement appointing a liquidator in 2023. FBME Cyprus Branch was a solvent entity with a capital surplus of over US$130 million with mostly international depositors located outside Cyprus, Zetland’s Sutherland said, up to Ioannides’ appointment.
“Ioannides and the lawyers KKP were appointed without any competitive bidding having taken place and in obscure circumstances,” Sutherland said in an email. “Although Ioannides is qualified as a liquidator in Cyprus, he does not hold either a practicing certificate or insolvency license from the Institute of Chartered Accountants in England and Wales and therefore it is questionable as to whether he was sufficiently qualified to undertake liquidation of a sizeable financial institution. KKP is a small Cyprus law firm, lacking in international experience.”
Ioannides and BDO, he charged, “have possibly shown professional negligence in the execution of their duties and may be in breach of the bankruptcy laws of Cyprus and the LFA – notably the length of time taken so far at 33 months is excessive and unreasonable given the limited progress that has been achieved and the fact that FBME was solvent. The Inspection Committee elected in May 2025 has failed to date to make any communication with the creditors they are supposed to represent. The committee consists of five members, three of whom are closely associated with the firm of Hadjihannas & Co. It is clear they are not acting in the interests of the creditors, may be in collusion with PI and are ineffective in performing their responsibilities.
“The fact is that the majority of depositors in FBME are not criminals and have had their funds tied up for almost 12 years,” Sutherland said. “Cyprus – despite being a member of the EU – appears to behave like a third-world country. There was also a fiasco earlier in 2013 regarding the collapse of Laiki Bank and the Bank of Cyprus, but the authorities seem to have learned nothing from this.”