The position of Jacob Lew, Secretary of the Treasury under the Obama Administration, was taken over by Steven Mnuchin upon Donald Trumps’ election as 77th and current President of the United States. The new government results in a new predominant Secretary of the Treasury and therefore the case formerly known as FBME Bank Ltd. vs. Lew changed into FBME Bank Ltd., et al (plaintiffs) vs. Steven Mnuchin, in his capacity as Secretary of the Treasury, et al (dedendants). The case number is 15-1270.
Most customers of the bank await a positive ending to the legal battles between FBME Bank, FinCEN and the Central Bank of Cyprus since July 2014. Occasional information from the personal viewpoint of FBME shareholders, is offered via an information portal initiated by FBME. FinCEN only publishes formal statements in the Federal register or on its own website.
The case FBME Bank Ltd. challenges in the United States Court, relates to the actions taken by the Financial Crimes Enforcement Network (FinCEN) that resulted in the temporary closure of the bank’s branch office in Cyprus and main office in Tanzania. Temporary in this case means, until the moment the court in Cyprus orders its verdict to liquidate the banks’ branch office after its license was revoked in December 2015.
On the 24th of February 2017, FinCEN filed its final statement and the third declaration of Richard May, the Deputy Associate Director of the Enforcement Division of the US Department of the Treasury’s Financial Crimes Enforcement Network (‘FinCEN’) to the US Court for the District of Columbia.
FBME lawyers question the adequacy and completeness of the administrative records and the information that leads to the rulemaking and conclusions set forth in the Final Rule. The court in Cyprus granted FBME lawyer Georgiou access to the premises of the Central Bank of Cyprus for inspection of CBC files and administrative resources. During the process of discovery in litigation with the CBC, FBME lawyers became aware of ‘newly discovered evidence’. New and relevant information is essential to re-open a case and to submit already known arguments. During the aforementioned inspection, certain documents at the Central Bank of Cyprus indicated evidence that the Central Bank communicated with FinCEN in 2015 and 2016. The ‘new evidence’ was according to the plaintiffs, an audit report, assumed to be executed together with Price Waterhouse Coopers (PWC), and a proposal from the Central Bank offering FinCEN to share several ‘boxes with relevant FBME information’. However, a handwritten note was discovered by Georgiou as well, stating that the information was never send to FinCEN. PWC confirmed at a later stage to FBME that it had never authored an audit for FBME Bank.
Plaintiffs further speculate, without presenting any further evidence of their assumption, that there may be additional information withheld from the record. Therefore they want the court to re-open summary judgment proceedings, order production of a privilege log, and order the deposition of Mr. May, who certified the administrative record.
May, who was the director of the Office of Special Measures within the Enforcement Division, declared as a response to the statements of FBME Banks’ lawyers, that ‘all information included in the classified and statutorily protected portions of the record as protected by the Bank Secrecy Act was reviewed to ensure that it was properly included.’ Additionally, May states under penalty of perjury that ‘he is not aware of an audit report authored by PWC and no such information appears in the record‘.
In layman terms, the question is if secret information was used by FinCEN to come to its final conclusion. Judge Cooper is appointed to issue a verdict based on all presented information.
FBME Bank Ltd, the plaintiffs, used several ways to challenge the certification of the administrative record. FBME Bank argued that (1) FinCEN had not identified all withheld information and demanded a privilege log. Additionally, FBME Bank expressed (2) particular concern that the government had denied having the PWC audits and yet relied on a CBC audit in which PWC had some role. Furthermore, FBME argued that (3) FinCEN had improperly considered and excluded from the record certain unsolicited, allegedly privileged, information provided by former FBME contractors. Although it was not part of the arguments presented during the summary judgement briefing, FBME argued without presenting ant further evidence that (4) defendants probably failed to produce other unclassified information.
FinCEN lawyers state, as we can see in the docking activity, that ‘the court rejected each of these efforts, denying the motions to supplement the record and discovery, and largely rejecting the arguments that FinCEN had hidden some category of unclassified information; although the court found some errors with respect to the agency’s notice, it ruled that such errors were harmless’.
The court also upheld the second final rule on the merits in almost all respects, rejecting FBME’s statutory and constitutional arguments against the rule. FBME’s argument that the second final rule was arbitrary and capricious was rejected by the court; FinCEN’s reasoning in support of the final rule was ‘largely sound’ and the court rejected most of FBME’s arguments that the final rule was arbitrary and capricious. The court did however concluded that FinCEN failed to respond adequately to specific comments in relation to the data used from the suspicious activity reports to come to a conclusion. Only that limited issue thus remains in this case, and the parties’ motions for summary judgment only on that issue are pending.
FBME lawyers ‘recycle’ arguments used throughout the legal procedures, where the court already rejected these arguments in earlier judgments. The validation to reuse the same arguments is found by plaintiffs in the assumption and speculation that there probably was more information that FinCEN kept back from the records.
Plaintiffs attempt to establish a basis for reconsideration by arguing again that the administrative record was improperly certified, and that the court should look outside the record to re-weigh the merits of plaintiffs claims.
The responsibility to compile the administrative record lies with FinCEN and, in considering a motion to supplement that questions the agency’s performance of that task, FinCEN is entitled to a ‘strong presumption of regularity, that it properly designated the administrative record’.
The Administrative Procedure Act, as addressed by FBME, limits judicial review to the administrative record except when there has been a strong showing of (1) bad faith or (2) improper behavior or when (3) the record is so bare that it prevents effective judicial review.
As already established by the court, FinCEN properly certified the administrative record, while FBME cannot show ‘bad faith’ or ‘improper behavior’. Waiving away the speculation from plaintiffs, improper behavior can lead to the suggestion that the Central Bank of Cyprus communicated with FinCEN and that the Central Bank presumably send the PWC report to a FinCEN official in confidence and that FinCEN asked permission to disclose it publicly.
As stated by Richard May, all information used by the decision maker was included in the administrative record. It therefore does not make a difference that FinCEN communicated with the Central Bank of Cyprus and that there presumably was a report that could have been used in the rulemaking process.
FBME Bank and its lawyers see a foundation for their claim that the record was improperly certified in the assumed disclosure of minimal information (without actually sharing the true contents; the boxes of FBME related information) and the revelation of the ‘February report’ to FinCEN.
FinCEN’s response to these speculations leave no clues; (1) there is nothing remotely improper about seeking or receiving information from a foreign partner, despite FBME’s previous protestations to the contrary, which US Court explicitly rejected. Also, (2) there is no definitive evidence in FBME’s motion or the declaration of Mr. Georgiou as to whether or not the February report was considered for the rulemaking process. Supplementary, if the February report were considered, the communication of foreign government information to FinCEN could have been properly treated as classified at the time.
There is no relevance for the question whether the February report is classified or not, and whether such information in Cyprus court deems to be classified. US court already decided summary judgement while rejecting FBME’s repeated complaints about the supposed inadequacy of the record. Furthermore, no evidence was found that any authority would warrant reopening of summary judgement or rulemaking based on subsequent declassification parts of the record that were properly classified at the time of rulemaking.
FBME seeks three forms of relief, (1) re-opening summary judgement proceedings, (2) production of a privilege log and (3) discovery. However, FBME has not established any reason to think that justice requires re-opening of summary judgement. As in previous motions, FBME did not even attempt to show if and how the assumed new information could or would change the outcome of summary judgement, the rulemaking and therefore an order. For the record, at summary judgement in an APA case, the court should consider the rule of harmless error and the challenger (FBME), bears the burden of demonstrating that the error is not harmless.
The court order
Based on the above, Judge Cooper has to present his order at short notice. A ruling in favor of FinCEN will trigger the case in Cyprus court, where closing arguments took place the 2nd of November 2016. The complete FBME case is about to end. That means that finally thousands of customers of the bank can start to prepare for the liquidation or bankruptcy of the bank. First, those with accounts in Cyprus are encouraged to file their claim as quickly as possible with the Deposit Guarantee Scheme at the Central Bank of Cyprus. Once the liquidator is appointed by the court, the second stage of fund recovery can commence.
FBME bank Cyprus fund recovery
Are you a customer of the bank and do you want the funds from your blocked bank account to be returned, contact us today. Legal Floris LLC currently represents over 1.300 customers of FBME Bank, both with accounts in Cyprus as well as in Tanzania.
We don’t work for everyone. FBME Bank was shut down for a reason. If there is a suspicion of money laundering, the DGS and liquidator, can and will not pay. Simultaneously, we reserve the right not to accept you as a customer. We wish to know our clients and must be assured on the source of your funds. If you’re a legitimate customer there is nothing to fear. Therefore, contact us today and let’s start the process for recovery right away.
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