The Financial Crimes Enforcement Network (FinCEN) is a bureau of the United States Department of the Treasury that collects and analyses information about financial transactions in order to combat domestic and international money laundering, terrorist financing, and other financial crimes.
The Administrative Procedure Act (APA) is the United States federal statute that governs the way in which administrative agencies of the federal government of the United States may propose and establish regulations. In order to protect citizens, the APA also grants the judiciary oversight over all agency actions. It is one of the most important pieces of United States administrative law.
When FinCEN makes a strong accusation towards a financial institute and they publish a Notice of Finding that results in a Final Rule, the accused has limited options to go against this verdict. FinCEN has extensive power to investigate and afterwards execute its findings in a ruling.
Sometimes a financial entity wants to go against the rule. FBME Bank from Tanzania, with a branch in Cyprus, did so. A substantial part of the case FBME Ltd. vs. Lew is outlined in another article on this website. FBME Bank used the Administrative Procedure Act to see if there are possibilities to undermine FinCEN’s vision.
Judge Cooper was not very cooperative for FBME Ltd. in his verdict: ‘Having reviewed the entire record, including the classified and unclassified portions, the Court is persuaded that FinCEN has strong enough support for its factual assertion in this regard that any comment from FBME would not make a difference. Finally, FinCEN had a more-than-sufficient basis, apart from this new allegation of fact, to conclude that it could not reasonably rely on a proposed resolution that depends on FBME’s candid provision of complete, credible and accurate information.’
The only angle, FBME Ltd. still has is that Cooper ordered a summary judgment, granted to Lew, et al. except to the extent FinCEN failed to respond to FBME’s significant comments regarding Lew’s analysis of SAR’s data, as outlined in the accompanying Memorandum Opinion.
Although FinCEN has to follow an administrative procedure to comply with the APA, it is unlikely that the case will be dismissed. Cooper stated already in 2015 that US court will not second guess FinCEN on its finding that FBME poses a primary money laundering concern, or its resulting imposition of the fifth special measure.
Additionally, the Central Bank of Cyprus will continue with its actions to liquidate the Cyprus branch and all accounts from Tanzania that were managed from Cyprus.
The challenge of FinCEN under the APA therefore has not been very successful thus far. It delayed the regular liquidation procedures in a time consuming and capital absorbing clutter. Funds that could better be used to return the deposits on the accounts of FBME Bank in Cyprus and Tanzania.