FinCEN's Money Laundering Death Penalty Temporarily Blocked (CRS Report for Congress)
| Release Date |
Oct. 6, 2015 |
| Report Number |
LS_2015-10-06_02 |
| Report Type |
Legal Sidebar |
| Source Agency |
Congressional Research Service |
Summary:
On August 27, 2015, the U.S. District Court for the District of Columbia, issued a preliminary injunction in FBME Bank Ltd. v. Lew, enjoining Treasury's Financial Crimes Enforcement Network (FinCEN) from implementing a regulation that cuts off FBME Bank Ltd. (FBME) from the U.S. financial system. FBME, formerly known as the Bank of the Middle East, is headquartered in Tanzania and operates primarily in Cyprus. The regulation, proposed on July 22, 2014, and finalized on July 29, 2015, was scheduled to go into effect on August 29, 2015. It subjects FBME to the most powerful of five 'special measures' (sanctions) that FinCEN can levy on a financial institution found to be 'of primary money laundering concern' under Section 311 of the USA PATRIOT Act. It prohibits all U.S. financial institutions from opening or maintaining correspondent or payable-through accounts for FBME and to exercise due diligence to prevent other foreign correspondent accounts from being used to process FBME transactions. The ruling is the first judicial decision on FinCEN's exercise of its power under Section 311. In response to the preliminary injunction, the government moved for a voluntary remand for FinCEN to reopen the rulemaking. After FBME objected, on September 18, 2015, the court ordered a full hearing on the issue, requiring the government's brief by October 5, and FBME's reply brief by October 13.
