K ro ll

1 .

P roject Ritchie

B a c k g r o u n d

a n d

s c o p e

o f

w o r k

1.1 Background
On 15 July 2014 the US Financial Crimes Enforcement Network (“FinCEN”) effected a Notice of
Finding that FBME Bank Ltd. (“FBME”) is a “fin a n c ia l
c o n c e rn ”.1 On

in s titu tio n o f p rim a ry m o n e y la u n d e rin g

21 July 2014 FBME was placed under special administration by the Central Bank

of Cyprus (“CBC”)2. On 23 July 2015 FinCEN issued a “F in a l
s p e c ia l m e a s u re "

R u le ” ,

which imposed

uth e fifth

against FBME under U.S. Code 31 § 5318A(b)(5).3 This entry in the U.S. Code

states that if an entity is found to be of “p rim a ry
Government (FinCEN) “m a y

m o n e y la u n d e rin g c o n c e rn ",

p ro h ib it, o r im p o s e c o n d itio n s upon, th e o p e n in g o r m a in ta in in g in

the U n ite d S ta te s o f a c o rre s p o n d e n t a c c o u n t o r p a y a b le -th ro u g h a c c o u n t'

case, FBME.4 This “F in a l

the United States

R u le ” ,

for the entity, in this

which was entered in the Federal Register with an effective date

of 28 August 2015, essentially prohibits FBME from using the United States financial system and
prevents it from conducting US$ transactions through correspondent banks.
FBME, and its Cayman Islands parent company FBME Ltd, have challenged FinCEN's ruling in
the United States District Court for the District of Columbia (Case 1:15-cv-01270) on
constitutional (lack of due process) and administrative law (arbitrary and capricious decision and
abuse of discretion) grounds.
In early 2015, investigators formerly retained by or on behalf of FBME and its shareholders
following FinCEN's initial findings, came forward of their own volition and informed the CBC that
their investigation had been cut short and that they had been terminated following discovery of
evidence which tended to support the conclusions reached by FinCEN: that FBME had been
engaged in money laundering and other unlawful activity.
In April 2015, and in response to a request made by the CBC pursuant to s.63 of the Central
Bank of Cyprus Law (see below), Nigel Brown (“Brown”) and/or Barrington London Limited and/or
Dangate Consulting and/or their consultants (together "Barringtons”), disclosed a number of
electronic and hard copy documents to the CBC relating to their investigation (“The Barringtons
Disclosure”).
On 22 April 2015 Kroll Associates UK (“Kroll”) was engaged by DLA Piper (UK) LLP (“DLA”) to
investigate on behalf of CBC the FinCEN allegations and to review and comment on the
Barringtons Disclosure.

1 Exhibit 001
2 Exhibit 002
3 Exhibit 003
4 Exhibit 003

Privileged and Confidential

5

  



FBME mi


appamul whom

a! FBML rm" nun

w: qnahmdhuw: Khauxatr

Ham 1 a ,4 (her meva at

 

2. Executive Summary

 

El PrOJecl 

 

KruH was mm am \0 ubtaw o! the some of cm a! the funds vm ch were Howmg

mrough W5 mama the remark 09--were < 

 

Svfimg



V: mu 

Lma deh'gnernt

Hpsmus
maH'FEME

mm

Ev mm 

mm 

 

 

 

 

 

 Kroll Project 

 

 

 

 

 

 

 

 

 

 

Fl KIOII Prmed Rama

6. FBME special arrangements for-

 

 

hathhacha.,mm1uj' (wand Menard

nn em emf"? fra'" 

2M Khazhawrar qamed a mm. a Harman; mu" 
,w app ar m'
[um-hm
arm MEA



vmu

mm

Hum-awn er

up

an tert,

mum ,4

 

 Kroll Project Rucme