EU banks caught up in Syria probe

Date: 25/11/04

THE European Commission is insisting that European banks must come up with more evidence before it will lodge a complaint against an American anti-terrorist clampdown on the Commercial Bank of Syria (CBS).

The European Banking Federation (FBE) has written to the Commission's external relations department claiming that its members are being unfairly caught up in US action against the bank - allegedly one of Osama bin Laden's terror fund conduits.

The US authorities have effectively banned EU banks with legitimate business links with the CBS from forwarding Syrian funds to their correspondent banks in the US. Correspondent banks are institutions that agree to handle transactions from accounts held with partner banks in other countries.

That would mean for example that a CBS customer in Damascus would struggle to transfer dollars via an EU bank to the US - even though EU banks already have in place statutory checks against money-laundering risks.

The FBE said the move, which also includes CBS's Lebanese subsidiary, “would have a serious impact on financial transactions and trade with Syria” and might “considerably disrupt competition in foreign trade”.

But Commission sources said that it could not take the warning seriously until it had more proof that the measure was hurting EU banks.

“We are looking into the matter but based on what we have received so far are not going to contact the US for the time being,” said a Commission official.

FBE legal affairs director Frédéric de Brouwer said that the group was “working” on providing more evidence to the Commission. “There are no reported cases as for now but the risk clearly exists,” he said.

Article reports that the European Commission is insisting that European banks must come up with more evidence before it will lodge a complaint against an American anti-terrorist clampdown on the Commercial Bank of Syria (CBS). The European Banking Federation (FBE) had written to the Commission's DG External Relations claiming that its members were being unfairly involved in US action against the bank, which was allegedly one of Osama bin Laden's terror fund conduits.