Law firm Appleby provided offshore services to a bank accused of backing terrorism, a British newspaper claimed yesterday.

The Guardian said Appleby worked for the Cayman Islands holding company of FBME Bank, which was banned last year from the American financial system.

The report said Appleby represented FBME for “at least a year” after allegations were made against the bank by the United States Treasury.

It added that Appleby also acted as an agent for FBME “for more than a decade” before the allegations were made.

The US Treasury’s Financial Crimes Enforcement Network said in 2014 that FBME was “of prime money-laundering concern”.

Fincen added: “FBME is used by its customers to facilitate money laundering, terrorist financing, transnational organised crime, fraud, sanctions evasion and other illicit activity internationally and through the US financial system.”

The Guardian report said Appleby withdrew from acting as the registered agent of the FBME holding company in December 2015.

The bank was established in Cyprus in 1982 as the Federal Bank of the Middle East.

It changed its country of incorporation to the Cayman Islands in 1986, and in 2003 moved its headquarters to Tanzania.

It changed its name to FBME Bank in 2005.

Regulators in Tanzania and Cyprus now retain control over the bank’s business, although FBME has filed arbitration proceedings against the Cypriot state and is demanding $1.82 billion in damages.

Among the 2014 Fincen allegations against FBME were that a customer received “hundreds of thousands of dollars from a financier for Lebanese Hezbollah” and that the bank “provided financial services to a financial adviser for a major transnational organised crime figure”.

The bank was also accused of having “at least” one customer that “was a front company for a US-sanctioned Syrian entity, the Scientific Studies and Research Centre”.

The Guardian report added it was alleged the SSRC was part of the Syrian Government’s chemical weapons programme.

A BuzzFeed News article published last year on FBME and its clients used details from investigators brought in to carry out an internal inquiry into Fincen’s claims.

Included was an e-mail sent by a senior director at FBME that alleged one of the bank’s clients had benefited financially from the distribution of child pornography.

The bank has denied all the Fincen allegations.

FBME said last December: “FBME has not engaged in money laundering and was never accused of such until the Fincen allegations.

“The bank has acted in compliance with all the EU and Cyprus anti-money laundering directives — a fact corroborated by multiple third-party auditors.”

The bank said that suggestions it operated with a culture of secrecy where staff were encouraged to duck money-laundering regulations was “absolutely false”.

It added: “The outrageous claims that FBME acted for terrorists, or knowingly acted for any sanctioned individuals, are false and deliberately damaging.”

Appleby revealed last October that a “data-security incident” in 2016 involved company data being “compromised”.

The International Consortium of Investigative Journalists and almost 100 media organisations around the world examined 13.4 million files from offshore law firms and company registries in offshore jurisdictions.

The files include financial statements, e-mails and loan arrangements going back decades.

Around half of the documents came from a cyberattack on Appleby.

Appleby has taken legal action against The Guardian and the BBC over coverage of the Paradise Papers leak on the grounds that their reports were not in the public interest.

The international law firm, founded in Bermuda, admitted it was “not infallible” and had always acted quickly “to put things right”.