Updated 1.49pm with PN statement

Bank of Valletta has been slapped with a massive €2.6 million fine by the FIAU after failing to properly identify thousands of corporate customers.  

In a public announcement on Friday, the Financial Intelligence Analysis Unit said BOV, Malta's largest bank, had failed to properly determine the beneficial ownership of 2,442 of its corporate customers.

It said the lack of information meant BOV was essentially "unaware whom it was ultimately servicing".

BOV said there was no suggestion that any of the affected accounts were involved in money laundering or terrorism. 

Lack of transparency of ownership was one of the key issues highlighted by the Financial Action Task Force when Malta was placed on an international grey list of countries in June.

In some cases, the bank only obtained basic identification details that same month, when it went to the country's beneficial ownership register maintained by the Malta Business Registry.

Prior to this, BOV had not adequately determined the beneficial owners of these customers.

In its announcement, the FIAU expressed its “concerns at the bank’s failures”.

“The obligation to understand who the individuals behind a corporate customer are is considered as one of the most basic and essential steps of customer due diligence," it said.

"Without such information, the bank was essentially unaware whom it was ultimately servicing,” the FIAU said.  

What did the FIAU find?

The FIAU said it had looked into a total of 2,442 corporate customers for which the bank either held or had held no beneficial ownership information.

Some 1,298 of these corporate customers were only properly identified to the bank in June. Prior to that, BOV had no beneficial ownership information or had only incomplete information. 

These 1,298 customers were made up of 259 corporate customers for which the bank had held no beneficial ownership information whatsoever and 1,039 corporate customers for which the bank had failed to determine additional individuals involved.

In some of these instances, the bank had identified at least one other beneficial owner aside from its customer, the FIAU said.  

The FIAU found 492 of BOV’s corporate customers were either struck off, in dissolution or inactive.

Another 556 corporate customers required a review of the customer due diligence information and documentation held at the bank, some of which included overseas entities.

The FIAU said 96 corporate customers were classified as law firms. 

How has the bank reacted?

Bank of Valletta said there was no suggestion that any of the affected accounts were involved in money laundering or financing of terrorism.

The bank said it had taken immediate action and collaborated with the FIAU in a full and transparent manner.  

“The bank continues to invest heavily in a transformation program and today is able to combat financial crime much more effectively and sustainably over the long-term,” the bank said. 

Rick Hunkin, BOV chief executive officer, said the fine imposed on the bank would not have any significant impact on its financial or capital position. 

“Bank of Valletta takes its responsibility towards regulators extremely seriously; there can be no excuse for a violation of CBAR reporting and this fine is a harsh but important reminder of the need for our systems to be flawless,” he said. 

“Bank of Valletta remains fully committed to protect the integrity of the local financial system and to continue servicing its 300,000 customers in an efficient manner.”  

PN: a very worrying situation

The Nationalist Party said it was very concerned by the FIAU findings, which do not augur well for Malta's attempts to get off the FATF grey list. 

It said BOV's failings were either the result of carelessness or malfeasance, with the intent of hiding the identities of people depositing money with the bank. 

"Whatever the case, this is very worrying," said PN finance spokesperson Mario de Marco. 

The PN MP said bank shareholders would bear the brunt of this latest blow, and said responsibility should be assumed both politically and by the bank itself.

"It's been two years since BOV issued a dividend, citing the COVID-19 pandemic as an excuse," he said. 

"Now it will have to pay €2.6 million, with the money going to the finance ministry instead of shareholders."

BOV registered a pre-tax profit of €46.5 million between January and September of this year.

Independent journalism costs money. Support Times of Malta for the price of a coffee.

Support Us