A record fine of just under €5 million given to Pilatus Bank by the FIAU has been upheld by an appeals court.
The court said the now-shuttered bank failed to abide by its basic obligations as a financial institution by allowing huge transactions to be processed without scrutiny.
Pilatus Bank was taken over by a regulator in 2018 after its owner Ali Sadr was charged in the United States with money laundering.
The FIAU, an anti-money laundering body, slapped the bank with a €4.9 million fine in 2021 for its “total disregard towards necessary anti-money laundering and terrorism financing safeguards”.
A court this week dismissed an appeal by Pilatus against the fine, saying the bank allowed huge transactions to be processed without scrutiny.
According to a summary of the decision posted on the FIAU’s website, the court said Pilatus had lost every control over its business operations, which can be said to have been dictated by the exigencies of the clients it was dependent upon.
The court also rejected the bank’s argument that the fine was excessive.
It said the considerable amounts being processed by the bank, together with the clients’ identity, undoubtedly increased the risks of money laundering and funding of terrorism for the bank.
The bank was found to be dependent on a number of wealthy politically exposed Azerbaijani clients.
This reliance on a small set of clients made it impossible for the bank to ever take concrete actions in respect of any transactions, activity or relationship deemed to be suspicious, the FIAU said.
A magisterial inquiry concluded in 2021 ordered criminal action to be taken against nine of the bank’s top officials.
To date, only the bank’s former anti-money laundering officer Claude-Anne Sant Fournier and the bank itself have faced charges.
A court recently turned down demands by rule-of-law NGO Repubblika for the police to act against the other officials named as complicit in the alleged money laundering.
Arrest warrants were issued against other officials, including Sadr, in 2021.
Police Commissioner Angelo Gafa said in 2022 that the police were "at the stage" of issuing international arrest warrants, as many of the bank officials live abroad.