The financial services watchdog has promised to “study” recommendations made by the European Banking Authority after an inquiry into the supervision of Pilatus Bank.
The EBA said last week the Financial Intelligence Analysis Unit had breached the EU’s anti-money-laundering directive in its oversight of Pilatus Bank.
A joint inspection by the FIAU and the Malta Financial Services Authority in March 2016 found serious breaches in Pilatus Bank’s anti-money-laundering compliance requirements.
The EBA said in its report the FIAU had failed to adequately follow up on this visit and the bank was never subjected to any sanctions.
Replying to questions from the Times of Malta about its role in the case, an MFSA spokesman said the regulator was not in a position to comment directly about the EBA’s report on the FIAU.
The financial services watchdog will see what lessons can be learnt
He said the MFSA supported measures that could help strengthen Malta’s financial supervisory regime. The financial services watchdog would be “studying” the EBA recommendations in detail to see what lessons could be learnt, he added.
The MFSA itself is the subject of an EBA enquiry into its supervision of Pilatus Bank. No reply was received to questions sent to the EBA about the course of this enquiry.
Questions have long been raised about the due diligence carried out by the MFSA on Pilatus Bank’s owner, Seyed Ali Sadr Hasheminejad. The financial services watchdog only appeared to take action against Pilatus Bank after Mr Hasheminejad was arrested in the United States in March on sanction-busting and money-laundering charges.
Prosecutors in New York have argued that the €10 million in capital used to establish the bank was the proceeds of crime.
The MFSA has defended its supervision of the bank, saying that the Ta’ Xbiex-based bank underwent a “comprehensive” due diligence process prior to being granted an operating licence.
The MFSA last month formally filed a recommendation with the European Central Bank, asking for the withdrawal of bank’s licence.
Pilatus Bank was granted a licence by the authority in 2014.
It was found to have been used by Azerbaijan’s elite to move millions of dollars into Europe.
The bank is at the heart of a magisterial inquiry into allegations that a company owned by the Prime Minister wife, Michelle Muscat, was used to receive a $1 million payment from the Azerbaijani elite.
Both Ms Muscat and the Prime Minister have denied the allegations.