The European Union’s banking watchdog has opened a “preliminary inquiry” into the supervision of Pilatus Bank, the Times of Malta has learnt.
Ta’ Xbiex-based bank has been at the centre of controversy ever since slain journalist Daphne Caruana Galizia reported claims by a Russian whistleblower, saying the Panama company Egrant was owned by the Prime Minister’s wife.
Both Prime Minister Joseph Muscat and Ms Muscat deny the allegations.
Asked what had led to the inquiry, a spokeswoman for the European Banking Authority said it had received a request by the European Commission some time ago and a report from the European Parliament.
She said the EBA was asked to see whether the Malta Financial Services Authority was fully equipped and free from conflicts of interest to perform its supervisory duties.
It was also asked to establish whether the MFSA had fulfilled its obligations as a national supervisory authority in view of the apparent lack of action against Pilatus Bank and Nexia BT, which continued to hold a licence to provide services within the EU, the spokeswoman said.
The EBA had also been requested to see if the fact that Pilatus Bank continued to hold a licence to operate within the EU warranted its intervention, along with that of the European Central Bank, she added.
MFSA officials told visiting MEPs in December they had not found anything warranting the withdrawal of the bank’s licence. They said supervision of the bank had intensified since 2016.
A leaked report by the government’s anti-money laundering agency said that failures to comply with money laundering laws had been noted during a March 2016 compliance visit to Pilatus Bank.
According to the report, Pilatus Bank did not have sound anti-money laundering and anti-terrorist financing policies for clients who classified as being politically exposed.
Rather, the leaked report said, a lot of attention was given to ensuring that the bank’s high-net worth clients, including those politically-exposed persons from high-risk jurisdictions, were given assurances that their banking operations were treated with utmost secrecy.
Following the resignation of the FIAU’s former director, Manfred Galdes, the Financial Intelligence Analysis Unit carried out a follow-up visit in the summer of 2016 after which it certified that the shortcomings found at Pilatus “no longer subsist”.
Ms Caruana Galizia had reported that family members of Azerbaijan’s President Ilham Alivey banked at Pilatus, along with Azerbaijan’s Minister for Emergency Situations, Kamaladdin Heydarov.
A man described by leaked US diplomatic correspondence as being a “front man” for Mr Heydarov set up a number of companies in Malta via audit firm Nexia BT a month after Dr Muscat, his chief of staff, Keith Schembri, and Tourism Minister Konrad Mizzi visited Azerbaijan.
According to court documents published earlier this week by MaltaToday, Pilatus Bank had filed a defamation lawsuit against Ms Caruana Galizia in the US.
Among other things, the bank accused Ms Caruana Galizia of intentionally misappropriating and publishing confidential information, including customer names, which the bank insisted was in duty bound to ensure remained confidential.