Updated 3pm
Pilatus Bank's fate in Malta is being discussed by Malta's financial regulator, with its local banking licence reportedly in the balance.
The supervisory council of the Malta Financial Services Authority - the arm tasked with issuing banking licences - has been locked in a meeting since 8.30am on Wednesday morning, sources told the Times of Malta.
Supervisory council members are discussing what to do with Pilatus Bank after its chairman Ali Sadr Hashemi Nejad was arrested in New York on charges of having evaded US sanctions against Iran.
The meeting was still underway at the time of writing.
The MFSA's supervisory council is chaired by the authority's director-general, with each of the authority's directors also having a seat. It meets on its own volition.
Whether the council can revoke a bank's licence on the strength of an indictment in a third country remains to be seen, given that Pilatus Bank's name does not figure in Mr Sadr's bill of indictment.
Should the bank's licence be pulled, the revocation process is likely to take months.
Earlier on Wednesday, activists called on the MFSA to revoke Pilatus Bank's licence by noon, slamming the bank as a "pigsty."
An FIAU report in April 2016 had noted that Mr Ali Sadr was “subject to a criminal investigation which is currently underway in a foreign jurisdiction for money laundering, illegal money transmission as well as other violations” and had recommended that the police should take action.
Earlier on Wednesday, Prime Minister Joseph Muscat told a Net News reporter that it was up to the MFSA's supervisory council to decide whether or not to revoke the bank's licence.
In a statement issued on Wednesday afternoon, the PN said that Dr Muscat had "washed his hands" of the issue and said Pilatus Bank's licence had to be revoked to ensure Malta's financial services sector was safeguarded.
The licence for Pilatus was issued before the Single Supervisory Mechanism (SSM) came into force. The MFSA now has to interact with the ECB on authorisation of new licences.