The Pilatus Bank issue was “a very big problem”, the Malta Financial Services Authority’s new chairman, John Mamo, told a parliamentary committee yesterday.

Prof. Mamo admitted he knew little more than any layman on the matter.

“I followed the situation developing closely and I agree that it is a very big problem. However, I cannot say if the MFSA acted correctly because I simply do not know,” he said during a hearing of the Public Appointments Committee.

A lawyer and entrepreneur, Prof. Mamo, who was nominated to the post last December to succeed Joe Bannister, spoke very candidly at the hearing.

He described Deutsche Bank, the Frankfurt-based, investment bank and financial services company, as a “well-known money-laundering channel”. Countries like Germany and Sweden, which were being vociferous in criticising the Maltese jurisdiction, should note they did not have a clean slate either. London was also a centre for money-laundering, he continued.

“We want to make it clear we are keeping a clean house,” Prof. Mamo said, adding that Malta should still not “be a masochist.

London is a centre for money-laundering

“We should not seek to go beyond what critics are asking of us.”

Members from both sides of the House of Representatives sitting on the committee said they were satisfied with his answers and Nationalist MP Carm Mifsud Bonnici noted the country’s reputation in the financial services sector would now fall on Prof. Mamo’s shoulders.

He said that in his opinion the MFSA should have been stronger when dealing with Pilatus Bank.

The financial services watchdog was widely criticised both in Malta and beyond for the way it handled Pilatus Bank, especially after its chairman, Seyed Ali Sadr Hasheminejad, was arrested in Washington on charges of violating US economic sanctions on Iran, where he was born.

After the arrest, the MFSA froze the bank’s assets and divested Mr Hasheminejad of all executive powers within the bank.

Prof. Mamo noted that the MFSA’s communications department was quite weak, adding that a recruitment programme was in progress to address the matter.

He pointed out that confidentiality issues limited how far one could go in terms of communication, adding that different units involved in financial services regulation were are also limited in what information they were able to exchange.

Since his nomination, Prof. Mamo has undergone an induction programme under the wings of his predecessor. He met with the International Monetary Fund and the European Central Bank as part of the induction programme.

“I was given as much exposure as possible while all involved respected the limits of confidentiality,” he noted yesterday.

Prof. Bannister officially left the MFSA on March 31.

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