There were "a million things" that went wrong in the case of the scandal-hit Pilatus Bank, a European Commission representative said on Thursday.
Fielding questions from MEPs during a debate with the Justice (LIBE) and the Economic and Monetary Affairs (Econ) committees, deputy head of the Commission's Financial Crime Unit Despina Vassiliadou said "all the rules were there but not much action had been taken" when asked about the Ta’ Xbiex-based Pilatus Bank.
She said the Financial Crime Unite was monitoring the situation since the European Banking Authority found last year that Malta's Financial Intelligence Analysis Unit breached union law "through non-action, through lack of monitoring".
"Malta's FIAU has carried out some improvements. What we are waiting to see is enforcement," Ms Vassiliadou said.
She went on to point out that while it was "nice to have rules", the FIAU needed to apply these.
Last year the directors of Pilatus bank were notified by the European Central Bank (ECB) that its license had been revoked, two years after it was first implicated in alleged money laundering breaches.
The move came after its then-chairman Ali Sadr Hashemi Nejad was arrested in the US over his alleged involvement in a scheme to evade US economic sanctions against Iran.
The Ta’ Xbiex-based bank had been at the centre of political controversy ever since a series of leaked financial intelligence reports flagged evidence of money-laundering and serious compliance shortcomings back in 2016.
It has also been alleged that the bank was used as a conduit for Azerbaijani millions making their way into Europe, and it was linked to allegations that Prime Minister Joseph Muscat’s wife Michelle secretly received graft payments. No evidence of that was found in a subsequent magisterial inquiry.
Reacting to the Commission representative's comments, Nationalist MEP Roberta Metsola, who sits on the LIBE committee, said it was "a watershed moment in the European Parliament".
"We saw that following the Pilatus Bank scandal, the Maltese authorities are still under the spotlight. We saw that it was only because of EU pressure that things in the sector in Malta were forced to improve and that systems were put in place to ensure that no one can again turn a blind eye to all that the Pilatus scandal exposed," she said.
The Pilatus issue, she said, is tied closely to the cash-for-passports scheme.
The new Commission is concerned by the loopholes these schemes create and have classified them as high-risk, she said.
"The fallout from cash-for-passports continues to grow and does not do our nation any favours. It should be stopped."