Updated 10.55am with bank statement

Bank of Valletta has been closing down a number of accounts during the past weeks, mostly in US dollar denominations, citing “client relationship reviews”, the Times of Malta is informed.

As the island is facing increasing pressure on its reputational risk, particularly due to claims of lax monitoring against money-laundering and proceeds from organised crime, BOV informed some of its clients that it will be closing down their accounts.

“Following an internal policy review, Bank of Valletta plc is no longer in a position to continue processing transactions through your US$ account held with the bank,” correspondence sent to clients and seen by this newspaper, states.

Clients, mostly international businesses and wealthy individuals, have been told that while the bank will continue to provide banking services in other currencies, it will close down their dollar accounts with immediate effect.

Relationships and accounts are reviewed on a regular basis

Asked for a reaction, a spokesman for the bank said that while BOV extends services in various currencies to a full spectrum of clients, it manages and maintains relationships and accounts within its risk appetite framework.

“Relationships and accounts are reviewed on a regular basis, and the necessary steps to align these with the bank’s risk appetite are taken accordingly,” the bank said.

Banking industry sources told this newspaper that the exercise made by BOV “might be related to potential problems with its US dollar correspondent banks”.

“Malta’s banking industry has been on the radar for a long time now and this may be part of the consequence. Despite continued claims by the local authorities that Malta is a sound jurisdiction, it is evident this view is not shared by other countries. We are no longer being taken seriously,” the sources said.

Last week, Malta’s reputational problems were also highlighted by the CEO of HSBC Andrew Beane while announcing a 23 per cent drop in profits in the financial year ended December 2018.

He warned about the danger to the sector as a whole: “2018 was difficult for the local financial services sector which suffered further reputational damage.

“It is essential that all market participants ensure anti-money-laundering standards are fully implemented without delay in order to avoid more significant long-term risks. We welcome new initiatives announced by the local authorities which the industry must fully embrace and support,” he said.

Only last year, Germany’s banking giant – Deutsche Bank – withdrew correspondent banking services for US dollar transactions to BOV without giving a reason.

The local bank played down the incident, describing this as “a normal occurrence” in the banking sector.

Banks outside the United States require a correspondent bank to clear transactions in dollars.

'Higher-risk clients' - BOV

In a statement issued on Saturday morning, the bank insisted that the accounts it had shut down belonged to customers which it considered to be "of a higher risk". 

"This forms part of a multi-year de-risking programme that the Bank is undertaking," BOV said, adding that any further interpretations were "pure speculation."

"The bank continues to offer accounts in US dollars and in all major currencies," it added. 

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