Bank of Valletta has been fined a total of €57,500 in two cases involving breaches of its anti-money laundering obligations.
A notice published on the Financial Intelligence Analysis Unit’s (FIAU) website says that, in the first case, BOV failed to flag how a factory worker who was later unemployed continued to make “significant deposits” of uneven amounts in cash, coins and cheques.
It says the bank had all the evidence necessary to establish reasonable grounds to suspect that the deposits could be derived from criminal activity or that they were otherwise laundered funds.
While BOV provided a document to justify a substantial part of the funds being received by the customer, the FIAU said the nature of the transactions described in the document did not tally with the types of deposits made by the client.
The FIAU said the amount referenced in the document was lower than the total amount of funds deposited by the customer, leaving a “considerable amount” unaccounted for.
It said BOV’s ongoing monitoring systems should have alerted it that the way the account was being used was not in line with the client’s expected economic profile.
The FIAU said the bank had failed to obtain further clarification and documentation to establish the actual source of the funds being deposited in the customer’s account and to understand the rationale of the transactions and, thus, ensure the funds came from a legitimate source.
BOV’s failure to flag these transaction patterns and file a report with the FIAU was of“serious concern”, the anti-money laundering watchdog said.
The failures led the FIAU to fine Bank of Valletta €40,000.
In another case, the FIAU found that, in 70 per cent of the files reviewed during a 2016 compliance visit, BOV failed to take all reasonable measures possible to establish the source of funds or assets being registered under a 2014 amnesty given by the government.
The amnesties give people the chance to declare previously-concealed funds and assets to the authorities against the payment of a fine.
Such amnesties are open to abuse by criminals who can take the opportunity to re-introduce their ill-gotten gains into the Maltese financial system.
The FIAU found instances where BOV relied on declarations by its customers that the money being repatriated consisted of inherited or donated funds, without substantiating such declarations with evidence, like a copy or a will or copies of a donation agreement.
It also found cases where the bank failed to determine the source of how such funds and assets had been generated.
Although the FIAU acknowledged that the applicants registering assets and funds were all long-term BOV customers, it said this could in no way exonerate the bank from its obligations to determine the source of the money.
These breaches were of serious concern, particularly given that the bank failed to appreciate the risks to which it was exposed by acting as an agent to the asset registration scheme and by failing to understand fully the source of funds or assets registered under the scheme. The FIAU fined the bank €17,500 for these failures.
BOV has in the past months been closing accounts of high-risk customers as part of its bid to satisfy the European Central Bank and find a correspondent bank that will give it access to dollar transactions.