Updated 7.40pm with PN reaction
Pilatus Bank’s directors on Monday were notified by the European Central Bank that its license had been revoked, two years after it was first implicated in alleged money laundering breaches.
The Sunday Times of Malta reported that the ECB would be closing down the controversial bank, some eight months after the Maltese watchdog started winding down its operations.
In a statement, the Malta Financial Services Authority on Monday said that further to the authority’s proposal to the European Central Bank to withdraw the authorisation of Pilatus Bank as a credit institution, the ECB's Governing Council had decided to withdraw the institution's authorisation with immediate effect.
Sources meanwhile said the bank’s remaining directors had discussed the matter with the MFSA and had agreed in principle with shutting down the bank.
Back in March, Pilatus chairman Ali Sadr Hasheminajad was arrested for alleged sanctions busting in the US.
The Ta’ Xbiex-based bank has 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, while it was linked to shocking allegations that Prime Minister Joseph Muscat’s wife Michelle secretly received graft payments, of which no evidence was found in a magisterial inquiry.
In a tweet, former opposition leader Simon Busuttil said: "Good news that Pilatus Bank has finally been shut down. But this is two years too late. Meanwhile Malta's name has been tarnished and the people who pushed for this bank to be given a licence and even had bank accounts there are still running our country."
Good news that #PilatusBank has finally been shut down. But this is 2 YEARS TOO LATE. Meanwhile #Malta's name has been tarnished and the people who pushed for this bank to be given a licence and even had bank accounts there are still running our country. https://t.co/CNgPKEpCDg— Simon Busuttil (@SimonBusuttil) November 5, 2018
Among other claims, Pilatus Bank was accused of processing corrupt payments for the Azeri and Maltese leadership by slain journalist Daphne Caruana Galizia.
The bank's chairman Ali Sadr Hashemi Nejad was arrested in the United States in March on charges of money laundering and sanctions violation.
After that arrest, the Maltese banking supervisor froze the assets of the bank and recommended the withdrawal of its licence.
The European Banking Authority subsequently found "general and systematic shortcomings" in the application of anti-money laundering directives.
The revocation of the bank’s licence is only the second time this had ever happened in Malta and is the most extreme intervention a regulator can undertake.
The MFSA said that the Competent Person put in charge of overseeing the bank several months ago would remain in control of Pilatus.
In a statement, the Nationalist Party welcomed the decision, which it said it had spent months advocating for to avoid further harm to the sector.
The PN said the investigation by the European Central Bank of the FIAU and MFSA was a further blow to Malta's reputation. Both entities, the PN said, had failed in their duties in respect of Pilatus.
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