Seyed Ali Sadr Hasheminejad’s arrest in the US “immediately compromised” Pilatus Bank’s entire operation and made it “fall foul of a myriad of provisions”, the financial services watchdog said.
The Malta Financial Services Authority has hit back at an attempt by the bank’s directors to regain control, insisting the gravity of the situation warranted all the measures taken.
The Sunday Times of Malta reported last month that the beleaguered bank’s directors were taking legal action against the MFSA in a bid to regain control after the company was placed in the hands of a “competent person”.
The financial services watchdog had stepped in after the bank’s chairman was arrested in the US amid allegations of money laundering and violating economic sanctions on Iran. It had raised concerns that funds held by the bank could potentially be moved.
MFSA sources said it had still to be established whether any assets were the proceeds of crime, adding that an investigation of the servers was still ongoing.
The MFSA’s legal team was insisting with the Financial Services Tribunal that the US charges brought against Seyed Ali Sadr Hasheminejad were so serious they justified the watchdog’s decision that he was no longer fit to own a bank, the sources added.
They pointed out that although the offences the US is alleging were committed by Mr Hasheminejad supposedly happened before the bank was set up, he was still ordered by the MFSA to step down.
During hearings on a request by Mr Hasheminejad to be granted bail, the US court was told the bank in Malta was set up using funds derived from criminal activity.
The bank’s six remaining directors say the sanctions issued by the MFSA were, among other things, “manifestly unfair”, “disproportionate” and “abusive”.
The regulator, however, argues that, had no sanctions been imposed, it would have been “seriously abdicating its duties, also possibly prejudicing the rights of depositors, creditors, clients, the public at large and the very same directors who are now filing the appeal”.
The sanctions, the MFSA remarks, were “urgent and precautionary measures” taken in an “emergency situation”.
The sources said the regulator could not cancel the bank’s licence unilaterally but would need to seek the approval of the European Central Bank. Also, before making such a request, the MFSA would first have to ensure the deposits were properly distributed and that only “clean funds” were returned to depositors, they continued.
“Hence, at this stage, it is important that the MFSA maintains control over the bank because if the licence is cancelled, that control may be lost and potentially laundered funds would be returned to depositors,” the sources noted.
Independent journalism costs money. Support Times of Malta for the price of a coffee.Support Us