A magisterial inquiry into potential criminal wrongdoing by employees at Pilatus Bank was launched days before the bank was shut down by the European Central Bank in November 2018.
The bank’s administrator, Lawrence Connell, noted in a report tabled in parliament how, on November 2, a few days before the ECB revoked its licence, a magisterial inquiry started and access to Pilatus Bank’s premises and systems was restricted.
Connell was appointed to administer the bank following its former chairman Ali Sadr’s arrest in the US on sanction-busting and money-laundering charges in March 2018.
Sadr has since been convicted on the sanction-busting charges but acquitted of money laundering.
Weeks before his arrest, the Financial Intelligence Analysis Unit (FIAU) had conducted a surprise visit at the bank, during which all its data was seized for analysis.
Concerns about the bank’s activities were first raised in a compliance review by the anti-money laundering unit in 2016, but Pilatus had successfully contested its findings.
The leaked compliance report said the “veil of secrecy” that had been created at Pilatus Bank made it easier for transactions to be carried out by politically-exposed persons, their family members and their close associates, without the level of scrutiny required by law.
Separately, the FIAU had flagged in a report sent to the police two suspicious transactions at the bank involving an account owned by former OPM chief of staff Keith Schembri.
A year later, journalist Daphne Caruana Galizia thrust the bank into the spotlight with reports about the high ratio of Azerbaijani clients there. Former prime minister Joseph Muscat had called for a limited inquiry into the journalist’s claims that Pilatus Bank was used to pass on kickbacks to Egrant.
Although the Egrant inquiry did not find any evidence of kickbacks or links between Egrant and Muscat’s wife Michelle, the inquiry ordered the police in July 2018 to probe potential money-laundering activities at the bank involving Azeri elites.
The police appeared to have responded to this investigation request by opening yet another inquiry in the days prior to Pilatus Bank’s licence withdrawal.
Connell says in his report that a number of accounts were identified as “a cause for concern."
“These were subject to further discussion, analysis and appropriate action, which included various meetings with the competent authorities.”
Connell said the bank only regained access to its Ta’ Xbiex premises in May 2019, due to the inquiry.