Pilatus Bank was a “money transfer operation” rather than an ordinary bank providing investment corporate and retail services to high net individuals, according to the bank’s administrator Lawrence Connell.
The former US financial regulator reached his conclusion in his first six-month report covering up to August 2018, which was only handed to the government earlier this month.
Though the report gives scant details of the suspected money-laundering activities over which the bank’s licence had been revoked by the European Central Bank, the administrator noted that some accounts were “a cause for concern”.
Established in 2014, the Ta’ Xbiex-based bank had risen to notoriety following the Panama Papers revelations of 2016 amid allegations of money laundering involving senior government officials.
Earlier this month, its former chairman, Ali Sadr, was convicted by a US court of various kinds of fraud and breaching sanctions against Iran. He faces up to 85 years in jail.
In his report, Connell noted that on the day he took over the bank, its total assets amounted to €126.9 million and the funds of the 162 deposit clients amounted to €114.4 million.
While its total equity was of €10.8m, Pilatus had just six loan clients and six to whom the bank had provided financial assistance in connection to residency schemes and applications to buy a Maltese passport.
Though loans to customers amounted to €66.7 million, it was pointed out that this portfolio was dominated by one particular loan amounting to $73 million. This had been secured by the client’s own deposit in the bank and $12.5 million in US Treasury Bills. Such an arrangement was described by the administrator as akin to the “client borrowing its own funds”. Of the five remaining loans, three were to related persons.
The report points out that a plan to open a branch in London had been immediately scrapped by the bank’s own directors while the workforce was downsized from 20 to five employees.
The administrator noted that some accounts were of concern but no details or indications of the amounts involved were divulged.
The only information given was that the first to be scrutinised were accounts with balances over €100,000, while the focus on smaller accounts was on those which had a high volume of activity.
No audited accounts for Pilatus Bank have been publicly seen after the end of 2016. Connell makes various references to the drawing up of the 2017 audited accounts but limits himself to saying he met the bank’s auditors over the matter.