Satabank has been slapped with a record €3 million fine for widespread breaches of money laundering laws.
The bank has been on regulators’ radar ever since a joint inspection by the Malta Financial Services Authority and FIAU last year found extremely weak structures in place to prevent its clients from using it to launder potential proceeds of criminal activity.
This led regulators to come down hard on the bank, freezing all its funds and appointing EY to administer its assets. Police and financial regulators have since been combing through suspicious transactions with potential links to fuel smuggling, drug trafficking and trade with sanctioned countries.
One source familiar with Satabank’s operations said the bank felt hard done by the multi-million euro fine, particularly given the way Pilatus Bank had escaped any sanction by the FIAU.
Contacted about the FIAU fine, a bank representative said Satabank continues to operate under close supervision, and is focused on returning funds to customers under the controlled release procedure instructed by the MFSA.
“The bank is taking all appropriate action in respect of investigations by the authorities,” the bank representative said.
Satabank poor risk management structures had already attracted a €60,500 fine from the MFSA in July 2018.
Fines levied on banks and other entities regulated by the FIAU usually show up on the unit’s website, yet in this case, the record fine imposed on Satabank is nowhere to been seen.
‘Naming and shaming’ on the FIAU’s website is often seen within the financial industry as being an even bigger penalty than the actual fine, as it could have a knock-on effect on the fined entities’ business.
Asked why recent FIAU fines are not showing up on online, a spokesman for the unit said changes to the law in December 2017 opened up the option of appealing fines in court.
Since the introduction of these amendments, €4.6 million in fines imposed by the FIAU have been appealed, the spokesman said.
A request by The Sunday Times of Malta for the list of entities that had been fined was refused by the FIAU on legal grounds due to the pending appeals.
The spokesman said the FIAU is currently reviewing the effectiveness of the legal framework and considering whether this may be amended to improve the overall sanctioning regime, including the publication process.
When fines are appealed
A search of civil cases filed against the anti-money laundering unit since December 2017 reveals how a bank and other financial institutions that have hit the headlines in recent years are appealing fines for money-laundering breaches.
Bank of Valletta is one of those appealing an FIAU fine.
Questioned about the fine, a BOV spokesman said the judicial process for appealing FIAU fines is not public in order to protect the confidentiality of its consumers.
“The bank is therefore not in a position to make further comments in reply to your query. The bank continues to maintain a good working relationship with the FIAU and remains committed to complying with its anti-money laundering and combatting the financing of terrorism obligations.”
Another familiar name on the list of appellants against the FIAU is Baltimore Fiduciary, a local company investigated for its role in a money-laundering scheme.
MaltaToday had revealed how a money-laundering probe by the police in early 2013 was placed on the back-burner once MP Beppe Fenech Adami’s name cropped up as a director of Baltimore Finance.
Prime Minister Joseph Muscat had promptly appointed a board of inquiry to investigate the claims, and had sent the inquiry’s findings to the FIAU for further investigation.
Contacted about the FIAU fine which is being appealed by Baltimore Finance, Dr Beppe Fenech Adami said he is no longer involved in the company, having resigned as a director many years back.
“I am not aware of the fine you mention. I am not aware of the appeal you mention. I have never been contacted or spoken to by any agency including the FIAU on any of the matters you mention. May I remind you that a public inquiry held way back in 2017 has cleared me from all allegations made against me by the Labour Party in particular,” Dr Fenech Adami said.
Another name on the appeal list is that of Portmann Capital Management, a Maltese company allegedly involved in money-laundering linked to Venezualan President Nicolas Maduro.
The Sunday Times of Malta has previously reported how the company was slapped with a €350,000 fine, which at the time, was a record for an FIAU sanction.