A local wealth management firm linked to an alleged conspiracy to embezzle over a billion dollars in Venezuelan oil money has been given a year to fix its anti-money laundering controls.
The financial regulator was forced to revisit its decision to effectively suspend Portmann Capital’s operations indefinitely after the firm won an appeal filed before the financial services tribunal.
In response to the tribunal’s decision, the MFSA has decided to maintain restrictions on any outgoing transactions or onboarding of new clients, pending a maximum one-year deadline for Portmann Capital to address its lack of “serious internal control[s] and governance weaknesses”.
The MFSA will maintain the restrictions on client account movements until the remediation measures are put in place by Portmann.
Failure to do so within the one-year timeframe could see further regulatory actions taken against the firm, the MFSA warned.
In 2018, German banker Matthias Krull pleaded guilty to facilitating the billion-dollar embezzlement and laundering scheme from PDVSA, Venezuela’s state-owned oil company.
Around €500 million is believed to have been laundered via Portmann Capital in 2014 and 2015.
The conspiracy is alleged to involve the stepsons of embattled Venezuelan President Nicolas Maduro, who has himself faced accusations of looting the public coffers.
Maltese firm received upwards of €20 million
According to the criminal complaint filed in the US, Portmann Capital was a willing accomplice in the money-laundering.
The US court documents allege that the Maltese firm received upwards of €20 million for laundering the money, which works out to be a four per cent service charge on the racket.
The MFSA and FIAU have both fined Portmann over the regulatory breaches, while the police have been investigating the criminal aspect.
The decision by the financial services tribunal came as a blow to the MFSA following its decision in August 2018 to suspend Portmann’s activities.
The tribunal ruled that the MFSA’s decision was “abusive and unfair”, as had the regulator cancelled Portmann’s licence outright, the firm would have been allowed to continue operating pending an appeal.
Instead, the MFSA was deemed to have left the firm unable to carry out any activities during the appeal period.