Bank of Valletta yesterday “categorically denied” that it has knowingly conducted itself in any unlawful manner or that it has intentionally concealed any breach of law, in reply to an article carried last Sunday by The Malta Independent.

The bank’s statement, however, contrasts sharply with documentation held by this newsroom, which clearly shows the Maltese authorities have been “extremely concerned” over the bank’s lax level of due diligence being applied to Libyans opening up accounts between at least 2013 and 2015. 

The documents also show how the bank’s officials had for at least two years been informing the authorities that its anti-money laundering and anti-terrorism funding obligations were being fully adhered to when, in fact, it they were not.

Last Sunday this newsroom had reported how documentation in its possession evidences that the bank had been turning a blind eye toward its anti-money laundering and terrorism obligations so as to accept business from war-torn Libya.

The bank yesterday, however, insisted that it has the appropriate mechanisms and processes in place to comply with its anti-money laundering obligations. These processes and mechanisms, it said, are kept under constant review by the bank with the aim of enhancing those procedures and making them as robust as practicably possible.

BOV was ‘knowingly in breach of money laundering and terrorist financing regulations’

In one of the documents in the possession of this newspaper, the bank’s own head of compliance informs the bank’s board of directors that when services are provided to Libyan nationals: “the CDD (Customer Due Diligence) being conducted is not the enhanced CDD required at law.”

According to that document, when opening accounts for Libyans, the bank is: “relying on bank references from Libyan banks where it is very unclear who is behind these banks today”.

Further documentation held by this newsroom shows Malta’s Financial Intelligence and Analysis Unit’s concern over the state of affairs.

The FIAU notes in no uncertain terms that: “This statement is extremely serious and reveals that the bank has knowingly been in breach of its legal obligations under the Prevention of Money Laundering and Funding of Terrorism Regulations for a period of time, a position which runs counter to what had been stated by bank officials during discussions held over the past two years.”

The FIAU also expresses “serious doubts on the adequacy of information being collected by the bank on the source of funds (if at all), which we consider critical for the purposes of identifying suspicious transactions relating to money laundering or the funding of terrorism.”

The FIAU is the government agency tasked with the collection, collation, processing, analysis and dissemination of information with a view to combating money laundering and the funding of terrorism.  It is also responsible for monitoring compliance with the relevant legislative provisions.

Its members are appointed by the finance minister and with a member each being selected from the offices of the Attorney General, the Governor of the Central Bank of Malta, the chairman of the Malta Financial Services Authority and the Commissioner of Police.

Certain decisions on accepting Libyan business can only be taken at board level

For its part, BOV yesterday did say that, “The volatility characterising the political scene in Libya has made the bank heighten the level of due diligence undertaken when accepting business from Libyan entities.

“The bank’s processes ensure that no officer of the bank may ‘waive’ or reduce the level of due diligence that is conducted in accepting any business. In recent months the bank has further strengthened its client acceptance procedures by adopting an escalation procedure within the bank where Libyan business is concerned.

“This procedure envisages that in certain instances decisions on accepting Libyan business can only be taken at the level of the board of directors, and this only after due confirmation that the due diligence process has been properly conducted.”

The bank stressed that it will continue to keep its client acceptance procedures under constant review to ensure that they meet the requirements of local and EU regulation with respect to anti-money laundering.

It added that, “Surprisingly, the main complaints we receive nowadays are that our client acceptance procedures are too stringent and that we take too long to open bank accounts particularly for foreign nationals - or that we refuse to open accounts at all, and not that we waive our due diligence requirements to open bank accounts.”