It transpires that the American authorities were investigating Pilatus Bank chairman Ali Sadr Hashemi Nejad for money laundering and a raft of other charges that could see him sent down for up to 125 years in prison, at the same time that the Malta Financial Services Authority was carrying out its due diligence on the bank and issuing it with a licence to operate in Malta.
Last April, the MFSA has confirmed that it had granted a licence to Pilatus Bank to act as a credit institution in terms of the Banking Act on 3 January 2014.
But in a statement on Sadr’s arrest on Tuesday, Manhattan District Attorney Cyrus Vance Jr. said that, “This indictment is the result of an investigation launched by my Office in 2013 into this defendant and his illicit scheme to funnel millions from Venezuela to Iranian-controlled entities.”
The scheme is believed to have been worth more than US$115 million in funds transferred to Iran, in contravention of US sanctions.
Moreover, according to the indictment in the US courts on Tuesday, the American authorities have accused Sadr of having operated the illicit scheme “up to and including at least May 2014” overlapping at least four months into the bank’s operations in Malta.
The fact that several US authorities had been investigating Sadr while the Maltese authorities were in the midst of evaluating the bank’s licence application calls the MFSA’s due diligence procedure applied to the bank into question.
Back in April 2017, when Pilatus was at the epicentre of controversy after revelations by journalist Daphne Caruana Galizia, Russian whistleblower Maria Efimova and leaked Financial Intelligence Analysis Unit reports published in the media, the MFSA had defended its decision to grant the bank a licence.
The MFSA had insisted at the time that, “The application for the licence was processed and assessed in full compliance with applicable legal requirements and in accordance with the Authority's authorisation procedures for the granting of a credit institution licence.”
The bank was given an additional MFSA Category 2 licence in August 2015 to provide the Investment Services.
The MFSA yesterday banned Sadr from his roles at the bank, as well as banning Pilatus Bank from conducting banking transactions, including withdrawals or deposits held with the bank by the shareholder, members of the Board of Directors and Senior Management officials of the Bank, or any connected persons or related persons thereto, whether direct or indirect. The Bank was also ordered to obtain the MFSA's prior approval before effecting any movement of the Bank's assets.
Sadr, who is 38 years of age, has been charged with one count of conspiracy to defraud the United States, one count of conspiracy to violate the International Emergency Economic Powers Act, one count of bank fraud, one count of conspiracy to commit bank fraud, one count of money laundering, and one count of conspiracy to commit money laundering.
The maximum accumulative prison time Sad is facing is 125 years, although sentencing will be determined by a judge.