There was “no way” the Malta Financial Services Authority (MFSA) could have been known that Pilatus Bank owner Ali Sadr Hasheminejad was under US investigation when the bank was being granted its licence, an official told a special tax committee under the European Parliament.
MFSA Director for the Enforcement Unit Anton Bartolo together with MFSA Director Marianne Scicluna fielded questions from the TAX3 Special committee at the European Parliament in Brussels. The committee is aimed at fighting money laundering in the EU banking system.
On March 20, Ali Sadr was arrested in the USA and charged with circumventing US sanctions on Iran, money laundering, fraud and more. He pleaded not guilty but was denied bail. Sadr faces a possible 125 years imprisonment if found guilty for the charges brought against him.
He was the chairman of Pilatus Bank, however upon the news of his arrest the MFSA took over the bank and had him forcibly removed as chairman. It is being reported that the bank’s operations in Malta and London are “winding down”.
In the US Bill of indictment, it was revealed that he had been under investigation from 2013. The MFSA granted Pilatus Bank in January 2014, while Ali Sadr was being investigated by the US authorities.
Bartolo told committee members that there was no way of knowing the Iranian banker was under investigation while the MFSA was processing the Pilatus banking licence. He commented on how information sharing could be improved not only at a European-wide level but even globally.
Bartolo and Scicluna both stressed that the MFSA could not have acted on the information being spread through rumours or through the information presented in newspaper reports.
The director of the enforcement unit added that even if MFSA officials had all the information in their hands, this might not have resulted in the drastic action some are calling for.
He continued to question what the fall out would be to the US investigation had the MFSA declined “gone to Sadr on the strength of the US investigation”.
Bartolo added that action taken too hastily could even have disrupted ongoing investigations in other jurisdictions.
MFSA officials were subject to harsh criticism over the way the entity dealt with Pilatus Bank even starting from the decision to grant it a licence to operate in Malta in the first place.
Scicluna and Bartolo held their ground when they were repeatedly asked the name of the firm which carried out the due diligence on Pilatus Bank. It had previously been reported that KPMG carried out this due diligence, however the officials repeatedly denied that. They said that it was not KPMG, neither was it a Maltese firm. They insisted that the firm engaged was a reputable institution that has been contracted to carry out similar work in other EU member states as well as the UK banking watchdog.