The Malta Financial Services Authority (MFSA) on Saturday announced that it has formally filed with the European Central Bank (ECB) a recommendation for the withdrawal of Pilatus Bank’s banking licence.
The recommendation for the withdrawal of the licence has been made on the following grounds:
Indictment of the ultimate beneficial owner (UBO):
1. In March 2018, Ali Sadr Hashemi Nejad, the sole and ultimate beneficial owner (UBO) of Pilatus Bank was indicted in the United States in relation to allegations of financial criminal offences. As a result, the MFSA is no longer satisfied that the UBO is a suitable person as required by the Banking Act,
Liquidity
2. The MFSA has been monitoring the bank closely and notes that the bank has been persistently breaching the liquidity coverage required by law since the indictment of the UBO.
The assets within the bank remain frozen in line with the sanctions imposed by the MFSA on March 21. The MFSA will continue to take all necessary actions to protect those assets until the results of the ongoing joint MFSA/FIAU investigation into alleged money laundering at the bank are completed.
Furthermore, the MFSA will now wait for the ECB’s assessment of the MFSA’s recommendation before proceeding with any further actions, the MFSA said.
Last month, the MFSA had told The Malta Independent that no “red flags” cropped up during the due diligence and authorisation process of Pilatus Bank.
“The FIAU and the MFSA exchange intelligence information on an ongoing basis as part of their respective supervisory responsibilities subject to the necessary clearances from other intelligence sources. Such clearances are usually requested to avoid compromising the investigations. The MFSA’s investigation on Pilatus bank is still ongoing and any further regulatory action will be made public," the MFSA had said.
Ali Sadr Hasheminejad, the bank's owner and chairman, was detained in the USA last March and accused of circumventing US sanctions on Iran when he brokered a development deal for thousands of housing units in Venezuela. He is accused of having used American and Swiss banking systems to affect transactions $115 million, and using complicated structures to conceal that the money was ultimately to be deposited in Iran.
The US Justice Department accused Pilatus Bank owner, Seyed Ali Sadr Hasheminejad, of using “criminal proceeds” to set up the now infamous bank.
Sadr became a household name in Malta when slain journalist Daphne Caruana Galizia had alleged that the Prime Minister’s wife, Michelle Muscat, is the owner of a Panama registered company called Egrant. All involved deny wrongdoing and magisterial inquiries are currently underway.
The Pilatus Bank membership in the Malta Bankers' Association was terminated in April.
In a statement, the Nationalist Party said that the revocation of the Pilatus Bank licence by the MFSA came months too late with the result that the country's reputation suffered greatly. The people have for long been waiting for the government to safeguard the reputation of the banking sector, and the government took its decision months too late.
The PN, through its spokesman for the economy and financial services Kristy Debono, said it had been saying that Pilatus Bank should not operate in Malta for the past year because it was ruining Malta's reputation. The government dragged its feet on the matter and did not take heed of what the Opposition, the independent media and MEPs were saying.
It had to be Ali Sadr's arrest that pushed the MFSA into starting the process of revocation, the PN said.