Pilatus Bank was officially shut down this week after its licence was withdrawn by the European Banking Authority.

The move came rather late in the day when considering that this particular bank was facing accusations that are far more serious than any other Maltese bank faced before it.

It was mentioned in connection with a number of leaked FIAU reports that allege high level corruption.

It was at the centre of the Egrant saga after Daphne Caruana Galizia claimed that Michelle Muscat was the owner of a Panamanian company and had received money at the bank. A magisterial inquiry did not find any evidence to support these claims but the way the bank handled the entire issue, including that famous late night walk with the luggage cases, raised more questions than answers.

There was also that FIAU report that had found serious shortcomings with regard to anti-money laundering measures.

Malta’s reputation took a severe beating over the course of the past two years with all the stories and scandals that were leaked, including the Panama Papers, the leaked FIAU reports and the government’s lack of action against people high up in power who were constantly accused of wrongdoing. Pilatus Bank was often at the centre of these controversies.

The bank had tried (and managed) to bully the media, threatening Daphne Caruana Galizia and several newsrooms, this one included, with ruinous SLAPP suits.

Despite the black on white facts and the bullying tactics, many people refused to believe the stories that were coming out and chose to believe the version given by the bank rather than the information that was being revealed by journalists.

To add insult to injury, a truckload of Labour supporters posed for photos outside the bank’s offices in Ta’ Xbiex on the PL’s election victory in 2017, despite the gravity of the accusations that were being levelled against it.

Then the tide began to turn. In March of this year, the chairman of Pilatus Bank, Ali Sadr Hasheminajad was arrested in the United States for alleged sanctions busting.

The Malta Financial Services Authority (MFSA) finally sprang into action and froze the assets of the bank and recommended the withdrawal of its licence (this newsroom is informed that the FIAU had urged police and MFSA action against the bank several months ago but no action was taken).

But in the end it had to be a European authority, not a local one, to shut down the bank once and for all.

The Nationalist Party and Partit Demokratiku both argued that this was a step that should have been taken much earlier, before all this damage had been done to our reputation.

Like in the Panama Papers, it was a clear case of unwillingness, by the political class, to take action. The closure of the bank by the EBA again puts Finance Minister Edward Scicluna, who is politically responsible for the MFSA, under the spotlight.

PD said yesterday that the bank should never have been allowed to set up, let alone operate. It asked what the cost of this decision would be for the financial services sector, which was once one of the most respected sectors of the Maltese economy.

The Pilatus Bank chapter may now be closed by the sector is still threading on dangerous grounds.

The ongoing situation at Satabank, which is also going through administrative procedures reportedly due to a failure to comply with AML regulations, does not bode well at all for the sector. Nor do the incessant reports of millions laundered through Malta.   

If this sector is to ever regain international respect the bad institutions and practices must be weeded out and regulations must be strengthened even more.

Parliamentary Secretary Silvio Schembri said on Monday evening that the government is working to attract at least two new banks to Malta. One hopes that these will be serious banks, and that a stricter due diligence process is affected. Nothing but the highest levels of professionalism and integrity will suffice.