Bank of Valletta Chairman Gordon Cordina admitted that the €2.6 million fine imposed on the bank last week by FIAU was justified, and processes have been implemented immediately to overcome the shortcomings in the identified breach.
Speaking to The Malta Independent, Cordina said that “The bank was transparent throughout the process and worked closely with the FIAU on this matter. The fine was issued as an administrative penalty for failing to report Beneficial Ownership information for 2,442 corporate customers in the Central Bank Account Register (CBAR) reporting to the FIAU. There was no suggestion that this resulted or has facilitated money laundering or the financing of terrorism.”
About public concern over the hefty fine the bank had to pay, Cordina stated, "The size of the fine reflects the size of the bank in the economy – as is normal practice when regulator determine fines: the figure per se is concerning but even more important is our responsibility towards regulators.
There can be no excuse for shortfalls in CBAR reporting and this fine is a harsh but important reminder of the need for our systems to be flawless. The issue has now been addressed and further work is ongoing to eliminate future similar incidents. The bank continues to invest heavily in a transformation program and today can combat financial crime much more effectively and sustainably over the long term. As a bank we are not a finished product, our transformation began at the end of 2017, and we will keep striving to improve. We remain on course to modernise all processes and procedures and strengthen training requirements for staff. This of course applies to our handling of issues which may potentially arise from the country’s grey-listing by FATF. Our focus is on continuing to improve our transactions management systems, maintaining close relationships and discussions with correspondent banks, within an imperative for the country to get off the grey-list as soon as possible."
Asked if shareholders were disappointed, Cordina emphasised, "Naturally they are, at the fact that share prices of BOV have dropped by around 40% of their net worth over recent years, and that dividends have been effectively suspended for two years, primarily due to ECB’s direction to banks not to pay dividends with the aim of boosting their capacity to absorb losses and to support lending to households, small businesses and corporates during the coronavirus (Covid-19) pandemic, prior to our announcement of an interim dividend a couple of weeks ago. However, we must consider the long term value of the entity, and the fact the bank is in a solid position, our capital and liquidity serve as a massive strength for us."
Cordina added, "Right now, however, the ongoing negative interest rates we must pay to hold excess liquidity arising from deposits is a significant cost to the bank. We must address this within the opportunities that exist for our depositors to make a more effective and regarding use of their savings funds.”