The European Banking Authority has confirmed that it is “currently carrying out a preliminary enquiry in Malta,” adding that at this stage, it cannot comment further.

Questions sent by The Malta Independent to the EBA in the wake of news that Pilatus Bank chairman Ali Sadr Hashemi Nejad has been arrested in the USA and has been accused of circumventing sanctions on Iran.

He is accused of facilitating the transfer of $115 million of Venezuelan money to Iran via the US banking system to build 7,000 housing units.

Sadr was the chairman of Pilatus Bank, ta’ Xbiex, which was at the centre of a major scandal in the previous year. Since the news of his arrest, the Malta Financial Services Authority (MFSA) has called for his removal as chairman, and has prevented the bank from carrying out any transactions for the time being.

In the EBA’s replies, it stressed that it has no direct supervision or enforcement powers towards firms, adding that it sets standards and can investigate whether a national authority is in breach of EU law.

22 MEPs from across the political divide have penned a letter to express their concern about Pilatus Bank, licensed in Malta in January 2014, and its continued allowance to operate in the EU.

MEPs which formed part of the PANA committee and those which formed part of the rule of law mission to Malta last November said,  there was leaked information pointing towards Pilatus Bank being “at the centre of illicit financial flows from Malta’s citizenship-by-investment scheme, the sale of state assets, and unexplained inflows from high-risk jurisdictions like Azerbaijan to Maltese politically exposed figures”.

PN MEP David Casa called on MFSA chairman Joe Bannister to revoke Pilatus Bank’s licence and failing this, he will write to the European Central Bank and the EBA to investigate.