This week finally saw tangible, legal action taken against Pilatus Bank – one of the institutions most synonymous with the age of alleged corruption which the Joseph Muscat administration brought about.

First, Pilatus was fined almost €5 million by the FIAU over its lax approach to due diligence and anti-money laundering measures – the biggest fine ever meted out by the authority.

Then, the bank and its head of legal compliance were hauled to court by police and charged with money laundering.

It’s good first to remember what Pilatus Bank was.

The Ta’ Xbiex-based bank rose to the fore in 2016, after it was implicated in the Egrant affair when Daphne Caruana Galizia claimed that the bank had processed a $1 million payment from the Aliyevs of Azerbaijan to the wife of former prime minister Joseph Muscat. The allegation was disproven by a Maltese magisterial inquiry along with other allegations she made about Pilatus Bank, but by then the banks’ other dealings for Azerbaijan had come under the lens of financial investigators.

Pilatus Bank was closed in 2018 after the arrest of its Iranian owner Ali Sadr Hasheminejad in the United States on charges of having facilitated the laundering of dollar payments from a Venezuelan housing project, to his family’s Iranian company, in what was a breach of US sanctions.

But the case was dropped after the US District Attorney withheld evidence from the defence, and Ali Sadr has since mounted an offensive campaign trying to silence journalists through SLAPP suits and even, this week, alleging that there was corruption in the appointment of the bank’s liquidation lawyers.

We know that the bank was given license to operate even though its owner had no experience in running a bank, and then it was the European Central Bank which had to actually act to strip Pilatus of its license in 2018 – not Maltese authorities.

It is clear that somewhere, there has been gross negligence in how this case has handled.

It can’t have gone unnoticed that there was a total lack of credentials in the bank’s chairman – and yet, in 2013, a license was duly granted.

Edward Scicluna – the man who now serves as the governor of the Central Bank of Malta – was the person responsible for the authorities who had to judge whether institutions should or shouldn’t be allowed to set up shop in Malta.

While he probably did not actively get involved in the day-to-day regulator works – this still happened under his watch, so one must surely question whether he should be the person to head Malta’s Central Bank.

But even if, for the benefit of the argument, Scicluna is removed from his post – the damage has now been done.

No amount of laundry will wash out the stain that this saga has left on Malta’s financial industry.

Reputation takes eons to build, but it can then disappear within seconds. 

Seeing how a financial institution was allowed to operate in such flagrant breach of money laundering regulations, to pander to clients from dodgy countries like Azerbaijan no-less, can only set alarm bells ringing.

It’s another nail in the country’s grey-coloured coffin.