KPMG International would not comment on the role the global firm played in clearing Pilatus Bank of anti-money laundering concerns following the arrest of the bank’s owner Ali Sadr Hasheminejad in the US last week, citing “client confidentiality”.
KPMG was involved in helping Pilatus Bank get its license in Malta, it audited the bank and it was commissioned to prepare a counter report for the bank against suspicions of money-laundering flagged by the Financial Intelligence Analysis Unit. This is documented in a number of reports, including that by MEPs investigating the rule of law in Malta and the firm’s audit of the bank.
Replying to questions from The Shift News, KPMG International’s Global Head of Communications Brian Bannister said: “Maltese law prevents us from commenting in detail for reasons of client confidentiality”.
The global firm would not say whether it would conduct an internal inquiry into the role KMPG played in clearing the bank of anti-money laundering concerns following allegations of money laundering activities exposed by the press and following Ali Sadr’s arrest in the US.
Ali Sadr, 38, was arrested last week and charged in a six-count indictment accusing him of participating in a scheme to evade US sanctions against Iran. He is charged with funnelling more than $115 million paid under a Venezuelan construction contract through the US financial system.
On Thursday, he was denied bail. Judge Barbara Moses rejected his request, arguing that his wealth and global connections meant there was a high risk he could flee the US. If convicted, Ali Sadr could face a sentence of up to 125 years in prison.
KPMG International was asked by The Shift News whether it was satisfied by the due diligence carried out by KMPG Malta into Pilatus Bank.
The FIAU carried out an onsite visit to Pilatus Bank between 15-22 March 2016, which resulted in a compliance report that raised concerns including alleged breaches of Maltese law against money laundering. This report was leaked to the media in May 2017.
Pilatus Bank contested the content of the compliance report by the FIAU and hired KPMG to do an audit of the Bank‘s compliance with money laundering obligations, the MEPs report confirms.
In September 2016, the FIAU certified in a letter to Pilatus Bank its compliance with anti-money laundering obligations, saying concerns “no longer subsist“.
In light of the evidence available and the international scrutiny on the bank’s owner, The Shift News sent a list of questions to KPMG International requesting clarification on its involvement with the bank’s operations and its justification for providing Pilatus Bank with a clean bill of health.
They are based on facts that have emerged as the scandal on the bank’s operations has evolved and confirmed in the report by MEPs investigating the rule of law in Malta.
Pilatus Bank CEO Hamidreza Ghanbari told MEPs: “The bank started as an asset management company in Switzerland. The promoter, by the end of 2011/early 2012 wanted to set up a bank in the EU and enlisted assistance from KPMG in three different jurisdictions… [including] the UK or Malta”.
KPMG Malta was engaged in August to handle the licensing process for Pilatus Bank. The Bank was incorporated in December 2013 and the license was issued in February 2014, he added.
Bannister referred to the MEP meeting in his reply to The Shift News: “We can confirm that KPMG Malta recently accepted an invitation to meet with members of an ad-hoc committee of the European Parliament. KPMG Malta did not attend that meeting in representation of the Bank”.
The MEP report on the rule of law in Malta notes that Juanita Bencini met with MEPs “in view of her involvement as a consultant in the application for Pilatus Bank’s banking license”. Bencini told MEPs she “could not talk about particular clients” but added that all her clients “went through a proper process with the MFSA”.
It emerged last week that Bencini was present at the wedding of Ali Sadr, together with Prime Minister Joseph Muscat and his wife, as well as his Chief of Staff Keith Schembri.
Bencini – who attended a meeting with the FIAU on 19 May 2016 as one of Pilatus Bank’s advisers – is President of the Institute of the Financial Services Practitioners and chairs the IFSP’s Prevention of Money Laundering and Funding of Terrorism committee. She is also board member of the government’s finance promotional arm FinanceMalta and chairs the anti-money laundering committee of the Malta Institute of Accountants, LovinMalta reported.
She was accompanied to the wedding by her husband Austin Bencini, who sits on the board of directors of Allied Newspapers – which owns The Times of Malta.