French and Maltese anti-corruption organisations called on MONEYVAL – the Council of Europe’s monitoring body on anti-money laundering – to investigate the Malta Financial and Services Authority (MFSA) in relation to Pilatus Bank.
In a letter to executive secretary Matthias Kloth, Sherpa and II-Kenniesa requested MONEYVAL to “monitor” the MFSA for the “potential failure to comply” with money laundering and the financing of terrorism obligations imposed by EU anti-monitoring laundering directives and the Financial Action Task Force (FAFT).
Sherpa is a Paris-based organisation that gathers legal experts from diverse backgrounds to protect and defend victims of economic crimes. It joined Maltese activists Il-Kenniesa who have sustained the call for justice for Daphne Caruana Galizia and an end to corruption in Malta.
Kloth replied immediately, saying “A copy of that letter will be made available to the assessment team tasked with the evaluation of Malta in the course of MONEYVAL’s 5th round of mutual evaluations.
This request came about as the European Banking Authority issued a recommendation on Wednesday, after it found the Financial Intelligence Analysis Unit (FIAU) had breached EU law in relation to its supervision of Pilatus Bank. The EBA’s preliminary inquiries in relation to the MFSA are still ongoing.
The organisations pointed out that Pilatus Bank was allowed to obtain a licence to operate in Malta and continued to do so even after revelations that the bank was at the centre of corruption and money laundering. The MFSA only froze its assets after the arrest of bank’s owner Ali Sadr in the US on charges of money laundering.
The MFSA failed to investigate last year, closing one eye to such serious allegations and “making way for such an outrage to happen in the EU,” the organisations said.
Maltese authorities failed to take any action against Pilatus Bank and no sanctions were ever imposed even though its non-adherence to AML were “glaring” and “deliberate,” they said.
In the letter, the organisations said that the Daphne Project was able to confirm that Pilatus Bank served as a cover for members of Azerbaijan’s ruling elite to move millions into Europe.
They pointed out that the MFSA claimed to have hired a foreign firm to draft an intelligence report before giving Pilatus Bank its licence but refused to state who these where. Also, the FIAU were aware that the bank’s owner was being investigated for money laundering, the organisations said.
They also referred to Nexia BT, the firm that created the money laundering structures exposed in the Panama Papers leak, which “continues to operate with complete impunity” and their continued operation exposes “systemic defects in the Maltese regulatory and supervisory system that protects those that service members of the present government”.
They called on MONEYVAL to take into account this information in the 5th Round Evaluation of Malta to improve the capacity of national authorities to fight money laundering and terrorist financing more effectively and “monitor the practices of the MFSA and see that procedures are in place to avoid such future scandals from happening again”.
MONEYVAL is a permanent monitoring body of the Council of Europe entrusted with the task of assessing compliance with the principal international standards to counter money laundering and the financing of terrorism and the effectiveness of their implementation, as well as with the task of making recommendations to national authorities in respect of necessary improvements to their systems.
Read the full letter here.