The European Commission has demanded that the Maltese anti-money laundering agancy – the Financial Intelligence Analysis Unit (FIAU) – steps up the supervision of banks.
This comes four days after the European Central Bank revoked the licence of Pilatus Bank, after the chairman of the bank was charged in the United States over money laundering and bank fraud.
The private bank had been accused by slain investigative journalist Daphne Caruana Galizia of processing corrupt payments for senior Azeri and Maltese political figures.
Moreover, the Maltese financial regulator – the Malta Financial Services (MFSA) – has put another bank, Satabank, under administration after finding shortcomings in the bank’s anti-money laundering procedures.
As the European Commission acted to step up a disciplinary procedure against Maltese authorities, in a formal opinion delivered on Thursday demanded additional measures from the FIAU to fully comply with its obligations under the fourth Anti-Money Laundering Directive.
The European Commission called upon the FIAU to take a number of measures, which include:
- Improving its methodology to assess money laundering and terrorist financing risks;
- Enhancing its monitoring and supervisory strategy by aligning resources with the risk of money laundering posed by certain institutions;
- Ensuring that the authority is able to react in an appropriate time when a weakness is identified, including by revising its sanctioning procedures;
- Ensuring that its decision-making is properly reasoned and documented;
- Adopting systematic and detailed record-keeping processes for offsite inspections.
Commissioner for Justice, Gender Equality and Consumers, Vera Jourová said Europe has the strongest anti-money laundering rules in the world, “but they need to be enforced with the same high standards across the EU to avoid creating any weak link. Malta and other countries must have well equipped authorities and fully implemented rules in place. The Commission will use all its powers, including infringement procedures, to close any loopholes in the fight against money laundering.”
The opinion requires the FIAU to take additional measures to fully comply with its obligation under the fourth Anti-Money Laundering Directive to effectively supervise financial institutions on its territory, including by having an effective sanctioning regime.
European Commission First Vice-President Frans Timmermans said: “To protect the security of Europeans and ensure a safe, reliable financial system, every authority in every Member State must uphold EU money-laundering rules in full. We remain vigilant and ready to act so that any breach is swiftly remedied and that better supervisory practice ensures it does not happen again.”
Commission Vice-President Valdis Dombrovskis, responsible for Financial Stability, Financial Services and Capital Markets Union, added: “We need to ensure that money laundering and terrorist financing risks in the financial sector are properly assessed and mitigated by our supervisory authorities. The European Banking Authority contributes to a harmonised application of anti-money laundering supervisory rules. Our September proposal will equip the EBA with the additional instruments and resources needed to ensure effective cooperation and convergence of supervisory standards. I count on the European Parliament and Council’s cooperation to turn this proposal into legislation rapidly.”
The Commission said that the FIAU has 10 working days upon receipt of the opinion to inform the Commission and the EBA of the measures it intends to take to comply with their obligations. This process under the EBA Regulation is separate from and without prejudice to the Commission’s prerogative of launching an infringement procedure against Malta.