The EU’s highest court today confirmed the legality of a decision taken by the European Central Bank in 2018 to withdraw the banking licence of Malta’s Pilatus Bank and effectively shut it down.
In its decision, after an application by Pilatus challenging the ECB’s action, the EU’s Luxembourg-based general court dismissed the application by Pilatus Bank and confirmed the legitimacy of the ECB decision to shut down the bank, accused of operating as a money laundering facility in Malta.
Rejecting all the 11 pleas “in their entirety” filed by Pilatus to try to reverse the ECB decision, the Court observed that according to settled case law, the legality of an EU measure must be assessed on the basis of the facts and the law as they stood at the time when the measure was adopted such that acts subsequent to the adoption of a decision cannot affect the validity of that decision.
Pilatus argued that while the decision by the ECB followed the arrest of bank owner Ali Sadr Hasheminejad in the US in 2018 and charged with facilitating money laundering activities of over $100 million, the charges were later dropped due to a technicality.
According to Pilatus, this merited a reversal of the ECB decision to shut down the bank. Yet the EU court disagreed, reiterating that the ECB acted legally and that its decision holds.
The EU court also noted that the ECB is under no obligation to comply with Maltese case law, as cited by Pilatus.
The former Ta’ Xbiex bank has been a source of political controversy since it was set up following the Labour Party’s return to power in 2013, particularly following leaked financial intelligence reports linking it to money laundering activities.
Despite receiving these reports, the Malta police took no action. It had also been alleged that the bank was used as a conduit for Azerbaijani millions making their way into Europe.