Shareholders fume over BOV’s failure to appeal €2.6 million FIAU fine

Bank of Valletta shareholders are fuming over the bank’s decision not to appeal a €2.6 million Financial Intelligence Analysis Unit fine over anti-money laundering shortcomings.

In view of recent court decisions that found similar fines imposed by the FIAU to have been unconstitutional, including one imposed on fellow banking institution Lombard Bank, shareholders speaking to The Shift said they could not understand why BOV had not appealed the fine.

Recounting how they have sent the bank repeated questions to explain the logic behind the board’s decision they felt was not in their interests, a number of shareholders told The Shift they had not received any reply.

The Shift has also asked BOV for an explanation, but the bank has provided no new information. It instead referred this newsroom to a statement from almost two years ago, on the day that the €2.6 million fine was imposed – one of the highest fines ever meted out by the FIAU.

The bank did not answer when asked to name the individuals responsible for the decision not to appeal the fine and whether the bank’s lawyers, Camilleri Preziosi, had advised BOV on this particular course of action.

Instead, it repeated its 2021 statement: “The bank continues to evolve in anti-money laundering internal controls in accordance with regulatory requirements and expectations.”

Sources speaking to The Shift on condition of anonymity said the real reason behind the bank’s lack of appetite to appeal was not commercial but political.

“Since the government controls the bank and has a politically-appointed board, it was decided that the bank should not embarrass another government institution (the FIAU) further, especially with its international partners.

“Imagine if Malta’s largest bank wins this case – as it probably would – against another government institution trying to shore up Malta’s reputation abroad. It won’t look good on the government at all.”

But when this reasoning was informally passed on to the complaining shareholders, it did not go well with everyone.

“What about our interests?” a veteran shareholder who said he waits for his yearly dividend to complement his pension asked The Shift.

“So first they fudge things and allow the bank to be used like a parking spot for millions of euros in suspicious funds, then we get a fine of €2.6 million, and our board doesn’t even want to protect our rights with an appeal,” he said.

“This is simply ridiculous. Who are the board members defending? Us, the shareholders, or the government that put them there?” another shareholder complained.

Legal sources told The Shift that, given how such cases are going in the courts, BOV would have most likely won an appeal.

Lombard Bank recently won a case against an FIAU fine. The bank’s lawyers were also Camilleri Preziosi – the same firm BOV uses.

The fine was imposed on BOV in December 2021 amid a rush by the FIAU to send the message that it was taking action after years of lack of supervision on anti-money laundering laws, and it began imposing hefty and indiscriminate fines as soon as Malta was greylisted by the Financial Action Task Force (FATF) after years of warnings.

According to the FIAU, BOV failed to look into a total of 2,442 corporate customers for which the bank held no ultimate beneficial ownership information. Close to 1,300 of these corporate customers were only properly identified to the bank in June 2021. Prior to that, BOV had no beneficial ownership information or had only incomplete information on those clients.