The European Banking Authority has accused Malta of ‘general and systematic shortcomings’ in its application of EU anti-money laundering rules.
The European Union’s top banking watchdog made the statement after concluding an enquiry into the way Malta’s anti-money laundering watchdog the Maltese Financial Intelligence Analysis Unit (FIAU), investigated alleged wrongdoings at Pilatus Bank.
Pilatus’ owner and former chairman have been charged in the U.S. with trying to evade sanctions against Iran by illegally sending $115m or more to Iranian businesses.
Prosecutors in the U.S. have claimed that the bank was created in 2014 with the intention of getting around the Iranian sanctions.
The bank’s assets are currently frozen, and the Maltese Financial Supervisory Authority last month recommended to the European Central Bank to withdraw its banking license.
Following the report, the Maltese FIAU said it was disappointed with the EBA’s report and had ‘serious reservations’ about the enquiry.
Vera Jourova, the EU’s justice commissioner, said that the EBA’s findings were ‘troubling news’ and that Brussels was reflecting on how to ensure ‘a stronger common EU approach to anti-money laundering supervision and compliance’.
The report pointed towards ‘general and systematic shortcomings’ at Malta’s Financial Intelligence Analysis Unit or FIAU, which is an independent government agency in charge of fighting money laundering and terrorism financing.
The European Banking Authority pointed to the agency’s move to close an investigation into Pilatus without imposing sanctions or other supervisory measures. It said the FIAU ‘failed to ensure” that the bank “put in place adequate and appropriate . . . policies and procedures.’
The EBA also claims that FIAU closed the inquiry into Pilatus in September of 2016 despite getting a notice in May that there were concerns the bank may have violated anti-money laundering regulations.
KPMG was hired to conduct an audit along with a local firm and was given a “clean bill of health,” noted the report. According to EBA, the audit was not enough to allay any concerns laid out in the letter. In response, FIAU said in a letter to the EBA the conclusion was based on one case and that it denied breaching EU laws.
Copyright © 2018 RegTech Analyst
Copyright © 2018 RegTech Analyst
