Malta’s FIAU And The Pilatus Bank Scandal

Maltese FIAU under fire
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There is no stop to the scandals in which Malta’s FIAU is embroiled. Pilatus Bank was an MFSA-regulated bank when Edward Scicluna was the Minister of Finance. Today, Scicluna is the Central Bank Governor of Malta. In September 2016, the Malta FIAU inspection highlighted several shortcomings in the bank’s operations. The FIAU’s acting director, Alfred Zammit, wrote a letter claiming the issues highlighted in the unit’s May letter had been closed.

A clean bill of health issued by the then-acting director of the FIAU to Pilatus Bank despite the mountains of evidence of industrial-scale money laundering is indeed shocking. All those years ago, that Acting Director was Alfred Zammit, who is today, you’d better believe it, Deputy Director of the FIAU. Thus, Alfred Zammit closed a crucial window of opportunity for Malta. Zammit, too, must be questioned about why he made the statement that effectively shut down all investigations into Pilatus Bank’s illegal activities for the next several years.

While FIAU officials who issue administrate fines do not declare their conflicts of interest in public, the unit’s decisions are taken behind closed doors. The companies and individuals under scrutiny do not have a right to be represented in such meetings. The internal committee that decides who is fined or not includes Alfred Zammit himself, Elena Tabone, and Jonathan Phyall. The owner of Pilatus Bank, Ali Sadr, was later charged with money laundering in the US. Sadr has since been released after being found not guilty of money-laundering charges due to disclosure failures by the prosecution.

Money laundering is a serious crime, carrying some of the heaviest penalties in legal systems worldwide. Yet here in Malta, an institution that has been found to have allowed irregularities and wrongdoing in almost all of its accounts are fined a paltry sum after it’s been shut down and effectively no longer exists.

Pilatus Bank was closed when its license was stripped by the European Central Bank (ECB) in November 2018 following the arrest of its founder and chairman, Ali Sadr, in the US.

That same year, the European Banking Authority criticized the FIAU’s failure to impose sanctions on the bank, despite its misgivings about its anti-money laundering controls. Malta’s FIAU and the Pilatus Bank scandal.

CategoriesFIAU Malta

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