Pi­la­tus Bank has Eu­ro­pean li­cence with­drawn

The Malta Business Weekly - - NEWS -

A Mal­tese bank at the heart of a money-laun­der­ing in­ves­ti­ga­tion has had its li­cence with­drawn by the Eu­ro­pean Cen­tral Bank.

Pi­la­tus Bank, which opened four years ago, was of­fi­cially closed down sev­eral months af­ter its Ira­nian chair­man and owner, Ali Sadr Hashem­ine­jad, was charged in the US in con­nec­tion with money-laun­der­ing and fraud.

The bank had also been ac­cused of pro­cess­ing cor­rupt pay­ments to Mal­tese of­fi­cials by the in­ves­tiga­tive jour­nal­ist Daphne Caru­ana Gal­izia, who was killed last year by a car bomb.

The Malta Fi­nan­cial Ser­vices Au­thor­ity, which reg­u­lates the coun­try’s bank­ing in­dus­try and granted Pi­la­tus a li­cence in 2014, said the ECB had acted on its re­quest to close the bank.

In a state­ment on Mon­day the MFSA said: “Fur­ther to the au­thor­ity’s pro­posal to the ECB to with­draw the au­tho­ri­sa­tion of Pi­la­tus Bank as a credit in­sti­tu­tion, the ECB’s gov­ern­ing coun­cil has de­cided to with­draw the au­tho­ri­sa­tion of Pi­la­tus Bank with ef­fect from to­day.”

The EU be­gan an in­ves­ti­ga­tion into Malta’s reg­u­la­tion of the bank last year, fol­low­ing Caru­ana Gal­izia’s death, with the Eu­ro­pean Bank­ing Au­thor­ity un­der­tak­ing the in­quiries.

Then in March, Sadr was ar­rested in the US on charges that he had vi­o­lated the coun­try’s sanc­tions and anti-money-laun­der­ing rules.

Ac­cord­ing to the in­dict­ment, filed in New York, Sadr par­tic­i­pated in a scheme to il­le­gally fun­nel $115m in pay­ments for a Venezue­lan con­struc­tion project to Ira­nian in­di­vid­u­als and com­pa­nies. He has pleaded not guilty to the charges.

Straight af­ter his ar­rest the MFSA took con­trol of Pi­la­tus, freez­ing all trans­ac­tions for cus­tomers, and ban­ning ex­ec­u­tives and share­hold­ers from with­draw­ing any funds from the bank.

In June, it filed a rec­om­men­da­tion with the ECB for the with­drawal of Pi­la­tus’s li­cence, on the grounds of Ali Sadr’s ar­rest and con­cerns that it had per­sis­tently breached liq­uid­ity rules since he was charged.

Reuters has re­ported that the Eu­ro­pean com­mis­sion was con­sid­er­ing ac­tions against Mal­tese au­thor­i­ties over their han­dling of the case.

At the time of her death Caru­ana Gal­izia was be­ing sued in a US court by Pi­la­tus and Sadr in a law­suit that ac­cused her of mal­ice, defama­tion and caus­ing dam­age to the bank’s “rep­u­ta­tion and ac­tual and prospec­tive eco­nomic re­la­tion­ships”.

She had re­ported on the Panama Pa­pers, which al­leged links be­tween the prime min­is­ter of Malta’s wife and shell com­pa­nies that held ac­counts with Pi­la­tus.

Pi­la­tus had been set to open an of­fice in Lon­don’s May­fair in April 2017. The Mal­tese reg­u­la­tor had granted it a pass­port to op­er­ate in in the UK but it was never given per­mis­sion to of­fer ac­counts to UK res­i­dents.

The bank, which re­ported €308m of as­sets in 2016, was known to have held ac­counts for a se­nior of­fi­cial in the gov­ern­ment of the Mal­tese prime min­is­ter, Joseph Mus­cat, and mem­bers of Azer­bai­jan’s rul­ing fam­ily.

The ECB did not com­ment on the de­ci­sion to with­draw its li­cence.

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