Fears ‘Russian ownership’ of Papaya hid from authorities
An investigation is ongoing to establish whether a Russian national concealed his ownership of a licensed financial institution from regulators, in a bid to facilitate money laundering.
While the Gżira-based financial institution Papaya is on paper owned by Latvian national Dmitrijs Panurskis, investigators suspect the real owner could be a Russian individual with alleged links to a criminal money-laundering network.
Malta was in 2021 greylisted by the FATF, an international financial crime body, in part for its failure to crack down on false company beneficial ownership information in the corporate registry.
Investigators are seeking to establish whether the Russian national’s suspected ownership of Papaya, which is licensed by the MFSA, was intentionally concealed from regulators, after Panurskis took over as Papaya’s sole shareholder back in 2016.
Financial institutions licensed by the MFSA, as well as the people behind them, are subject to strict due diligence and antimoney laundering checks.
This is done to prevent bad actors gaining control over them.
A spokesperson for the MFSA declined to comment on specific cases when contacted by Times of Malta about Papaya.
The spokesperson acknowledged that instances when ownership information is concealed from the authorities may exist, despite all the measures in place to prevent it.
“Such instances are investigated thoroughly with the support of local and international intelligence/law enforcement authorities as well as other local and international regulatory bodies through all the resources available to the authority,” the spokesperson said.
‘DisinFoRmation attack’
Contacted by Times of Malta, Papaya’s listed owner Panurskis denied any wrongdoing.
“We have to acknowledge that Papaya has been currently faced with a disinformation attack, characterised by the dispersion of unfounded and defamatory data gathered from unverified and untrustworthy sources, aiming to misguide the financial institution’s clients and partners,” Panurskis said.
He said Papaya is determined to initiate a thorough investigation to disclose the culprits behind this disinformation attack, and to counteract them via legal means, along with the assistance of relevant authorities.
“We will inform you about the outcomes as the circumstances become clearer. As a regulated financial institution, Papaya manages its business with a high level of transparency.
“For any inquiries concerning Papaya’s organisational structure, ownership, or stakeholders, please reach out to the MFSA, which is in charge of the governance of this data and is the sole accurate source of information regarding this matter,” Panurskis said.
Papaya features in an international investigation into how a Russian-Eurasian organised crime group allegedly offered money-laundering services to criminals.
Documents, Phones seizeD
Sources familiar with the probe say Papaya is suspected to have served as a front for some of these activities.
The Russian national suspected to be behind Papaya was one of the targets in a coordinated large-scale operation carried out in February by authorities in Latvia, Germany, France, Italy and Malta. Around 460 police officers in Germany searched 58 residential and business addresses as part of the investigation, with further searches carried out in Latvia.
Business documents, mobile phones and other electronic devices were seized during the searches. The Malta offices of Papaya, which was set up in 2012, were also searched as part of the probe.
Its former CEO and shareholder Frederic Villa sold his shares in the company to Panurskis in 2016.
Sources familiar with the investigation suspect that the Russian national only entered the picture after the shares were transferred.
Villa’s lawyer Peter Fenech told Times of Malta that before his client sold the shares to Panurskis, all due diligence was carried out in compliance with applicable Maltese legislation, including fit and proper test by the competent authorities, who exercise ultimate discretion with respect to approval of shareholders on licensed entities.
“Russian national only entered the picture after the shares were transferred
A spokesperson for the MFSA said that over the past few years, the authority has bolstered the authorisation process for financial institutions, in line with reviews and recommendations by Moneyval and the FATF.
“The authorisation process is twofold and is carried out in parallel. One part relates to the analysis of the business model and strategy proposal, and the second part entails a fitness and properness assessment for involved parties in accordance with applicable legislation,” the spokesperson said.
The due diligence process is started for all involved parties who are in a position to affect the direction of the applicant, including key functionaries and direct and indirect qualifying shareholders, up to the ultimate beneficial owner.
Checks on the applicant’s competence and integrity are carried out with a view to ascertain that the applicant is able to carry out the proposed role within the ambit of proposed business model to an expected high standard, the MFSA said.
The spokesperson said fit and proper checks on licensed individuals are done in close collaboration with local and international regulators, including intelligence reports.
“Through its authorisation process, the MFSA complements the assessment of the Malta Business Registry and acts as a second line of defence in the identification and verification of beneficial ownership of persons providing financial services in Malta,” the spokesperson said.
Lawyer Tonio Fenech, a former Papaya director, told Times of Malta that throughout his involvement with Papaya, he never had any indication that the declared owner of the company may have been acting for anybody at all.