EU Court annuls ECB decision refusing Satabank access to file

The European Union’s General Court has annulled the European Central Bank’s decision that denied Satabank, the shuttered Maltese credit institution, its request for access to its file.

Satabank plc, a bank whose licence was withdrawn by the Maltese regulator MFSA on order of the ECB, was suspected of having allowed millions in criminal proceeds to pass through its system in 2018. In 2020, the bank’s licence was withdrawn, and the credit institution was placed under control of auditors EY.

The Financial Intelligence Analysis Unit had fined Satabank a reported €3.5 million for various regulatory breaches, while 12,000 of Satabank’s accounts were frozen by the MFSA, with controlled releases effected by EY.

This was the first time in Maltese banking history that the MFSA, in coordination with the Central Bank of Malta and the FIAU, had taken such action against a retail and commercial bank.

In 2020, Satabank requested access to its file from the ECB, months before its licence was officially withdrawn in June 2020. The bank then filed a lawsuit seeking annulment of the withdrawal decision on 9 September 2020, but it discontinued those proceedings on 18 February 2020,

The ‘file’ requested by Satabank refers directly to the documents collected by the ECB in the context of the supervisory procedure.

The EU’s General Court stated that given that Satabank was legally defined as “a less significant institution”, the ECB did not exercise constant supervision, which was the responsibility of the national competent authorities.

By contrast, the decision to withdraw the applicant’s authorisation falls within the ECB’s tasks, which, moreover, initiated the corresponding procedure in respect of the applicant after receiving the draft decision proposing the withdrawal of the MFSA’s authorisation.

The General Court noted that the right to access a supervisory procedure file and the right of access to documents of institutions were legally distinct but lead to similar situations. The objectives of access to the file are to ensure the rights of defence of the parties concerned are respected and complaints are dealt with diligently, while also ensuring compliance with professional secrecy in administrative procedures.

The General Court concluded that, in the present case, since no supervisory procedure was pending in respect of Satabank at the time of its request for access, no ‘file’ within the meaning of the SSM Framework Regulation exists, and that means the bank’s request should be examined “as a request for access to documents concerning it on the basis of the general provisions, in particular Decision 2004/258.”

In this sense, given that the ECB did not analyse the request for access based on Decision 2004/258, it could not validly claim that Satabank’s request, based on that decision, was not precise.

The General Court annulled the ECB decision of 26 November 2019 by which it rejected Satabank plc’s request for access to the file concerning it and ordered the ECB to pay costs.

Shuttered bank

Satabank offered an innovative online payment channel which allowed small peer-to-peer payments to be made. Prior to setting up in Malta, Satabank’s Bulgarian co-owner Christo Georgiev ran an e-money business in Luxembourg. A self-described pioneer of innovative payment solutions who has worked in the fintech sector since 2000, according to a biography on one of his company’s websites, Georgiev also owns Bulgarian iCard AD, and the Liechtenstein-based myPos AG.

In 2019, the FIAU fined Satabank €3.5 million for various regulatory breaches while police investigated what could be billions in euros which passed through the bank’s payment channels.