European Central Bank yet to reply to Pilatus complaint

The European Central Bank has yet to answer a letter from Nationalist MEP David Casa, who has called on the supervisor to take control of the private bank Pilatus.

A spokesperson for the ECB released no comment on the matter, although any such correspondence could be made public by Danièle Nouy, the chair of the ECB supervisory board.

Although Pilatus Bank is not supervised by the ECB, Casa has requested that it instructs the Malta Financial Services Authority to withdraw its banking licence over suspicions that it is being used to launder money for Azerbaijani oligarchs and politically-exposed persons (PEPs).

The bank was at the centre of allegations (now being investigated by a magistrate) that it processed a $1 million payment from the daughter of Azerbaijani President Ilham Aliyev to the wife of Maltese Prime Minister Joseph Muscat. Both Muscat and the bank denied the allegation, first published by Daphne Caruana Galizia.

While the ECB is responsible to authorise appointments and solvency for BOV, HSBC, and MeDirect Bank, it is the MFSA that is directly responsible for Pilatus, which was granted a licence in 2014.

“The MFSA carefully considers and reviews any reports, allegations or approaches from all quarters raising any concerns on financial regulatory matters. However, it can only act in accordance with due process and subject to its duties of confidentiality and in compliance with the relevant law. To do otherwise would compromise its integrity and independence,” the regulator said in a statement on Monday.

It is unclear whether the ECB could step in to take control of the bank on complaint of alleged money laundering.

Back in August 2017, Danièle Nouy had replied to a letter from Green MEP Sven Giegold, saying that monitoring the financial system for preventing money laundering was “not one of the tasks of the ECB. Compliance with anti-money laundering legislation is a matter for the relevant national competent authorities.”

Nouy had said that the ECB was fully committed to cooperating with national authorities in combating money laundering by closely monitoring relevant developments and taking action where appropriate.

In 2016, the ECB asked the MFSA to take control of Finnish-owned bank Nemea, after a whistleblower said the online-only bank processed a €10 million deposit by an Azerbaijani woman living in Paris.

In his letter to the ECB, Casa pointed out that Iranian-born chairman Seyed Ali Sadr Hasheminejad holds a St Kitts & Nevis passport, flagging a 2014 report by the US Department of Treasury that claimed Iranian nationals were still obtaining SKN passports despite being suspended from their citizenship-by-investment programme.

Hasheminejad is the son of one of Iran’s richest men, banker Seyed Mohammad Sadr Hasheminejad.

“The bank’s clients are predominantly PEPs from Azerbaijan, including President [Ilham] Aliyev’s two children and his minister for emergency situations [Kamaleddin Heydarov]. Former EU commissioner John Dalli… Michelle [Muscat], and… Keith Schembri were also revealed to be clients of Pilatus by Caruana Galizia’s sources,” Casa said.

Casa sent leaked FIAU reports to the ECB, showing that the PM’s chief of staff Keith Schembri received a €100,000 payment from Nexia BT partner Brian Tonna. The allegation, now under investigation by a magistrate, is that Tonna kickbacked revenues from an IIP client to Schembri using his own BVI offshore company.

Casa had already requested the revocation of Pilatus Bank’s licence by the MFSA, in a letter to chairman Joseph Bannister – himself implicated in the Paradise Papers for holding directorships in offshore companies.

In the letter Casa insisted, “As chairman of the MFSA you have been made aware of the results of investigations carried out by the FIAU. I refer in particular to those investigations that took place under former director Manfred Galdes and before the political capture and emasculation of this institution.”