MFSA recommends the ECB withdraw Pilatus Bank’s licence

The Malta Financial Services Authority has formally asked the European Central Bank to withdraw Pilatus Bank’s banking licence.

In a statement issued Saturday evening, the authority said the decision had been made following the indictment in the United States of the bank’s owner, Ali Sadr Hasheminejad, in relation to allegations of financial criminal offences.

“As a result of this indictment, the MFSA is no longer satisfied that the [ultimate beneficial owner] UBO is a suitable person as required by the Banking Act,” the MFSA statement read.

Hasheminejad, 38, the son of an Iranian banker and holder of a Saint Kitts and Nevis passport, was arrested in the US on 21 March on charges of having participated in a scheme to evade US sanctions and funnel more than $115 million paid under a Venezuelan construction contract through the US financial system.

He was charged in a six-count indictment filed in federal court in Manhattan accusing him of a role in a scheme to evade US economic sanctions against Iran.

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The MFSA said it had also been monitoring the bank closely and noted that the bank had been persistently breaching the liquidity coverage required by law since Hasheminejad’s indictment.

The assets within the bank remain frozen in line with the sanctions imposed by the MFSA on 21 March 2018.

The MFSA said it would continue to take all necessary actions to protect those assets until its ongoing joint investigation with the Financial Investigation and Analysis Unit into alleged money laundering at the bank was completed.

Furthermore, the MFSA said it would wait for the ECB’s assessment of its recommendation before proceeding with any further actions.

PN reaction

In a statement, the Nationalist Party said the MFSA’s recommendation for the withdrawal of Pilatus Bank’s license had come months too late, to the detriment of Malta’s reputation.

“People had been waiting all this time for the government to take the decisions that needed to be taken so as to safeguard the financial services sector’s reputation and the jobs it provides,” Kristy Debono, PN spokesperson for financial services, said.

“Instead the government resisted for months from making a decision that should have been made months ago.”

Debono said that, for more than a year, the PN had been calling for Pilatus Bank to have its licence revoked, but the government – for some unknown reason – had ignored everybody, including the Opposition, independent media and even members of the European Parliament, who had called for an investigation into the case.

“It was only after Ali Sadr’s indictment in the US that the MFSA decided to make its recommendation to the ECB, despite allegations in the independent media of the bank being used to launder money obtained through the sale of Maltese citizenship,” Debono said.