Left: The MFSA’s Marianne Scicluna and Anton Bartolo; Right: Pilatus Bank owner Ali Sadr Hasheminejad
The Malta Financial Services Authority (MFSA) has confirmed for the first time that it had been informed the FBI was investigating Pilatus Bank owner Ali Sadr Hasheminejad but had not managed to get any information about the investigation from the US enforcement agencies.
“No one outside the United States knew that [Sadr] was under investigation and the MFSA’s due diligence on him did not immediately identify there was an investigation,” Anton Bartolo, head of the MFSA’s enforcement unit, told a European Parliament special committee on financial crimes this morning. “When that fact was made available to us, the information we had in hand was extremely, extremely sketchy. We didn’t even know the basis of this investigation, because clearly the FBI don’t go about providing information to the international community that they are investigating Mr X or Mr Y. There was no way we could have known Ali Sadr was under investigation in the US and maybe this is something that can be improved at a global level.”
Bartolo confirmed that the MFSA tried to glean information from the FBI but that its attempts frustratingly hit a brick wall.
“It wasn’t an easy situation, because obviously law enforcement authorities have valid reasons as to why they cannot disclose certain information,” he said. “However, it was a big challenge for us and it was one we continued to face for a long time – knowing there were investigations, asking about them but not getting any information. All we had was a whisper in the ear that we couldn’t use, because as a regulator we can only act on factual evidence.”
Moreover, Bartolo said that a premature revocation of Sadr’s banking license could have prejudiced the FBI investigation – which turned out to be into allegations of money laundering and evasion of US sanctions on Iran.
Bartolo defended the MFSA’s due diligence procedure that led up to Sadr obtaining a banking license – arguing that the entire process took a year and involved an intelligence report on the banker conducted by an unnamed foreign intelligence company “that is used by a number of European regulators including the FCA in the UK”.
A recent demonstration outside Pilatus Bank
Once Pilatus Bank was opened, it was subjected to a “high degree” of MFSA supervision, including several on-site inspections in liaison with the FIAU.
The MFSA also confirmed that it “intensified” its supervision of the bank last year, after assassinated journalist Daphne Caruana Galizia wrote that it had been used to launder money for politicians.
“The review is still ongoing and the main challenges have proven to be the prudential indicators and the limited intelligence available to us,” the MFSA’s director general Marianne Scicuna said. “The review is a comprehensive and in-depth examination of the bank, including a review of all its phone calls, accounts and transactions to ascertain whether it was involved in money laundering or any other illegal activity.”
After Sadr was arrested and arraigned in the United States, the MFSA removed him as shareholder and froze the bank’s assets to prevent any deposit withdrawals. The MFSA will decide whether to take any further action once its review of the bank is concluded.
“The situation could evolve in a short period of time and we are prepared to take all the necessary decisions,” Bartolo said. “We acknowledge that the bank may have dirty money and we must protect it if it exists. We shouldn’t rush though, because we need to do things properly.”
‘Pilatus Bank is a stain on Malta’s reputation’ – Metsola
Five MEPs asked the MFSA officials, as well as FIAU director Kenneth Farrugia, questions on Pilatus Bank, including Nationalist MEP Roberta Metsola.
Metsola’s questions focused on the role of Azeri and Maltese PEPs in Pilatus, as well as on 17 Black – the Dubai company that was recently discovered to have received millions of dollars from the Maltese agent of the LNG tanker and from an unnamed Azeri national. However, these questions remained unanswered on the grounds that answering them could breach client confidentiality and prejudice ongoing investigations
“It is clear to everyone that Pilatus Bank is a vehicle for the laundering of ill-gotten gains, it has been clear for some time, either there is decisive action taken or the whole system will be forced to pay the price,” Metsola said. “It is a stain on our legitimate financial services sector. Pilatus Bank was not a whisper of money laundering but someone screaming into a loudspeaker.”
“The actions of the criminal, the corrupt and the complicit at the highest levels of the Maltese Government are not representative of the people of Malta and Gozo. Malta is not a tax haven, and whilst it is competitive, it is also fair. We have withstood pressure because our enforcement systems are robust and any loopholes were closed, now we have a situation were people think that they can act with impunity in full protection from any sort of enforcement.”