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Pilatus Bank Fined €5 Million By FIAU For Serious Money Laundering Law Breaches

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Pilatus Bank has been fined €4,975,500 by the FIAU for breaching money laundering and terrorism financing rules.

In a public notice today, the FIAU said the defunct bank was found in breach of several legal AML provisions, exposing the Maltese jurisdiction to “egregious money laundering risks that were not being mitigated in any manner”.

“The Bank’s total disregard towards necessary AML/CFT safeguards, led to it allowing millions to pass through the Maltese economy without any consideration of possible money laundering taking place,” the FIAU said.

“The [FIAU] Committee ascertained that the Bank’s systemic failures in the implementation of AML/CFT controls, measures and processes has greatly exacerbated the risks of its being used and abused by money launderers to process illicit proceeds through the Bank.”

“The seriousness and systemic nature of the failures determined following the supervisory examination on the Bank, exacerbated by the considerations set out here above has led the Committee to impose an administrative penalty of four million nine hundred seventy-five thousand and five hundred euro.”

The FIAU said Pilatus failed to build a comprehensive customer business and risk profile of its clients, often relying on “generic” information provided by the clients to obtain information on their source of wealth, expected source of funds and estimated account activity.

It also identified failures in the bank’s obligations to keep customer information, data and documentation up to date in 96.5% of the customer files reviewed, with the FIAU flagging an overall “lax” approach towards its ongoing monitoring obligations.

And in 86% of the customer files reviewed, Pilatus was found to have allowed transactions to flow into their customers’ accounts without the proper level of scrutiny.

“The Committee has found that the Bank has repeatedly and systemically failed to scrutinise transactions that were either not in line with the information available to it on the customer, or that were otherwise large, anomalous, dubious, or suspicious,” the FIAU said. “The Committee’s concern on such failures stems from the overall disregard and lax approach the Bank had towards such an important obligation.”

Finally, the FIAU flagged “extensive” failures in 86% of Pilatus’ customer files in terms of its obligation to internally review anomalous customer activities and transactions and subsequently file suspicious transaction reports to the FIAU.

“The Committee determined that the Bank completely disregarded the most onerous and important of its obligations, i.e. to ensure that transactions that were anomalous and for which there was no explanation or that were otherwise suspicious be escalated internally for consideration by the Bank’s Money Laundering Reporting Officer and reported to the FIAU where there was a suspicion that these transactions were actually linked to proceeds of criminal activity, money laundering or the funding of terrorism.”

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Tim is interested in the rapid evolution of human society brought about by technological advances. He’s passionate about justice, human rights and cutting-edge political debates. You can follow him on Twitter at @timdiacono or reach out to him at [email protected]

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