Funds used to set up Pilatus Bank were processed through “reputable institutions”, Malta’s financial services regulator said.

Questions were raised about the source of the €8 million in capital provided by Pilatus Bank owner Seyed Ali Sadr Hasheminejad, arrested in the US last month.

He is accused of evading United States economic sanctions against Iran by filtering $115 million through front companies and foreign bank accounts to mask Iranian business dealings in Venezuela between April 2011 and November 2013.

Iranian-born Mr Hasheminejad registered Pilatus Bank in Malta in December 2013. The €8 million in capital was deposited in a Bank of Valletta account that same month.

Opposition leader Adrian Delia has questioned whether Bank of Valletta was pressured by the government to offer services to Pilatus Bank.

Checks in connection with the funds followed all normal practices

Replying to questions sent by the Times of Malta several weeks ago about the capital provided by Mr Hasheminejad, a spokesman for the Malta Financial Services Authority said the checks in connection with the funds in question followed all the normal practices and procedures.

The European Banking Authority has confirmed it has opened a preliminary inquiry into the Malta financial services watchdog’s supervision of the bank.

Pilatus Bank, which the MFSA placed in the hands of an administrator following Mr Hasheminejad’s arrest in March, was booted out of the Malta Bankers’ Association last week.

The MFSA spokesman said that the regulator had cooperated fully with the Financial Intelligence Analysis Unit when it came to Pilatus Bank. Recently-appointed Malta Financial Services Authority chairman John Mamo told Parliament’s Public Appointments Committee last week the Pilatus Bank issue was “a very big problem”.

“I followed the situation developing closely and I agree that it is a very big problem. However, I cannot say whether the MFSA acted correctly because I simply do not know,” he said.

Read: Pilatus Bank issue is a big problem – new MFSA head

Earlier this year, the MFSA lost its long-serving head of the banking supervision unit, Karol Gabarretta. He told the Times of Malta he felt it was time to move on after working there for 15 years.

KPMG, who had handled the bank’s licensing procedure, insisted last week it acted professionally in all its dealings with Pilatus Bank, “in line with the professional standards it adhered to and applied for all its clients”.

It said Maltese law governing client confidentiality prevented it from commenting further.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.