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Government silent on FIAU money-laundering breach

Opposition calls for independent investigation

The European Banking Authority says that the anti-money laundering unit breached EU laws. Photo: EBA

The European Banking Authority says that the anti-money laundering unit breached EU laws. Photo: EBA

The government would not comment on the European Banking Authority’s conclusion that the anti-money laundering unit breached EU laws, with Finance Minister Edward Scicluna insisting he “never interfered” in the regulatory authorities’ work.

The Financial Intelligence Analysis Unit was declared to have breached the directive on the prevention of money laundering and terrorist financing in the manner it supervised Pilatus Bank.

Read: FIAU has breached anti-money laundering directive - EBA

Asked by Times of Malta on Thursday whether he would be assuming responsibility and stepping down from his post once the FIAU fell under his remit, Prof. Scicluna said he never interfered in the work of regulatory authorities.

“My ministry has never interfered in the work of our regulatory authorities, which include the Central Bank of Malta, the Malta Financial Services Authority, the FIAU and the Malta Stock Ex-change, and never will,” he said.

He pledged his ministry would continue to support the institutions “in their challenging supervisory and regulatory functions”.

Prof. Scicluna did, however, point out that the government’s anti-money laundering unit had submitted an action plan to the EBA on how to “strengthen their own institution”.

Read: Pilatus Bank supervision comes under scrutiny of EU banking watchdog

FIAU chairman Peter Grech, the Attorney General, refused to comment on the findings and, in a terse reply to questions, referred to the unit’s statement issued on Wednesday night, pointing out he had “nothing to add” to it.

In its brief statement, the FIAU said it was disappointed with the EBA’s conclusion that it was in breach of EU law in the case of Pilatus Bank.

It expressed “serious reservations on the process adopted by the EBA in carrying out its preliminary inquiry and the subsequent breach of Union law investigation”.

The FIAU said it would still continue to cooperate with the EBA throughout the implementation of the anti-money laundering unit’s action plan, which, it specified, was set in action before the EBA’s preliminary inquiry started last November.

It said it would respond to the EBA in due course.

They should be there to protect people’s interests and to ensure that laws are followed

No reply was forthcoming when Dr Grech was asked whether he believed his dual role amounted to conflict of interest, nor did he reply to questions on, if push comes to shove, he could, as Attorney General, appear as the government’s legal counsel in a case in which he himself was involved.

Questions to the MFSA, which is also mentioned in the EBA’s report, were not answered by the time of writing.

Meanwhile, the Opposition has called for an independent investigation into what led to the series of shortcomings identified by the EU watchdog.

The Opposition spokesman for finance, Mario de Marco, told a press conference that the Nationalist Party was not only calling for an investigation into the shortcomings and why these had occurred in the first place, but also for the Prime Minister and the Finance Minister to shoulder their responsibility.

“The Opposition has long been saying the country’s institutions are not working as they should,” Dr de Marco said.

“They should be there to protect people’s interests and to ensure that laws are followed. It’s not just the European Parliament, the Opposition or the independent media saying all this but, now, we have the EBA too,” Dr de Marco added yesterday.

“The financial sector’s success could only be assured if the island’s reputation was intact.”

The PN’s economy spokeswoman, Kristy Debono, described the FIAU’s reaction to the findings as “dangerous”, noting the unit should have immediately come out with information on how it would be addressing the shortcomings.

“Instead of giving details of what is being done to address shortcomings, it dismissed it. Not only is this pathetic but also dangerous,” she said, giving a detailed breakdown of the EBA’s findings.

The Labour Party said in reaction that, while it noted the EBA’s comments, it wanted to point out that the local authorities had taken action against Pilatus Bank after it emerged that its owner, Seyed Ali Sadr Hasheminejad, was under investigation in the US.

In recent months, it added, new and unprecedented measures had been introduced as part of efforts to fight money-laundering.

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