Auditors to 'advise and monitor' Satabank on MFSA orders
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Auditors to 'advise and monitor' Satabank on MFSA orders

Regulator appoints 'competent person' to bank following AML probe

Photo: Matthew Mirabelli

Photo: Matthew Mirabelli

Updated at 1.50pm with Central Bank statement

Auditors EY have been appointed by the MFSA to “advise and monitor” Satabank, after a joint inspection and audit by the MFSA and FIAU found shortcomings in the bank’s anti-money laundering procedures.

In a public announcement on its website, Malta’s financial regulator said Ernst & Young, which does business under the brand name EY,  had been appointed as a “competent person” to ensure good governance and controls at Satabank, as well as the implementation of remedial measures in line with the MFSA’s supervisory requirements.

Satabank continued to meet its financial prudential requirements, the MFSA said.

The MFSA said the regulatory measure will remain in force until otherwise directed.

It said the appointment of EY as a “competent person” was carried out without prejudice to further regulatory action.

Satabank was also slapped with a €60,500 fine in July after it was found to be in breach of risk management laws.

Times of Malta reported in June how Satabank faced a comprehensive examination of its compliance with anti-money laundering and terrorist financing laws after catching the eye of the MFSA and FIAU.

Inspectors from both bodies carried out an extensive audit of Satabank’s client files, to check for any shortcomings in the way it goes about its operations.

The decision to appoint auditors came about after such shortcomings were found.

Prior to the bank gaining its licence in Malta, Satabank’s Bulgarian co-owned Christo Georgiev ran an e-money business in Luxembourg.

The group the bank forms part of voluntarily surrendered its electronic money institution licence issued by Luxembourg after Satabank was given its licence in Malta.

Satabank told Times of Malta in March that the bank had tightened its criteria for the selection and on-boarding of new clients, to reflect the bank’s risk appetite, and in order to stay consistent with the upcoming regulatory ratios.

The bank was named by a Sicilian prosecutor last year as having been used by fuel trader Gordon Debono to receive illicit payments through his Maltese company Petroplus Ltd, as part of an alleged €30 million fuel smuggling ring.

Mr Debono and PetroPlus Ltd were slapped with US sanctions in February.

Malta’s banking sector has faced a tumultuous period over the last few years.

Nemea Bank was placed under administration in 2016 and its licence withdrawn the following year by the European Central Bank (ECB), acting upon the MFSA’s advice.

The bank is appealing the decision.

In March, the MFSA appointed a “competent person” to take control of Pilatus Bank. It later advised the ECB to withdraw the bank’s license.

The bank has sued the MFSA for damages in the hope of regaining control of their business.

In July, the European Banking Authority found that the FIAU had in 2016 breached EU law over shortcomings in its oversight of Pilatus Bank.

The authority had also raised concerns about the MFSA’s handling of the case, but decided against further action after its request to the ECB for the withdrawal of the bank’s license.

'Small bank'

The Central Bank of Malta reacted to the news by issuing a brief statement saying Satabank was "a small international bank with minimal links to the domestic economy".

It added that the MFSA's move was evidence of the "strong determination" of competent authorities to "protect and uphold good governance in the financial system". 

jacob.borg@timesofmalta.com

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