Malta’s main banks have rejected Prime Minister Joseph Muscat’s claim that legitimate people and businesses are sometimes not allowed to open new bank accounts.

The banks cited a huge increase in new account holders and pointed to new rules which increase the amount of information that is required from potential new customers. 

On Thursday the Prime Minister said the banking sector’s reticence when opening new accounts was in breach of EU rules. He said “legitimate” people and businesses were often unable to open new accounts, which was their right, adding that he could not tolerate such a situation.

Charles Azzopardi, public relations executive at Bank of Valletta, told The Sunday Times of Malta that over the past few years, new rules and regulations, primarily on money laundering and terrorism funding, had impacted the extent of information and documentation required from bank account applicants.

BOV, he said, had a “clear risk appetite framework and customer acceptance policy”.

He said the bank provided services to both domestic corporates and international corporates setting up in Malta. Last November it had introduced the BOV Salary Package, designed to cater for foreign individuals working in Malta, and also offers the Basic Payment Account, which gives consumers legally resident in Malta or the European Economic Area access to basic features, the right to comparability of fees and payment account switching locally and across borders.

But while the bank had taken an active role in servicing the banking requirements of corporate and personal clients, these services were provided so long as they fell within the bank’s customer acceptance policy and risk appetite framework, adhering to the ‘know your customer’ and due diligence rules and regulations, Mr Azzopardi said.

Marcel Cassar, the CEO of APS Bank, said APS fully abided by EU and Maltese laws, rules and regulations.

The bank showed “no reticence” in opening new accounts, he said, offering a whole suite of deposit accounts addressed at all segments of society, without distinction.

The suite, he added, included the Basic Payment Account, with basic features available to consumers legally resident in Malta or in another EU Member State who did not have other bank accounts in Malta.

There is absolutely no truth whatsoever in any suggestion that legitimate people and businesses are being prevented from opening an account

“There is absolutely no truth whatsoever in any suggestion that legitimate people and businesses are being prevented from opening an account with APS Bank,” Mr Cassar insisted.

He said last year had set a record in terms of business growth, lending and deposit raising. It was also a record year for account opening across the board, following on previous years which he said had also shown impressive growth in all segments.

“The BPA has further widened our reach to more consumers and we have been opening such accounts at an accelerated pace.”

Mr Cassar stressed, however, that the right to a Basic Payment Account also came with obligations on the part of the consumer and an application may be declined where those conditions are not met.

“The requirements/conditions are fairly straightforward and we also show a great deal of understanding during the on-boarding process. This is why I say that legitimate persons should not find any problem in opening a basic account at APS Bank.”

Mr Cassar added that some applicants for business (less so of the BPA kind) might experience delays in getting approval or might even be declined.

“There will be good reasons for this, it is never our pleasure to do so – we are out to grow our business! But we must also comply with the law, protect the integrity of the bank, of the financial system and above all our reputation and that of Malta.

“There is an abundance of good, legitimate consumers and businesses out there and we want to service them. But there is also some very nasty stuff, typically appearing very legitimate. We need to keep away from those, even if they may be strong and vociferous in their complaints,” he said.

An HSBC Bank Malta spokesperson said:  “HSBC Malta welcomes all prospective new customers.  Our due diligence requirements are in line with local regulations and bank policy. In January we were pleased to open around 40 per cent more accounts than 2018 as new customers choose HSBC for their banking services.”

Another bank, BNF, said: “We welcome new customers to bank with us. Through regular training of our customer-facing employees and information publicly displayed on our website, we ensure that potential customers are aware of the documents that they need to present at the application stage.  This enables BNF Bank to meet its regulatory obligations.”

‘Politicians should not try to interfere’

A financial services consultant agrees that everyone has a right to have a bank account – so long as they meet the conditions imposed by regulators on banks that offer such services.

“So technically, yes, banks cannot discriminate. However, this simplistic statement ignores that fact that banks who do not adhere to EC and ECB directives on the opening of accounts risk heavy penalties and even losing their licence,” said the consultant, who preferred not to be named.

He added: “Anti-money laundering regulations are, of course, the elephant in the room in this controversy. Malta has already been pillared for the money laundering allegations against Pilatus Bank and its alleged Venezuela money-laundering schemes.

“HSBC burned its fingers in countries like Mexico and has decided to be more careful not to lose its banking licence in jurisdictions like the US. BOV is being sued for hundreds of millions of euros for allegedly facilitating criminal activities by an Italian shipping group that had a trust registered in Malta. Satabank has been punished for allegedly not taking its anti-money laundering obligations seriously.”

The consultant said that as stated by the IMF and the European Commission in their most recent reports, Malta had adopted an economic model that exposed it to risks of money laundering and financial crime. E-gaming, fintech companies and certain financial services carried a substantial risk that could ruin Malta’s reputation.

“Banks are right in taking these risks seriously,” he said.

“Banks are in business to make money as any other for-profits business. They are subject to strict but independent regulation. Politicians should not try to interfere with this regulatory framework.

“Businesses with sound business plans and fit and proper persons leading them have no problem opening accounts and borrowing money.”