UPDATED: EBA admonishes FIAU on Pilatus Bank – FIAU does not agree with EBA conclusions
The European Banking Authority (EBA) has concluded that the Financial Intelligence Analysis Unit (FIAU) in Malta was not in conformity with the European directive not to allow the financial system to be used for money laundering and financing of terrorism, as it had failed to carry out what it referred to as effective supervision on Pilatus Bank.
In an investigation requested by the European Commission, a number of shortcomings were indicated in regard to procedures and supervisory action when the section decided to close the case on Pilatus Bank without imposing sanctions.
The EBA made eight recommendations to the FIAU, in which it called for following its obligations according to European laws. The report, signed by Andrea Enria, Chairperson of the Authority’s Board, says the FIAU has to strengthen its scrutiny on potential cases of money laundering, whilst implementing strong internal procedures to carry out supervision of financial entities to ensure these are following the rules.
The Authority stated that it had found the FIAU did not have all the records and documents, and therefore could not defend itself. It added that the FIAU had failed to offer reasons why it had not imposed sanctions on Pilatus Bank, which among others did not have strong measures against money laundering for clients classified as politically involved.
The Authority stated that the FIAU had failed to carry out on-site inspections before being ordered to do so by the Financial Services Authority, although Pilatus Bank had been considered as a high risk institution. The FIAU has been given a ten-day period within which to state what actions it will take to address the shortcomings identified in the investigation.
In statement by way of a reaction, the FIAU declared it is disappointed by the conclusions of the European Banking Authority. It added that it has serious reservations about the process adopted by the Authority in the preliminary inquiry, and in the investigations regarding whether European law had been contravened.
The FIAU stated that despite this, it will continue to cooperate with the EBA in the implementation of the FIAU action action plan which had been drawn up before the preliminary inquiry regarding the possibility of contravention of European Union legislation. The FIAU added that it will be replying to the Authority in connection with this issue.