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Pilatus Bank: MEPs demand action from European Central Bank

Brussels, 26 march 2018 - Members of the European Parliament ad-hoc Delegation to Malta (30 November - 1 December 2017) wrote to Mario Draghi, President of the European Central Bank, to request an assessment on the adequacy of the measures taken by the Maltese Financial Services Authority (MFSA) following the arrest of Ali Sadr, Chairman of the Pilatus Bank in Malta. American prosecutors accused Mr. Sadr last week of participating in a scheme to evade U.S. sanctions and funnel more than $115 million paid under a Venezuelan construction contract through the U.S. financial system. Mr. Sadr, who is an Iranian national who acquired St Kitts and Nevis citizenship, is the only ultimate beneficial owner of Pilatus Bank.

Following the arrest, the MFSA imposed a freeze on the business of Pilatus Bank, including all deposits and withdrawals and any disposal of the bank's assets.  The Maltese regulator also ordered the removal of Mr. Sadr as bank director, suspended his voting rights as a shareholder of the bank and ordered him to refrain from exercising legal and judicial representation of the bank.

MEPs asked the ECB to consider whether these are sufficient measures and whether the circumstances warrant the need for withdrawal of the authorisation of Pilatus Bank by the ECB in accordance with the relevant Union law.

MEPs also urged the ECB to assess the adequacy of the organisational structure of the MFSA, and the independence of its regulatory and operational functions, notably the absence of conflicts of interest among staff and Board of Governors. Parliamentarians expressed disappointment that, "after months of warnings and allegations on the integrity and compliance of Pilatus Bank's activities with Union law, dating back to reports and investigations of the murdered journalist Daphne Caruana Galizia, no visible action was taken by either Maltese or European supervisory or law enforcement bodies to ensure the integrity of the EU financial system."

On the 15th of November 2017 the European Parliament adopted a resolution on the rule of law in Malta, noting that "Pilatus Bank's licensing process has been expeditious compared with the average time required to ensure compliance with standards laid down in the Capital Requirements Directive". The resolution also called on Maltese supervisory and judiciary authorities to "investigate the licensing process of Pilatus Bank, in particular regarding fulfilment of the fit and proper requirements for the management body of financial institutions, as mentioned in the Capital Requirements Directive".

The ad-hoc Delegation to Malta, which included a meeting with representatives of Pilatus Bank, further pressed in its mission report that the ECB and the EBA "investigate whether the fact that Pilatus Bank continues to hold a license to operate in the EU warrants ECB/EBA intervention".



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