The European Central Bank (ECB), the main banking regulator in Europe, has revealed that Malta’s biggest bank failed for years to detect or address thousands of payments that may have been involved in money laundering or other illegal activities.
A confidential ECB report seen by Reuters has accused Bank of Valletta (BoV) of failing to act on a variety of risk management issues, despite warnings since 2015. The regulator wants to implement remedial measures — such as assessing if the bank’s top managers can handle their positions, as well as reducing exposure to risks posed by foreign clients — by the end of this year. BoV responded that it was in the process of boosting its risk controls, governance structure and anti-financial crime defenses.
“The Bank is today engaged in a priority process — agreed with and monitored by its regulators — to deal with the legacy issues highlighted by the report,” BoV said, according to an email on Wednesday (Nov. 20).
In the meantime, Malta’s police — its chief appointed by the government — would not say if they were investigating BoV. A spokesman for Malta’s Prime Minister Joseph Muscat said he trusted the bank.
This isn’t the first time the ECB has addressed money laundering issues in Malta. Last year, the regulator slammed Malta for “systematic” failings in the enforcement of anti-money laundering rules, failing to act on “serious breaches” at Pilatus Bank. The owner and former chairman of the bank were charged in the U.S. for trying to evade sanctions against Iran by illegally sending $115 million or more from Venezuela to Iranian businesses.
In addition, Pilatus Bank was the focus of reporting by Daphne Caruana Galizia, a journalist who was murdered in a car bombing in October of 2017. She had been reporting on claims that the government was corrupt, and that money laundering was going on.