Public statement by the Malta Financial Services Authority in relation to Pilatus Bank
APRIL 02, 2018

The Malta Financial Services Authority (“MFSA”) is issuing the following statement on the exercise of the MFSA’s responsibilities with regards to Pilatus Bank to the extent that is permissible by law. This reflects MFSA’s commitment to ensure that it delivers on its priority to protect the integrity of the banking system without fear or favour in accordance with the powers granted to the authority by the law.

Following the indictment in the United States of America of Mr Ali Sadr Hasheminejad on 20 March 2018, the MFSA has taken the following actions:

  • Removed Pilatus Bank’s former Chairman (and more recently non-Executive Director) Mr Ali Sadr Hasheminejad from all his positions within the bank, also stripping him of all voting rights as a shareholder.
  • Taken charge of all assets including those related to the investment services business of the bank and directed the bank to obtain the MFSA’s approval prior to effecting any movement of the bank’s assets.
  • Stopped all transactions, including withdrawals or deposits.
  • Placed the bank under the control of Mr Lawrence Connell as a competent person in terms of the Banking Act. Mr Connell, a distinguished former US financial regulator with a many decades of experience, has since taken over the running of the Bank, taken charge of all assets and has assumed control of the Bank’s banking and investment business.

Furthermore, the MFSA has been, and continues to be, committed to its supervisory responsibility and actively managing the situation by making use of all tools and processes at its disposal. To this end, the MFSA, among other measures:

  • Confirms that during the authorisation process for Pilatus Bank, it carried out comprehensive due diligence and review of the application documents for many months, including the commissioning of an independent external intelligence report.
  • Has undertaken various supervisory steps as required, closely reviewing and monitoring the Bank, in accordance with its supervisory responsibilities and subjecting it to numerous examinations including:
    • on-site inspections regarding prudential issues related to the Bank and
    • on-site anti-money laundering and combating the financing of terrorism (AML/CFT) examinations conducted jointly with the FIAU.
  • Has been and continues to coordinate closely with international regulators, including the UK Financial Conduct Authority, law enforcement authorities and others.
  • A comprehensive and in-depth compliance examination of the bank’s operations has been and continues to be underway.

The MFSA will update on progress with regards to this process within the parameters of the law.

 

About the Malta Financial Services Authority

The MFSA is an independent regulatory authority tasked with the supervision of the financial services industry in Malta. Its main priority is to protect the integrity of the banking system in accordance with the powers granted by law. The MFSA’s Supervisory Council has exclusive authority for the licensing, regulation and supervision of financial services licence holders. Banks are directly supervised by the MFSA for prudential purposes and jointly with the FIAU for the purpose of compliance with antimoney laundering and combating the financing of terrorism (AML/CFT).

The MFSA is bound by strict confidentiality. This means that it cannot and does not share confidential information with the public or other non-regulated bodies. This is an intrinsic requirement for effective regulation in Malta and internationally. The MFSA can only take decisions based upon firm evidence and following due process.