On July 7, the Sunday Times of Malta reported that the Malta Financial Intelligence Analysis Unit (FIAU) had imposed a €3 million fine on Maltese bank Satabank for what the Sunday Times termed “widespread breaches of money laundering laws.”
This fine – reportedly a record for the FIAU — is the latest in a series of actions concerning Satabank that began in 2018. At that time, the Malta Financial Services Authority (MFSA) imposed a €60,500 fine on Satabank for poor risk management structures, and a joint inspection and audit by the MFSA and the FIAU found reported “shortcomings” in Satabank’s anti-money laundering (AML), procedures.
That inspection, which found “extremely weak structures in place to prevent its clients from using it to launder potential proceeds of criminal activity,” led to the MFSA’s effectively freezing all 12,000 accounts at Satabank and appointed the consulting firm Ernst & Young to administer the bank’s assets. Subsequently, the Times of Malta reported that tens of billions of euros in transactions had passed through Satabank during four years of operation “and investigators now believe as much as half of these may have been ‘high risk and highly suspicious’.”
Note: This action continues the disorder in the Maltese financial sector that began with the MFSA’s placing Nemea Bank under administration in 2016, followed by the European Central Bank’s withdrawal of Nemea’s license in 2017 and the MFSA’s appointment of a person to take charge of Pilatus Bank’s assets in 2018.
It may also be an indication that Maltese regulators are reacting to concerns within the European Union that Malta, due to its laxity in selling passports and tolerating corruption, “might pose a serious threat to global efforts to track money laundering, enforce economic sanctions, and maintain fair transnational standards.” Even after the international outcry about the 2017 murder of Maltese investigative journalist Daphne Caruana Galizia, there appears to have been little overall change in the Maltese government’s attitude toward the country’s burgeoning “reputation for rampant corruption and dubious dealings.”
Financial firms with business operations in Malta should therefore continue to follow closely how vigorously the MFSA and the FIAU police Maltese banks’ management structures and AML measures, and whether the FIAU prevails in other Maltese banks’ appeals of FIAU fines for money-laundering failures.