Fiduciary at heart of CapitalOne saga fined €16,000 for breach of Trusts Act

The Malta Financial Services Authority has fined Baltimore Fiduciary, the firm at the heart of the botched CapitalOne police investigation, €16,000 for breach of the Trusts and Trustees Act.

The penalty was for breaches of rules pertaining to the minimum number of company directors and minimum capital requirements for corporate bodies represented by a mandatory.

In the meantime, Baltimore submitted a request to surrender its authorisation under the Trusts and Trustees Act, and in view of the fact that it has divested itself of all remaining clients, such request was accepted by the MFSA.

The CapitalOne inquiry was launched after MaltaToday reported that in January 2013, police did not investigate leads on alleged money laundering through the company CapitalOne Investment, which was held in Malta by Baltimore Fiduciary as nominee. At the time, Nationalist parliamentary assistant Beppe Fenech Adami, was a director of the fiduciary.

READ MORE CapitalOne, the ‘hot potato’ nobody wanted to handle

Baltimore Fiduciary was already under the scrutiny of the MFSA in March 2013, in an audit requested by the Financial Intelligence Analysis Unit, to review the extent to which the company was complying with requirements of the Trusts and Trustees Act and a review of the procedures in terms of the Prevention of Money Laundering Act.

A second audit requested by the FIAU started in May 2016 by the MFSA’s enforcement unit (anti-money laundering/counter-terrorism section), to ensure the company had enough background information on its clients.

The MFSA said the FIAU had identified “an element of carelessness… the FIAU knew that Baltimore had not sent an annual compliance report, gave them a warning, then a fine. We wanted to know whether this carelessness extended to them giving services to people whose records of identity they did not even have.”

Fenech Adami had already resigned the fiduciary’s directorship in January 2014.

CapitalOne background

In November 2012, following a drugs bust on properties owned by poker player Robert Soogea, Dutch prosecutor Jeroen Hennekam requested a freezing order on a Bank of Valletta account in the name of CapitalOne Investment Group. In the course of executing the freezing request, the police started investigating CapitalOne’s operations in Malta, finding that it was owned nominally by Baltimore Fiduciary Services – a firm owned by Richard Abdilla Castillo and which had Fench Adami as non-executive director.

On 13 January, 2013, in his report to superiors, police inspector Raymond Aquilina stated that one of the Baltimore directors was a PEP – Beppe Fenech Adami – and requested that the information gathered be referred to Europol.

The case was not pursued, because Assistant Commissioner Michael Cassar referred the file to the Assistant Commissioner Special Branch, Andrew Seychell, and to the international relations unit on 17 January. At this point, Inspector Mario Cuschieri noted the file with “B U in 3 months” – “bring up, in three months”.

An inquiry headed by three retired judges after the MaltaToday story, could not establish with certainty why the case was never pursued, with the file gathering dust until the economic crimes superintendent sent the file to Mario Cuschieri on 25 December 2013, who annotated it with “PA” or “put away”.