Court rejects Pilatus Bank’s appeal on €5 million penalty

The Appeal’s Court has rejected Pilatus Bank's appeal against the €4,975,500 administrative penalty imposed by the Financial Intelligence Analysis Unit (FIAU) in 2021.

“The Bank had lost every control on its business operations, which can be said to have been dictated by the exigencies of the clients it was dependent upon,” the court stated in its ruling.

In a judgment delivered on 12 February, the court confirmed the FIAU's decision to impose the hefty penalty, citing the bank's failure to meet its obligations and inadequate ongoing monitoring practices.

Back in August 2021, the FIAU imposed the fine on Pilatus Bank for what it described as “very serious and systemic” failures in the bank’s obligation to guard against financial crime. 

The bank subsequently appealed the decision, leading to a suspension of the penalty pending the court’s judgment.

In its decision, the court dismissed Pilatus Bank’s arguments that the penalty was excessive, emphasising the considerable amounts being processed and the high-risk nature of the bank’s clientele.

The court also rejected claims that the FIAU’s decision lacked proper motivation, stating that it was “very well motivated” and clearly outlined the specific regulations and sections of the Implementing Procedures that were breached.

Pilatus Bank was the subject of a money laundering investigation and had its licence withdrawn by the European Central Bank in 2018, following a recommendation by the Malta Financial Services Authority.

The forced closure came after the arrest of Ali Sadr Hasheminejad in the United States on charges of having facilitated the laundering of dollar payments from a Venezuelan housing project, to his family’s Iranian company, in what was a breach of US sanctions.

The case was eventually dropped after the US District Attorney withheld evidence from the defence.

However, in 2021 the Maltese police charged the bank and a Maltese official on money laundering charges.

The case is ongoing.