Incoming MFSA chairman accuses Deutsche Bank of being ‘among most well-known channels of money laundering’

Incoming Malta Financial Services Authority chairman professor John Mamo has accused Deutsche Bank of being a well-known “money-laundering channel”.

Mamo was answering questions put to him by MPs on the new parliamentary committee established to vet appointments to government agencies and regulatory bodies, where he was asked about the threat posed by tax harmonisation to Malta’s financial services.

He said that the UK’s departure from the European Union meant Malta had lost a valuable ally, but insisted that Malta needed to stand its ground in the face of pressure by other European member states.

“Germany has been one of the most vociferous countries but it doesn’t exactly have a clean banking history because Deutsche Bank is one of the most well-known channels of money laundering,” said Mamo. He added that the same could be said for London.

“We need to make it clear that we are keeping a clean house but as I am saying, we also don’t need to be masochistic and do more than those attacking us are doing.”

Despite the need for Malta to defend itself, Mamo said it also needed to understand that in some occasions, “retreat was sometimes the best form of defence”, especially when dealing with countries like the UK, which can leverage the use of correspondent banks.

Mamo was the first appointment to be scrutinised by the new committee set up at the end of last year. His nomination was announced in December, with both the Labour and Nationalist parties agreeing to his appointment.

Asked how Malta could improve its competitiveness, Mamo stressed the need for the country’s educational system to produce more qualified individuals that could take on the top jobs in the sector.

Above all, he stressed the importance of quality, reputation and seriousness for Malta to compete.

He said this was especially true if it intended to enter the crypto-currency and blockchain industries.

“These sectors are very specialised and there is a lot of debate on where they will go,” he said. “I understand that we want to be the first to regulate, but we will have to see the extent to which the industry will be allowed to operate out of Malta.”

MPs from both sides of the House said they were satisfied with the written replies provided to the committee by Mamo however Opposition MP Carm Mifsud Bonnici noted that there were concerns about the MFSA’s current situation, especially as it related to Pilatus Bank and the country’s reputation.

He said the Opposition understood the situation with the bank was still a developing one, but stressed that it believed more measures could have been taken. 

Mamo replies by saying he knew as much as the layman about the case at this stage. “I have been following it closely and up until this morning there was a full page in Financial Times.”

He said he agreed it was a very big problem but couldn’t say whether the MFSA acted correctly or not because he simply didn’t know, but added there were a number of areas in which operations could be improved.

“It appears that communications department is weak and I know there are efforts to recruit more people,” he said.

Moreover, he pointed out issues related to confidentiality, explaining that it was often very difficult to determine “where the line should be drawn”, even when it came to communication between different units within the MFSA.

He ensuring smoother operations was one of his priorities, but added that he was also mindful of the fact that the regulator was sometimes criticised unfairly.

 “I don’t think the MFSA is above criticism but I would like to see this criticism being levelled at it for something it actually did or didn’t do.”