[WATCH] UPDATED | Edward Scicluna must shoulder responsibility for damning FIAU report, Opposition says

PN MP Mario de Marco on EBA report that found serious breaches at FIAU

Edward Scicluna must shoulder responsibility for the serious shortcomings identified by the European Banking Authority at the Financial Intelligence Analysis Unit, the Opposition said.

Nationalist Party MP Mario de Marco also called for an independent investigation of the FIAU’s conduct and the sacking of two senior officials from the watchdog last year.

De Marco was reacting to the damning findings of the EBA, which concluded that the FIAU had breached the EU’s anti-money laundering rules in respect to its monitoring of Pilatus Bank.

“An independent investigation has to be undertaken into what led to the firing of former FIAU officials Jonathan Ferris and Charles Cronin because Edward Scicluna has given no explanation for this, to date,” de Marco said, adding the finance minister had to shoulder political responsibility for the FIAU’s failings.

READ ALSO: FIAU breached anti-money laundering rules over Pilatus Bank, EBA says

Ferris and Cronin, were engaged by the FIAU in 2016 and fired in 2017, sometime after last year’s election, for reasons which have not been made clear, de Marco said.

The Opposition MP said the decision to dismiss Ferris and Cronin was “unacceptable at the time, and even more unacceptable now that we have the EBA’s report on the FIAU”.

De Marco said that apart from political reasons, there might be other, more serious reasons behind the FIAU’s behaviour. “There should therefore be an independent investigation into what led to the shortcomings in the FIAU, as identified by the EBA.”

FIAU reaction ‘pathetic’

PN MP Kristy Debono called the FIAU’s reaction to the EBA report “pathetic”. She said the conclusions were “damning” and did not give a good certificate of conduct to the financial watchdog.

“The report clearly says the FIAU failed to implement the adequate policies and procedures in terms of anti-money laundering when it came to its supervision of Pilatus Bank, in what constituted a breach of EU rules,” she said.

Debono said that instead of discussing any new measures it will be taking, the FIAU only said that it was disappointed with the EBA’s conclusions, and that it had serious reservations regarding the process used to draw up the report.

“This is not only pathetic, but dangerous,” Debono remarked.

She said it was useless to attract new economic sectors and put together a good legal framework, if big questions regarding the independence and autonomy of the FIAU and the Malta Financial Services Authority remain.

 “There are serious doubt on whether the government is going to let the institutions implement anti-money laundering procedures… If the FIAU does not take on board the EBA’s recommendations, the repercussions will be very serious, and will have serious effects on our economic sectors,” she said.

EBA confirms important institution not functioning

De Marco said that it was now not only the Opposition which was saying that Malta’s authorities and institutions were not functioning properly. 

“We now have the EBA’s confirmation. The report said that an important institution in our country is not doing what it should to ensure anti-money laundering rules are observed and implemented,” he said.

De Marco said Pilatus Bank was given a license in January 2014, during Joseph Muscat’s first legislature. When the application for a license had been submitted, the owner of the bank, Ali Sadr Hasheminejad, was already being investigated by other jurisdictions on very serious crimes, he added.

“We know that at the time, then Police Commissioner Michael Cassar decided to, for his own reasons, resign when a report was placed on his desk saying that there were serious shortcomings in the FIAU. I think there are reasons behind Cassar’s resignation which are above and beyond the health issues he cited,” de Marco added.

Cassar had resigned in April 2016, reportedly after receiving a report from the FIAU on suspected money laundering by people close to the government.

Some months later, then-FIAU director Manfred Galdes also left the watchdog, in circumstances that remain unclear.

It is understood that Galdes had initiated investigations into various politically exposed persons, including Konrad Mizzi and Keith Schembri, whose names had cropped up in the Panama Papers.

Most of the individuals had also used the banking services of Pilatus Bank.

The Labour Party reacts 

Reacting to the PN’s statement, the Labour party said that as reported by the European Economy Commission, Malta has a solid reputation.

In a statement, the PL said that that the number of international companies which have chosen to move or expand to Malta was a clear indication of the country’s good reputation.

“The FIAU’s shortcomings mentioned in the EBA’s reported happened on their watch, during former minister Tonio Fenech’s time,” PL said.

“it should also be mentioned that Maltese institutions have taken action against Pilatus Bank after it was evident that the bank’s owner was facing charges abroad.”

The Party said that in the last few months, the country took new steps to fight against money laundering and financial terrorism, under directives by Minister Edward Scicluna

“The Nationalist Party only game is to make minister Edward Scicluna resign, even though he has brought great surplus to our country.”