11 July 2018

EBA issues recommendation to the Maltese Financial Intelligence Analysis Unit in relation to its supervision of Pilatus Bank

The EBA Recommendation aims at remedying the particular failings identified by the EBA by encouraging the Maltese Financial Intelligence Analysis Unit (FIAU) to take all the necessary actions to comply with the Anti-Money Laundering and Countering Terrorism Financing Directive (AML/CTF).

Following the European Commission's request of 23 October 2017, to investigate a possible breach of Union law (BUL) regarding the apparent failure of the Maltese FIAU and the Maltese Financial Service Authority (MFSA) to effectively supervise Pilatus Bank Ltd in relation to its AML/CFT obligations, the EBA conducted a preliminary enquiry, including an on‐site visit to the Maltese competent authorities.  

On 23 May 2018, the EBA Chairperson, having consulted with the Alternate Chairperson, opened an investigation into a possible BUL by the Maltese FIAU. The EBA concluded that the FIAU failed to conduct an effective supervision of Pilatus Bank due to a number of failures, including procedural deficiencies and lack of supervisory actions by the FIAU after its decision to close the case without imposing any sanctions on the bank.

Despite the several measures taken by the FIAU to remedy the identified failures, the EBA deemed these measures as not sufficient to satisfy the deficiencies that led to the launch of a BUL investigation. Therefore, the EBA called on the FIAU to adopt recommendations aimed at addressing the identified shortcomings. In particular, the EBA asked the FIAU to take actions:

• to systematically assess the ML/TF risk associated with the Maltese financial sector;
• to supervise the effectiveness of the AML/CFT policies and procedures put in place by the obliged entities;
• to ensure enough resources are available and robust procedures are in place to supervise its obliged entities.

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