FRANKFURT (Reuters) - European lawmakers are urging the European Central Bank’s President Mario Draghi to investigate Maltese banks and their supervisors after the arrest of Pilatus Bank’s chairman on charges of breaking U.S. sanctions.
Ali Sadr Hashemi Nejad was accused in an indictment filed in a federal court in Manhattan of involvement in a scheme to evade U.S. economic sanctions against Iran, U.S. prosecutors said last week. A lawyer for Sadr has declined to comment.
Pilatus Bank’s assets have since been frozen by the Malta Financial Service Authority (MFSA) but the case prompted criticism of the island’s authorities for inaction.
Six members of the European Parliament are now calling for the ECB, the euro zone’s top banking watchdog, to reconsider Pilatus’ banking license and screen the Maltese banking sector for more financial crime. Pilatus has not responded to requests for comment.
“We urge the ECB to assess the adequacy of the measures taken by the MFSA and consider whether these circumstances warrant the withdrawal of the authorization of Pilatus Bank,” the MEPs said in the letter.
“In addition, we call on the ECB to systematically check whether the business model of other Maltese credit institutions pose risks stemming from financial criminality.”
They asked the ECB to assess “the independence of the MFSA’s regulatory and operational functions”.
The MFSA did not immediately provide comment, but Maltese Prime Minister Joseph Muscat said last year the financial services sector is as transparent, solid and compliant as that of any other European jurisdiction.
Malta’s police have said the suspected sanctions busting did not involve Maltese citizens or institutions and that no transactions passed through Malta.
The ECB has been keen to stress it is not responsible for money laundering but its chief supervisor, Daniele Nouy, conceded on Monday that seeing U.S. authorities unearth cases in the euro zone was “very embarrassing”.
She also called for harmonized EU legislation against money laundering and, possibly, the creation of an agency to enforce them.
Reporting by Francesco Canepa; Editing by Alison Williams