A magisterial inquiry into Pilatus Bank’s operations identified several instances where suspicious activity was not reported to authorities, the court heard on Friday.
The compilation of evidence against Pilatus Bank and its former MLRO Claude-Anne Sant Fournier kicked off on Friday, with several members of the police force testifying.
Keith Vella, a former police officer, was first to testify on the investigation. He recalled how police had received confidential information about Pilatus Bank, specifying that it could have been used for money laundering.
Following this, a magisterial inquiry into the bank was launched in November 2019.
Police officers asked the bank staff to leave the premises, and €52,000 and £20,000 were taken from the bank as evidence.
A firm was eventually appointed to scan and index the information stored on the bank’s servers, and every physical document in the bank was scanned and added to the record of the inquiry.
When the magisterial inquiry was concluded in December 2020, the magistrate directed the police to take criminal action against the bank, Sant Fournier, “and other persons”.
The police officer added that there were several instances where suspicious activity was not reported to the authorities, according to the inquiry. The bank failed to flag PEPs and document their source of wealth and funds or monitor them, and accounts were opened without all the paperwork being in order.
In April 2021 a search warrant was issued on Sant Fournier. She was arrested and interrogated, but opted not to answer any questions because she wanted disclosure.
Stefano Filletti, Sant Fournier’s defence lawyer, tried asking the police official who the source of the report was, but the official said he could not do so, citing confidentiality.
A former inspector, Matthew Vella, corroborated most of what Keith Vella said. Police had received confidential information about practices adopted by the bank, including possible assistance to money laundering.
Court-appointed experts took scans of every document under the bank’s posession, including hard disks and bank servers.
He added that the source of the initial report against the bank were the FIAU and MFSA.
A witness from the MFSA testified on Sant Fournier, explaining that she was a lawyer by profession and had attended several AML courses.
However, when lawyer Kathleen Calleja Grima asks whether Sant Fournier had prior experience as an MLRO, she stated that she hadn’t.
KPMG and MFSA had discussed the lack of a bank in the shareholder structure at Pilatus. At the time, banks needed a bank of repute in the shareholding structure, but this policy had changed for macroeconomic reasons.
To safeguard the fact that there was no “bank behind the bank”, the MFSA had asked for limitation of liability on deposit compensator scheme.
The bank’s UBO, Sadr, had required enhanced due diligence, as he was born in Iran and was a citizen of St Kitts and Nevis, so the MFSA appointed an internationally recognised third party to carry out enhanced due diligence.