Last Updated on Wednesday, 1 June, 2022 at 12:01 pm by Andre Camilleri
A fine imposed on the now defunct bank Satabank by the Financial Intelligence Analysis Unit has been slashed from €327,500 to €68,000 after the bank appealed the penalty, this newsroom can reveal.
In an updated notice published on Tuesday, the FIAU said that a fine which they had issued against the bank in October 2018 had been revised by the Court of Appeal (Inferior Jurisdiction) which decided that while the enforcement was correct, the fine was too high for the legal provisions which had been breached.
Satabank – which slammed shut in 2018 after both the FIAU and the Malta Financial Services Authority (MFSA) found extremely weak anti-money laundering structures in place – was fined €327,500 on 5 October 2018 for failing to reply to requests made by the FIAU within the stipulated timeframes and for also providing the same authority with incorrect information.
This fine is separate to a massive €3.7 million fine which the FIAU slapped onto the bank for its anti-money laundering shortcomings. That fine was reduced to €851,000 upon appeal.
The FIAU had said that throughout the period between February 2016 and November 2016, the Bank failed to reply to requests for information made by the FIAU within the stipulated regulatory timeframes on 22 different occasions.
The working days by which the Bank replied late varied from 1 day late to 44 days late.
The Bank had told the FIAU that this was because it did not have the adequate resources to reply to the request in a timely manner, but the FIAU determined that this does not justify the failure to stick to the timeframes as the bank should have ensured that it has the resources to reply within the legally stipulated timeframes.
The FIAU also said that in seven cases Satabank did not provide the correct information required to satisfy their requests.
In these cases, the FIAU expressed its serious concerns relating to the Bank’s systematic failures. This because the breaches identified were a result of the ineffective systems and procedures the Bank had in place to retrieve customer information.
In view of these breaches, the FIAU decided to impose a penalty of €327,500, saying that it had taken into consideration the size of the Bank’s operations as well as the nature of the breaches identified.
Satabank subsequently appealed the fine on 24 October 2018 – an appeal which was decided on 25 May 2022.
The FIAU said that the Court dismissed Satabank’s argument that its representations were not taken into account by the FIAU and went on to identify all the factors which the FIAU considered in arriving at its decision, including the nature and seriousness of the breach and the systematic delay in replying amongst numerous other factors.
The FIAU said that the court noted inter alia that the Company’s submission that its breach was negligible and that it brought about no damage not only shows arrogance on the part of the Company but also reflects the lack of understanding of its obligations according to the Act and Regulations.
However, the court noted that the administrative penalties imposed by the FIAU for both of the regulatory breaches were too high, and therefore revised the administrative penalty from €327,500 to €68,000.
Satabank: A history
Satabank rose to prominence – for the wrong reasons – after it was subject to a joint inspection and audit by the Malta Financial Services Authority and the FIAU in 2018.
Significant shortcomings were found in the bank’s anti-money laundering procedures, which ultimately resulted in the total freezing of all 12,000 of the bank’s accounts as EY was drafted to administer the bank’s assets.
Police and financial regulators subsequently opened a much more in-depth investigation into the bank and the dealings of its customers, with billions of euros in transactions coming under the spotlight.
More than 300 reports of suspicious transactions at Satabank – worth over €130 million – were ultimately flagged by experts.
The bank was eventually slapped with a massive €3.7 million fine by the FIAU over its money laundering regulation breaches. This fine was reduced to €851,000 by an Appeals Court in December 2020.
That mammoth fine was imposed at the same time as the aforementioned €327,500 fine was imposed by the FIAU on the bank.
The European Central Bank withdrew Satabank’s licence on 30 June 2020 – the second time in as many years that the ECB had taken such action against a Maltese bank licensee after the infamous Pilatus Bank suffered the same fate in November 2018.
Satabank’s Bulgarian owner Christo Georgiev has since sued newspaper Times of Malta, blogger Manuel Delia for their coverage of the scandal associated with the bank, and also sued former PN MP Jason Azzopardi over a speech he gave in Parliament.
The cases were opened in his native Bulgaria, meaning that they are classified as SLAPP suits – which are law suits purposely opened in a foreign jurisdiction in order to force the defendant to face high expenses to defend itself.