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Pilatus Bank failed on various accounts, including identity verification of customer businesses, UBO verification, and AML screening of PEPs and other high-risk entities.
Malta’s FIAU (Financial Intelligence Analysis Unit), has fined Pilatus Bank approximately €5m (€4,975,500) due to AML/CFT breaches.
The regulatory authority issued a report on 31 August that stated: “the Bank has exposed itself, and the Maltese jurisdiction, to egregious ML risks that were not being mitigated in any manner. The Bank’s total disregard towards necessary AML/CFT safeguards, led to it allowing millions to pass through the Maltese economy without any consideration of possible money laundering taking place.”
The FIAU says that after reviewing the sample files, it was found that Pilatus Bank did not obtain the necessary information and documentation to understand the purpose and intended nature of business relationships – a task necessary for devising client business’s risk profile.
The FIAU report identified illegal activity in 97% of the bank’s operations, with suspicious transactions being facilitated without scrutiny in 86% of the cases. The following faults have been identified in the report:
- Information on customer transactions, their source of income, and estimated account activity was overall lacking
- Unverified customer information was accepted
- Documented evidence on investors was lacking
- Unverified CVs of customers and BOs was obtained
- Overall failure in meeting Enhanced Due Diligence (EDD) obligations
In the concluding remarks, the FIAU has advised the bank to implement adequate measures for meeting AML/CFT requirements and safeguarding the company against potential ML/FT threats.
Such robust measures include the implementation of EDD and CDD measures on PEPs and other high-risk entities, close monitoring of customer transactions, and document verification prior to enabling transactions and forming business relationships. According to experts, these targets can be effectively met with the use of AI-powered ID verification systems that automate processes such as KYC (Know Your Customer) and AML screening.
Suggested Read: AML Compliance in EU Member States and Risks of Businesses