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Prominent Maltese bank found to have breached AML rules – hit with €340k fine

By Dan Byrne for AMLi

ONE OF MALTA’S BIGGEST banks been hit with a €340,000 fine for a lack of legally required due diligence.

Lombard Bank – the 6th largest bank in Malta – was found to have failed to adequately monitor a series of transactions from one specific customer, Malta’s financial watchdog (FIAU) said in a recent report.

These transactions were deposits as large as €2 million, and altogether totalled almost €4 million. However, the bank kept little investigative information about them, or the source of the funds involved, beyond photocopies of the cheques that were used, the FIAU said

Under Maltese law, investigative due diligence is required to screen any transactions deemed to be at risk of links to financial criminals. Larger amounts of money changing hands, or the involvement of a potentially exposed person, are considered red flags.

Any compromising information obtained is then to be shared with authorities.

However Lombard personnel violated five separate money laundering provisions and did not question pivotal information in dealing with this specific client, the FIAU said.

“The bank either did not scrutinise the transactions being effects through its accounts, or otherwise carried out inadequate monitoring of the activity.”

“The bank neither questioned such voluminous amounts, not did it attempt to obtain further information about the payments from its customers. Instead, it proceeded to allow the transactions being effected.”

Lombard’s commitment to process and scrutinise transactions manually was also called into question, with the FIAU judging it to be improbable based on the bank’s size and customer base.

The fine is the latest in a string of AML-related developments from Malta, a tiny EU nation often criticised for its use a ‘haven territory’ by criminals.

The country was recently called out by the EU for its citizenship investment programme allowing anyone investing a pre-determined sum in the Maltese economy to obtain a passport – and thus EU citizenship.

Lombard Bank has said that it will appeal the decision handed down by Maltese authorities, and reaffirmed its commitment not to go into business with “those involved in sectors considered to carry inherent AML/CFT risks.”

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