Bank of Valletta deposits increase by €2.3 billion in funds from suspect sources since 2013

This story in yesterday’s The Malta Independent on Sunday reveals some shocking facts about the situation at the Bank of Valletta since 2013.

The newspaper has documented evidence that the bank is not applying the required due diligence checks to suspect clients from Libya who have been allowed to open accounts and deposit huge sums of money, and that the European Central Bank is now putting considerable pressure on the Bank of Valletta to shut down these accounts.

The newspaper had already reported in another issue that it has copies of correspondence between the bank and the Financial Intelligence Analysis Unit, which is the Maltese authority responsible for policing and investigating suspicious banking activity and other transactions under Malta’s anti-money-laundering and anti-terrorism laws. Bank of Valletta’s senior officers had been telling the authorities that they were sticking with their due diligence obligations when, in fact, they were not.

Doing away with proper scrutiny under the law has led to deposits at the Bank of Valletta skyrocketing from €6.22 billion in 2013 to €8.56 billion in 2015, an increase of over €2.3 billion that is completely out of whack. New deposits of €1.4 billion were taken by the bank between 2014 and 2015 alone. Between 2013 and 2014, the bank took new deposits of €900 million.

The Financial Intelligence Analysis Unit and the European Central Bank are extremely concerned about eh source of these funds, The Malta Independent on Sunday reports. I think here we have the source of the Prime Minister’s cavalier remark on prime-time television, some months ago, that he “saved the banks”. Turning the Bank of Valletta into a money-laundering outfit, however, is not “saving the banks”, but rather the opposite.

HSBC could afford to pay the $1.9 billion fine with which it was hit in 2012 in the United States, for laundering Mexican drug money. But the Bank of Valletta can’t survive massive fines, not financially, and not in terms of reputation.