<https://timesofmalta.com/articles/view/pilatus-chairman-and-the-mfsa-what-could-happen-next.674028>
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"The news of the Pilatus bank chairman's arrest has led to calls for the revocation of the bank's licence by the Nationalist Party and activists.\nHowever, such a process can be somewhat complicated.\nWho can take action?\nPilatus Bank is supervised by the Malta Financial Services Authority, and was given its licence before the European Central Bank's Single Supervisory Mechanism was introduced in 2015. The ECB has no supervisory role over its day-to-day operations.\nThe MFSA can take action if there are breaches to the Banking Act or money-laundering rules. So far, Pilatus Bank has no connection at all with the sanctions-busting allegations which resulted in its chairman’s arrest.\nSources involved in combating economic crime told Times of Malta that in situations like this, the authorities \"can’t simply shut down a bank\".\nREAD: Pilatus Bank chairman forced out by MFSA\nThey said investigation into the Ta’ Xbiex institution had been ongoing for “quite some time” systems in place had to be followed by the authorities.\nThe FIAU was already aware that Ali Sadr was being investigated by an overseas jurisdiction, and its report was passed on to the police in July 2016.\nThe licence could be suspended very quickly if the MFSA found valid reasons. However, the revocation process would take months.\nCan action be taken against Ali Sadr?\nThe chairman – and directors – of any bank need to pass a ‘fit and proper test’, so if Ali Sadr were convicted, the MFSA would certainly have reason to ask for him to be replaced. But so far, he has only been charged.\nHaving said that, while the presumption of innocence prevails in a court of law, when it comes to banking, if there is reasonable doubt that his position is being abused in any way, the supervisor can take action and suspend him.\nPress reports are not usually enough to trigger action by the supervisory authorities, usually requiring more investigation. Of course, if facts do emerge which would impact the original “fit and proper” test, then a re-assessment of the board member could very well be instigated.\nA placard with a Maltese idiom reading: \"The truth will always surface\" is seen outside Whitehall Mansions, which houses the Maltese-registered Pilatus Bank, in Ta' Xbiex. Photo: Reuters\nWhat about his links with the bank?\nThe investigation into Ali Sadr could uncover information about the source of the wealth used to set up the bank.\nPilatus Bank is owned by Pilatus Holding (9,999,999 shares) and Hong Kong company Alpene (1 share) while Pilatus Holding is in turn owned by Alpene (9,999,999 shares) and Ali Sadr (1 share).\nSo unless Ali Sadr has any shareholding in Alpene, or there is some link between Alpene and the alleged crime in the US, his removal as chairman would not have any impact on the bank.\nAccording to the MFSA Act, the Maltese authorities are empowered to restrict or withdraw a banking licence if it finds that this had originally been obtained through “false statements or any other irregular means”.\nIf the MFSA takes no action now, what could happen in the future?\nThe board could decide to increase the number or frequency of on-site inspections, and could insist on having a permanent presence at Pilatus. It could also call for additional or more frequent reporting by the bank. It could also decide to rope in the European Banking Authority, which has powers of its own.\nWhat are the implications of doing nothing?\nThe arrest adds fuel to previous allegations about Pilatus – which have already hurt the country’s reputation for financial services, according to the PN.\nSources familiar with the MFSA told Times of Malta that the best course of action would be to clear any doubts about the process leading to the award of the licence by publishing all the relevant minutes and documentation.\n“This is the only way to prove that everything was done properly and without any political interference,” the sources said."
<https://timesofmalta.com/articles/view/pilatus-chairman-and-the-mfsa-what-could-happen-next.674028>