The Maltese authorities have seized control of a bank at the centre of a corruption scandal involving the funnelling of illicit funds through a series of front companies.

The Malta Financial Services Authority has frozen all transactions for customers, executives and shareholders at Pilatus Bank with immediate effect.

Owner arrested

The Maltese regulator’s move follows the arrest and indictment in the US of the bank’s Washington-based Iranian owner, Ali Sadr, who was charged earlier this month with money laundering and evading sanctions.

Prosecutors allege that he skimmed US$115 million of a nearly US$500 million Venezuelan construction contract through the US banking system.

Front companies

Sadr is alleged to have built a spider’s web of front companies and foreign bank accounts to mask Iran’s business dealings in Venezuela, and then used entities in Switzerland, Turkey, and the British Virgin Islands to funnel illicit funds back to Iran.

The authority also barred Sadr and any other directors or top executives from withdrawing funds from the bank and Pilatus is now required to obtain approval before transferring any of its own capital.

Pilatus has been the subject of intense controversy in Malta and was known to have held accounts for a top official in the government of the prime minister, Joseph Muscat, and members of Azerbaijan’s ruling family.

Categories: Trade Based Financial crimes News