Issue link: https://maltatoday.uberflip.com/i/817563
14 Let's start with the enduring image of the past week: you walking out of the bank's back entrance, carrying luggages in hand. The impression out there is that you were trying to dispose of documents, at a late hour in the night. What do you say to this? On Thursday morning I landed in Malta at 11:30 from Wash- ington DC through Frankfurt. I caught an eCab, came directly to the bank, got my luggages out and went directly to the boardroom. I was in the boardroom for the en- tire time that I was at the bank. From around 12:30 to almost 9pm I was at the bank with my luggages intact. As you know the bank is monitored by CCTV cameras. We voluntarily submitted everything we had, not only the eight or nine hours I was at the bank, but the en- tire day's footage. It was important on that day that I get straight to work and don't go home. That is what is required of someone of my calibre to get to work faster. I worked on the Chair- man's Statement and Director's report so we would be prepared for the day after, which was the board meeting that was scheduled on Friday. All of that is captured, throughout the entire day, to put people's minds at rest, I did not touch any of the clients' docu- ments, and it's not my job to touch clients' documents. Or the allega- tion or the claim that any of the documents were taken out of the bank – all of that is just patently false. That's the entire amount of time that I spent inside the bank and then what happened outside of the bank is known to everyone. Having seen what people are talking about, if I were to make those decisions again, hindsight being what it is I would have taken a different course. I would have handled the situation better. How? I would have walked out of the front door and not the side door. My opinion of the matter of the time was for the safety and for the fact that employees of the bank can't talk to media, they can't dis- close information to media. So you were aware that the media was outside the bank? Yes we were told by the security people that there's media outside. For their safety, not that there's anything wrong, I just didn't want the friction of our employees who are working really hard till 9pm to face media questions that they can't answer. Were you aware why the media was there? Of course there were claims that had come out in blogs and posts that had made some claims that the bank had certain accounts. So that was probably the intention of the camera crew to come out and be at the side of the bank, obvious- ly you would have to refer to them to see what the intentions were. The next day you were challenged about your bank's relationship with the Aliyev family and you never denied this. Would you like to comment on this? The bank is prohibited by law from making any comment on any client it has, had or wants to have. Putting that aside, I want to get to the fact that the bank had very, very rigorous compliance and governance system in place. That is important to understand that and it is also important to ask what type of banking we're talking about here. In fact I was about to ask you: what kind of clients, what sort of services do you offer. You're obviously not a high street bank with ATMs, you don't give out home loans as far as I know. What does Pilatus Bank do? Pilatus Bank is a private bank. The notion is that we deal with pri- vate individuals, high net worth in- dividuals and mass affluent people who do not live in Malta. However, this is a Maltese bank. If a high net worth individual from Malta came and asked to experience private banking in Malta we would assess the risk and business model and risk appetite to onboard them. But coming back to your ques- tion, Pilatus Bank is a private bank and it caters for investors out of Malta, just like private banking happens in Switzerland, just like private banking happens in Lux- embourg, just like private bank- ing happens in Vienna, just like how private banking happens in Lichtenstein. I'm naming these countries because they're known for private banking. You can go to the likes of bigger countries like Germany and France and you find very large private banks. But as a private banking hub, Malta is ripe. Malta is ready. Malta can become the next global player in the Private Banking sec- tor. That's the message, that's the takeaway. That is obviously an important aspect and thank you for sharing it, but we know for a fact that for example Azeri businessman Manuchehr Khangah is a client of yours. He opened a company in formation account with Pilatus Bank. How did he come to choose your bank and do you feel comfortable with having clients like him and the Aliyevs, a dynasty of kleptocrats? Matthew that's a great question. As you know I can't comment be- cause of the legal framework that binds me to confidentiality. You didn't want to answer about individual clients, but some of these clients are subject to sanctions or blacklisted. So how do you reconcile that with your legal obligations and responsibilities? The notion that there are indi- viduals that you're saying the bank was never allowed legally to bind itself into a relationship, that legal- ly the bank was not allowed to on- board. That is just patently false. Not only is that patently false but the bank goes above and beyond to ensure that there is a proper risk framework around such clients and transactions. When you say risk framework, does this include due diligence and KYC? Absolutely. In banking there are many things you have to follow prior to onboarding a client and after you onboard a client that there is ongoing monitoring of the client and his transactions and many things that come through. There are many words that are technical here: source of funds, source of wealth, many technical words that we can talk about. All of that, through our policies and procedures need to translate into practical ways and means for the bank to make sure that it is not only abiding by the rules and the laws stated by the regulators, but goes above and beyond to protect its own reputation. Walk me through it. I'm a client, I have $150 million and I want to deposit them at Pilatus bank. First of all I don't do the on- boarding of clients but I can tell you about the procedure. In the broadstrokes. You go through a very rigorous process. Onboarding of clients if they come from some element of high risk – that onboarding, it takes time. The process is rigor- ous. For some people, it could take, for known quantities to the bank, for some people it could take less, for some people it could take more. What I can tell you is this. We don't cut corners. Everybody is subject to a rigorous process. You as your example goes, we go through a very rigorous process to establish the source of funds. This is the issue. We're a regulated enti- ty and a regulated entity is subject to a lot of standard inspections. We are subject to a lot of audits. In fact the bank was reportedly investigated for unspecified irregularities by the FIAU. Can you tell me what the investigations were about? Any bank, all banks are subject to regular inspections by the regula- tors. We're in constant commu- nication with all regulators, in- cluding the FIAU and MFSA and whatnot. But are you being investigated by them? This is another piece... I'm bound by confidentiality not to disclose any past, ongoing, future inspec- tions. The FIAU is a respected in- stitution and has brought a lot of reputational... positive elements not only to Malta but to the bank- ing system. It remains an impor- tant force as we move forward and make Malta a financial hub in the EU. I want to come to this, because this is a very important part – these inspections are good. We welcome these inspections all the time. Our doors are open all the time to any regulators to come and ask ques- tions and get a better sense. And we get a better sense of what they expense. As we move forward, I encourage these con- versations, these inspections. So that the institutions and the regu- lators come together more often so their expectations do match. If the regulators want the institu- tions to go further in certain areas, that is exactly how it comes to the subject person to the bank to all financial institutions. So not only are we subject to all of that, we en- courage that and we're extremely forthcoming." There was also speculation that your bank should not have been granted a licence in the first place, because you're born in Iran if I understand correctly. How did that work? I understand that you have a St Kitts and Nevis passport. This is pertinent to the issue. For someone to suggest that someone who was born in Iran, as a matter of an accident – I'm sure we never chose in which country we were born, that that should determine who we can become in life is a wrong statement to make. I don't want to get into racism or the likes of racism, I want to stay with this positive message. No matter where you were born: in Iran, in Malta or in any other country on this planet, you can achieve any- thing if you set your mind to it. That's the takeaway. I am a person who went to an Ivy league school. To somehow suggest the notion that because someone was born in a certain country they can't achieve the highest standard in life – that notion is past us. You have a strong relationship with Nexia BT and KPMG. What was their role in bringing Pilatus Bank to Malta. We have a working relationship with all audit firms, there are the Interview By Matthew Agius maltatoday, SUNDAY, 30 APRIL 2017 Malta is an amazing hub for banking. Let's look to the future. For the first time in the history of this country, Pilatus Bank has ventured out and established a branch in London. We're putting the Maltese flag on the private banking map. MALTA ON THE PRIVATE BANKING MAP Playing by the rules