The company at the heart of a US investigation on dirty money from Venezuelan politicians had channelled money through Malta-based Pilatus Bank, the Caruana Galizia public inquiry hears
€120 million in financial transactions from the shuttered Portmann Capital Management, were funnelled through the private Malta-based Pilatus Bank, the former economic crimes unit boss said.
Assistant Commissioner Ian Abdilla told the public inquiry into the assassination of Daphne Caruana Galizia, that Portmann had channelled a total of €120 million in transactions, out of €520 million it handled in total, through Pilatus Bank.
The wealth management firm is embroiled in a United States investigation on dirty money from Venezuelan politicians.
Abdilla only mentioned the case in passing in a bid to convince an otherwise sceptical inquiry board that the unit he headed had investigated high-profile cases despite the limited resources available to it.
Portmann Capital Management is suspected of having been used in a high-profile $600 million money laundering scheme reaching up to the Venezuelan presidency of Nicolas Maduro, on embezzlement of the country’s petroleum profits.
The firm was fined €370,000 by the Financial Intelligence Analysis Unit over its scant due diligence on its politically exposed clients (PEPs), and €63,000 by the Malta Financial Services Authority.
The company, owned by banker Kurt Portmann, was revealed to have processed a total of €553 million in 735 transactions for its small clientele of just 53 clients between 2011 and 2018 without a payments services licence.
Venezuela money laundering
Portmann’s clients include Venezuelan national Jose Vincente Amparan Croquer, aka ‘Chente’, described by the US investigators as a “professional money launderer” who uses a Spanish real estate firm as his front. According to the criminal complaint, “Amparan also maintains relationships with ‘European Financial Institution 1’ in Malta” now suspected to be Portmann Capital Management.
US investigators used email search warrants to confirm the flow of funds from Venezuela’s state petroleum company PVDSA, to conspirators through ‘European Financial Institution 1’. One email, carrying an attachment titled ‘Operation 600k’, contained worksheets detailing the illicit cash flows from Venezuela to Malta: which included €20.4 million assigned to the Maltese ‘European Financial Institution 1’ as a 4% fee.
The MFSA and FIAU suspect that the company’s core business was carrying out unlicensed payments services for its select clients, of significantly high values not related to investment operations but as a substitute for banking or payment accounts.
But both the MFSA’s and FIAU’s fines were only finally imposed in August 2018, after Portmann was implicated in the Venezuelan money laundering probe.
While the MFSA discovered the unlicensed payments during a site visit in June 2016, the company accused both the regulator and the FIAU of acting belatedly in response to press attention.
Indeed, the FIAU carried out its own site visit in November 2016, in which it discovered major breaches of financial rules on due diligence and client on-boarding, but again only fined the company €370,250 on 24 August 2018, 13 days after the Maltese press reported the Venezuelan money-laundering investigation by United States investigators in Miami.
Portmann claimed the FIAU’s and MFSA’s actions were only spurred by the press reports, since the two authorities were “silent for 10 months” after their follow-up requests on their 2016 site visits.
“The FIAU was pushed into action by what emerged in the media as they referred to ‘the possible impact… on Malta’s reputation’ in their sanction letter,” Portmann’s lawyers said in a court document contesting the fines. “It is unfair that the company has been judged by what was published in the media… if nothing had happened, or had timely adjudication taken place before, the outcome would have been different.”
Last February, the MFSA was forced to revisit its decision to effectively suspend Portmann Capital’s operations indefinitely after the firm won an appeal filed before the financial services tribunal.
In response to the tribunal’s decision, the MFSA decided to maintain restrictions on any outgoing transactions or onboarding of new clients, pending a maximum one-year deadline for Portmann Capital to address its lack of “serious internal control[s] and governance weaknesses”.
The MFSA said it will maintain the restrictions on client account movements until the remediation measures are put in place by Portmann.
Failure to do so within the one-year timeframe could see further regulatory actions taken against the firm, the MFSA warned.