Malta's Financial Intelligence Unit (FIAU) has fined Lombard Bank € 340,058 for violating anti-money laundering rules.
A €2m deposit was made into a Lombard Bank account without the origin of the funds being substantiated in any way, the FIAU has found.
In a report published on its website, the Financial Intelligence Analysis Unit said the only documents maintained on file for this large deposit were copies of cheques issued from bank accounts that the customer held with another bank.
A substantial increase in the funds deposited with the bank by the same customer resulted in deposits running to €4m within a span of only 10 months. This was not questioned by the bank, the report added.
The breaches were identified by the FIAU in an inspection on the bank carried out in September and October 2019. The bank said they did "not relate to suspicions or evidence of money laundering".
The FIAU found that the bank had violated five money laundering and the fight against terrorist financing provisions. In one case, the Bank had failed to ascertain the source of client funds as a politically exposed person. The FIAU inspection resulted in the finding of three other files that lacked adequate information on the source of wealth.
Inspectors had also found shortcomings in the occasional review of files, with the FIAU in its report expressing concern that not all bank documentation was centralized.
Doubts were also raised as to how a bank, having such a size and customer base could update its records manually, something which as evidenced from the findings of the compliance review, was not being achieved by the bank.
Serious shortcomings were identified in relation to the bank's obligation to scrutinise transactions taking place through the customers' accounts.
"The bank either did not scrutinise the transactions being effected through its accounts, or it otherwise carried out inadequate monitoring of the activity carried out within the accounts held... Whilst in certain instances the volumes passing through the bank's accounts were extremely large, in other cases the transactions did not tally with the customer profile.
The bank neither questioned such voluminous amounts nor did it attempt to obtain further information about the payments from its customers. Instead, it proceeded to allow the transactions being effected."
Lombard said in a statement it was committed prevent the use of its services for any form of illicit activity. "Indeed, as a matter of policy it does not enter into business relations with those involved in sectors considered to carry inherent AML/CFT risks while it continues to strengthen its defences to this end."
Lombard Bank will be appealing against the decision.