Friday, October 9, 2020



Yesterday's US Treasury OFAC sanction of 18 Iranian financial institutions will be felt by Malta's banks. We have already seen the first evidence of this; the Austrian bank which is the last correspondent for US Dollar payments for Malta's biggest bank announced that it is terminating the relationship. This is no coincidence; most international bankers expected sweeping US sanction on Iran's banks, and generally there are indications which bankers are quite attuned to, in predicting government actions.

  That is reportedly the Maltese bank's last direct US correspondent connection, and it will have to immediately search for a replacement, which will probably be a more expensive non-bank financial institution alternative. Given that small Maltese banks relied upon the dominant local bank, the effect on the economy will be negative, due to increased costs, and additional processing delays. 

There are also concerns that any Maltese bank which has had, in the past, any transactions with the newly-sanctioned Iranian entities may be subject to US investigation, and possibly the imposition of sanctions against any bank in Malta that is found to have engaged in major Iran sanctions evasion activity. OFAC is most likely still smarting from Malta's very recent refusal to honor its sanctions against Libyan oil traffickers, and release their substantial accounts, and any efforts to persuade OFAC officials to desist from imposing sanctions on Iran sanctions offenders in the Maltese financial community may fall on deaf ears.

                                                                    The SOFA twins

We also should point out that the debacle involving the American Secretary of Defense and what had been described as a Bad Faith negotiation on SOFA, conducted by Malta's Prime Minister Abela, but in reality directed by resigned PM Joseph Muscat, will not be soon forgotten in Washington, and any efforts by the Labour Government in power to seek any favors from the US on OFAC enforcement will not be very well received.


And of course, there is the eight hundred pound gorilla in the room, Pilatus Bank, and those banks who conducted transactions for, and with, it, all are fearful of the long arm of the Office of Foreign Asset Control, especially since US court cases have uniformly affirmed OFACs jurisdiction, and right to withhold classified information from sanctioned entities. Will the Pilatus Bank scandal bring down any Maltese banks ? Only time will tell, but we will be watching closely for any signs that this is in the works, and will furnish our readers with any information that comes in.


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.