HSBC LOOKING TO PULL OUT OF MALTA; IS IT THE RAMPANT FRAUD, MONEY LAUNDERING AND CORRUPTION, AND ARE AMERICAN BANKS WATCHING?

The Republic of Malta, the sole surviving European Union country to still sell economic citizenships, appears to be losing HSBC's Malta subsidiary; the bank issued a press release describing its "strategic review," a reassessment of its role these, which is bankspeak for a planned pullout. For many years, we have covered Malta's systemic money laundering problems, now complicated by a major corruption scandal, with elements of a massive fraud. No wonder HSBC is seriously considering a complete withdrawal; the risk most likely exceeds the rewards it receives.

Malta, which is fighting a European Commission intent on terminating the country's IIM (CBI) economic citizenship program in the courts, has been selling passports to individuals from high-risk countries with impunity; those prized passports give bad actors visa-free entry into the Schengen Zone, which is the only reason the clients purchase them, and the EU is most likely tired of the resultant increased risk.

We trust that US banks are paying attention, especially those that are still engaged in lucrative correspondent banking business with Caribbean financial institutions located in states that sell economic passports. Malta is also guilty of deliberately ineffective AML compliance in its CBI program, which facilitates money laundering into the EU, and gives the European Union nightmares. Whether American banks see the disturbing parallel here remains to be seen, but we will be watching to see if they are paying attention.