money laundering

The Malta Financial Services Authority (MFSA) has decided to cancel the investment services licence of Portmann Capital Management Ltd, a firm at the centre of a United States money laundering and sanctions busting investigation involving the Venezuelan state oil company and relatives of Nicolas Maduro, the Venezuelan president.

In a decision taken on 27th January, the MFSA concluded that Portmann Capital Management breached a laundry list of regulations, including continuing to provide payment services without a licence.

Portmann Capital Management was also found in breach of rules stipulating that licence holders must act honestly, fairly, and professionally, that they must have sound and prudent management, and that they must monitor and periodically assess the adequacy and implementation of strategic objectives and take appropriate steps to address any deficiencies.

Additionally, the MFSA said the company was in contravention of related to compliance with the Authority, the compliance function, the external auditor, reporting requirements, and risk management.

The decision may still be appealed before the Financial Services Tribunal, and shall not become operative until the expiration of the period within which an appeal lies.

The MFSA also decided that directives it issued on 23rd December 2019 should not be modified, with no lifting of restrictions to cease ongoing transactions for Portmann Capital Management’s clients.

A directive restricting the onboarding of new clients and the outgoing transactions from the accounts of clients held by the company under nominee would therefore remain in force for the time being.

Furthermore, the MFSA also decided to direct the Company to remove any reference to licensable activities in the objects clause contained in the Memorandum and Articles of Association.

How is Maduro involved?

In 2018, Times of Malta reported that the US Department of Homeland Security had filed a criminal complaint alleging that huge sums of money had been syphoned from the Venezuelan state oil company and transferred to Europe via a third party, believed to be Portmann Capital Management in a “complex money laudnering scheme”.

At this stage, Portmann Capital Management Ltd and its directors are not and have not been formally named, nor considered conspirators.

Testifying before the public inquiry into whether the State could have done more to prevent the assassination of journalist Daphne Caruana Galizia, the former chief of the Economic Crimes Unit within the Malta Police Force Ian Abdilla said that Portmann Capital Management handled a total of €520 million in transactions related to the Venezuelan money laundering scheme.

Of these, €120 million passed through Ta’ Xbiex-based Pilatus Bank, which was later shut down by the European Central Bank amidst international controversy.

Previous brushes with the law

Portmann Capital Management has previously been 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 MFSA.

The company 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.

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