Greylisting: BOV CEO confirms ‘very isolated cases’ where payments had to be returned to clients

Bank of Valletta CEO Rick Hunkin has confirmed “very isolated cases” where payments via bank transfers had to be returned to clients, when responding to a question about the impact greylisting has had on the bank’s operations.

In June of this year, the Financial Action Task Force (FATF) voted to place Malta among a list of countries under increased monitoring, the so-called grey list, which acts as a signal to the global economy that there are heightened risks with doing business with Malta from a money laundering and financing of terrorism perspective.

At a press conference detailing the bank’s Q3 financial results, Mr Hunkin was asked about the impacts greylisting has had on its day to day operations.

He conceded that BOV has not seen “a significant impact”, citing close relationships with its correspondent international banking partners “the majority of which factored in the possibility” of greylisting.

Mr Hunkin went on to say that this doesn’t mean there was no impact, and that all banks have their own risk appetite.

BOV has had its fair share of issues with maintaining correspondent banking relationships, due to the tighter risk appetite by the international banking community, and the relatively small gains by doing business with local banks considering the limited size of Malta.

“Processing payments from Malta has meant more paperwork on occasion, and justification for payment. There were very isolated cases where payments were returned and we do see an increasing level of validating larger payments.”

He added that the bank is hopeful that the impacts of greylisting will remain subdued so long as the process to get off the list is not prolonged.

‘No impact on the real economy’

BOV Chairman Gordon Cordina, on his part, said that any shock to Malta’s economy is of great interest given the systemic importance BOV has on the local economy.

“Any shock that could affect the competitiveness of business factors into risk management considerations,” he said.

He added that at this time, greylisting “has not had major impacts on the real economy, also because it has been as yet a short-lived experience”.

“We cannot exclude that if the experience is prolonged, effects may be felt on the wider economy.”