L-Atti tal-Inkjesta datata 19 ta' Novembru 2019, rigward skont it-Termini ta’ Referenza ta’ l- Inkjesta Pubblika dwar l- Assassinju ta’ Daphne Caruana Galizia.

So this is again an extract, or it looks like it is an extract from an internal

..from a compliance report, and just to be clear this has nothing to do now with the analyses work of the FIAU. It is very important to make a distinction between these 2 functions of the unit.

Judge J Said Pullicino :

This is compliance.

The Witness : –

This is compliance. So this is what we refer to as an initial findings letter; so this is the letter that the FIAU would send out to a subject person such as banks, financial institutions, so on and so forth, detailing the findings of … examinations. But this is the first step in the compliance process after the supervisory.. after the… examination. And at that time the process was that after this letter was submitted to the bank the bank could have a period of around one month to submit these representations. And in fact after we submitted this letter to Pilatus Bank we received representations from Pilatus

Bank. I think this is, well, you know, as I think is very important to talk about because I know that even I read the articles and I know that the questions were raised in this court as to how the FIAU went from issuing this initial findings report, to issuing the so called clean bill of health as is often referred to. My opinion is not a clean bill of health, but anyway. So the examination carried out by the FIAU in 2016 was carried out in March, and after that March examination we issued this report, that again unfortunately ended up in the public domain which is called the initial findings report. This was issued in May 2016.

The bank had round about one month to provide these representations. On the 8th of June we received those representations, and on the 22nd of June a meeting was held between FIAU, was myself and the former director of the FIAU Manfred Galdes, with representatives on the bank namely the owner of the bank Mr Al Sader, and representatives from KPMG Ms Juanita Bencini. The bank in that meeting insisted and stressed that the independent reports that it had carried out by KPMG and Camilleri Preziosi just after it received our initial findings letter, identified that the findings in the FIAU’s letter did not subsist. And at an actual fact the bank had all the documentation that it was supposed to have inline with the law; and in this meeting the bank especially Mr Sader asked the FIAU to carry out a follow up visit. Not a second compliance examination, a follow up visit to establish whether in fact those documents were there or not and to determine therefore whether KPMG and Camilleri Preziosi’s reports were right or not. And in the same meeting they therefore asked the FIAU to carry out a follow up visit.

It is not uncommon because.. I mean this is.. you know, I am speaking generally here .

Dr Therese Comodini Cachia :

It is not uncommon in our jurisdiction or all over the world?

The Witness :

No, well I can speak for our jurisdiction. I worked in the private sector as well. What I .., allow me to explain, I mean this is not.. I am not in anyway here defending Pilatus Bank, but I want to explain what a dual filing system can mean. For example it is very typical to find files as contained customer due diligence information; which are kept separate from other files that a company service provider in relation to the service that a company service provider may provide to its clients. Very often in customer due diligence files

you have information that is more sensitive and that a service provider may wish to keep restricted and make it only accessible to the complaints team for example. So this is again, I am not here to … with Pilatus Bank, I am speaking in generally, and it happens, is very often that when we are onsite we note that there maybe sort of a dual filing system, but in the end and was to coming back to your question, subject persons no was information they are supposed to collect, and this also lease me back to your question Your Honour. It is next to impossible for us to know what documentation you have to be inline with your obligations because if your obligations is for example to identify someone you can identify a person by liaison documents, you can identify a person by using his passport or his ID card. So I cannot come to an tell me give me the copy of the passport of your client. Because maybe you have a copy of his ID card. And if the obligation is to collect sufficient information on one source of wealth and one source of funds, again, you can do that by using several different documents. There is not one specific document. So we cannot carry out on .. examination and ask for specific documents. In the end as I said before the owners of demonstrating compliance is on the subject person. They know that their obligation is they have to identify the clients; that they have to build their profile, that they have to obtain sufficient information on their source of wealth; but then it is up to them what information to collect to be inline with their obligations. So .

Judge J Said Pullicino :

But then it’s up to you to carry out money loudening, not up to them. The problem is that it’s up to you to carry out money loudening to identify. Unless you had the material in your hand you can’t identify whether money loudening is taking place or not.

The Witness :

No no this .., apologise, this work, and this is why I said this important to make a distinction. This work the Pilatus compliance examination is not to check whether the bank is laundering proceeds of crime or not. This is work to identify whether Pilatus Bank is actually adhering to its obligations. Its administrative..

Judge J Said Pullicino :

Including that. Including not evading obviously; if a bank is money loudening it is not complaint with his obligations I suppose …

The Witness :

That, if there is a suspicion that someone is laundering process of crime that work would be handled by our intelligence team; and it would be illegal for us

to inform that person that we are actually carrying out analysis to determine whether that person is laundering in process of crime or not. That will be tipping off.

Dr Therese Comodini Cachia :

I am going to take you to my previous question and to which you replied that it is not your working practice, or it is your work in practice not to inform the bank of what information you will be seeking or the files you will be asking for. But in a letter dated 21st July 2016 signed by yourself addressed I assumed to Pilatus Bank, you wrote the following : the follow up on site examination is scheduled to commence on the 8th August 2016. In this respect please find attached appendix 1 the list of customer files that will be reviewed. Can you explain why the change in working practice?

The Witness :

Yes yes. No no no it’s not a change in working practice. I’ve already explained. The visit that we carried out in August was not a new visit. It was a follow up of the visit that had commenced in March, and therefore..

Dr Therese Comodini Cachia :

So a new visit you do not inform the bank what which client’s files you will be asking, but for a follow-up visit you inform the bank which client files you will be asking.

The Witness :

Because it was a continuation of the first visit, so we simply had noted a number of deficiencies in those files and therefore in the second in the follow up visit we looked at those same files. Can I clarify something? Who am I supposed to answer? To her or ..

Chairman Judge M Mallia :

No. To us.

Dr Therese Comodini Cachia :

You have to reply to them; But the questions I am allowed to place questions, but you look at the Board please. Why was it important for you in that letter to inform Pilatus Bank that Dr Manfred Galdes had resigned?

The Witness :

…still ongoing but we don’t have results as yet.

The Witness :

Pilatus Bank is not Panama Papers.

Judge J Said Pullicino :

Yes I agree. Pilatus Bank is one thing and the Panama Papers is another. They are internal link because of the ….

The Witness :

Yes yes; but your question is that.. well, I don’t .. if you are asking for my opinion, but it mentioned that in our countries things happened, people resigned. If we are talking about Panama Papers, obviously here I am representing the FIAU, and I can assure you that the FIAU has done everything it can do. We are not perfect; we make mistakes; we accept them; we seek to improve. And I have thing the FIAU is nowhere comparable to what it was some years ago; we opened cases on our own motion. In a way we are not obliged to do so. FIAU …. as international standards should have the

So I can’t understand why said that; there were lots or reasons. We employed Mr Ferris as a manager of the intelligence team and we made a mistake because he did not perform well as a manager. He was a terrible manager. And this is not me speaking; well I am here speaking, but it actually was something that was brought to our attention by the whole team. And in the end we had to take action. Ok? Because the product the output of our intelligence team was deteriorating; and as an FIAU its not the first time that we recruited persons who did not make it through the probation period.

Judge J Said Pullicino :

.. that matter

Chairman Judge M Mallia :

Ok. We can stop here now. Il-Bord jordna li f’ dan l-istadju tigi zgumbrata l- Awla halli titkompla x-xhieda ta’ Alfred Zammit bil-maghluq.

Din hija s-sustanza tax-xhieda ta’ Alfred Zammit dettata minnu stess fil- prezenza ta’ l-istess xhud.

Niddikjara li traskrivejt bl-ahjar hila tieghi x-xhieda ta’ l-istess xhud.

Saviour Scicluna Traskrittur