Deutsche Bank AG will terminate correspondent banking services, in all currencies, for financial institutions in Malta by the end of December, Times of Malta reported.
The German lender's move follows the assessment, by the Council of Europe's anti-money laundering body, that the country's efforts in combating financial crime are inadequate, the report said.
The newspaper noted that the move, which will likely only affect small banks in the country, was communicated to local lenders and the authorities during meetings held in October but no official announcement was made by the country's government or the Financial Services Authority.
Most local banks have had "alternative arrangements" in place for a while, a senior banking source with knowledge of the matter told the newspaper. However, if access to the dollar becomes difficult it will have an impact on how willing international companies are to move to the country and attracting new correspondent banks to Malta would be difficult despite tax incentives, he added.
Deutsche Bank has come under fire from authorities across the globe for its lapses in combating financial crime, with some of the money laundering introduced through its correspondent banking relationships, the report said.
A spokesman for the German lender said his bank had been reviewing its correspondent banking relationships in smaller countries around the world over the past three years and that in the future it will "focus more on those countries which are key to the bank's core client base."