The British bank HSBC is under pressure to quit Malta – a European Union member state that is struggling with a scourge of money laundering.

As reported by The Telegraph, the threat to launch a potentially damaging publicity campaign against the bank’s continued presence in Malta could raise fresh questions over the sincerity of the its on-going efforts to restore its reputation after a series of scandals and compliance failures.

“If I don’t see a change in attitude, backed up by demonstrable action, I will launch a campaign calling for HSBC to quit the island,” Sven Giegold, a German MEP, told The Sunday Telegraph.

Malta’s financial services authority, the MFSA, has been under pressure from Brussels in recent months after a European Banking Authority report found “general and systematic shortcomings” in how Malta applies money-laundering rules.

The criticism followed an EBA investigation into Malta’s 2014 decision to grant a license to Pilatus Bank and its subsequent lax supervision after US prosecutors indicted its owner over allegations it had been set up with the proceeds of an Iran sanctions-busting racket.

While Malta only accounts for 0.3% of HSBC profits, it is one of the only major international banks still providing services there, Maltese financial experts have warned that its exit from the island would be “calamitous” for the local industry.

David Curmi, the managing director of Curmi & Partners who has worked in Malta’s financial services sector since 1995, said: “The danger is that the only international bank with a global name in Malta – which is HSBC – will not want to be part of the financial services industry in Malta, because it will decide that the risk of reputational damage outweighs any possible gain financially.”