Malta courts

Once again, Malta’s courts have ruled that another company has had its right to a fair hearing breached by the Financial Intelligence Analysis Unit (FIAU) when it was investigated and fined for non-compliance with anti-money laundering regulations.

The company, Insignia Cards Limited, was handed a €373,670 fine by the FIAU in November 2020 following an on-site compliance review which was carried out in 2019.

However, the company appealed the decision, and filed proceedings with the Constitutional Court, on the grounds that its right to a fair hearing had been breached.

It argued that since the administrative measure carried was of a criminal nature, the decision should have been taken by an independent and impartial court, which the FIAU is not.

Furthermore, while the law permitted those fined to submit an appeal, it was not guaranteed the right to a fair hearing, nor equality of arms.

Equality of arms is defined as the balance between parties involved in litigation.

The FIAU has “absolute discretion regarding the terms of when it conducts investigations, how long it takes to investigate, conclude the report and take a decision.”

On the other hand, the company only had 20 days to understand the decision of the FIAU, and to see whether it needs to appeal it, all while not having access to the concerned files which were in the FIAU’s possession.

“The FIAU had full control over the investigative process.”

The law also allows the FIAU to impose a fine as high as €5 million. While it is meant to act as a deterrent, it was also capable of punishing subject persons found to be in breach of their obligations.

The State Advocate admitted that a decision of the FIAU may have “serious effects” on a company.

The court document read that, “this could give rise to the possibility of imposing an exaggerated and perhaps even unfair administrative penalty in the case of a not-so-significant violation.”

This was identified as one of the reasons why any arbitrary action by the FIAU should be suppressed and why the right to a fair hearing must be protected.

However, the court said that the FIAU was not to blame as it was abiding by the law.

To that end, the administrative fine was made null by the court and the company was awarded €10,000 in moral damages, which were to be paid by the State Advocate.

A similar ruling was handed down to the FIAU on 30th March which made its power to investigate and issue fines was null and void. However, since the FIAU decided to appeal the decision, it has been able to operate in the same manner as before.

At time of writing the FIAU has not appealed the latest ruling and has 20 days from the date (24th May) to do so.

The Government has yet to present a bill in Parliament in order to amend the laws regulating the FIAU which lead to a breach in the right to a fair hearing.

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