FIAU appeals landmark ruling that found its powers unconstitutional

Malta’s national money laundering and terrorism financing watchdog has submitted an appeal to the Constitutional Court, after the latter ruled that the authority’s powers to conduct investigations and issue fines were unconstitutional.

On 30th March, the First Hall, Civil Court found that the law which grants the Financial Intelligence Analysis Unit (FIAU) power to investigate and impose fines violates the applicant’s constitutional right to a fair hearing.

To that end, it declared Article 13(2) of the Prevention of Money Laundering Act and Regulation 21 of the Prevention of Money Laundering and Funding of Terrorism Regulations null and void.

In a case between Phoenix Payments LTD vs the FIAU, the court found that the FIAU had acted as judge, jury, and executioner, therefore violating the firm’s right to a fair hearing.

The judge overseeing the court case had ordered that the judgement is passed to Parliament to act on the matter.

When the Justice Minister was asked a parliamentary question on what legislative steps are being considered in light of the growing number of court rulings which found public authorities in breach of article 39 (1) of the Constitution, he responded that various sentences by the Maltese Constitutional Court are being analysed, and that necessary steps would be taken in the time to come.

Yet, despite the ruling, the FIAU has continued issuing fines, as though nothing changed.

This newsroom reached out to the entity directly to understand why it is still issuing fines, despite the courts supposedly making the laws granting it those powers null and void.

 “It is pertinent to clarify that the FIAU and the State Advocate have both appealed the judgement handed over by the Fist Hall, Civil Court in its Constitutional Jurisdiction, and therefore this judgement is not yet final and enforceable until a final judgement is handed by the Constitutional Court,” said the spokesperson.

“The appeal filed stems from the obligation the FIAU and the State Advocate have towards safeguarding Malta’s enforcement framework in imposing effective, proportionate, and dissuasive administrative penalties when breaches of the AML/CFT legislative provisions are identified.”

Therefore, the FIAU is continuing to operate within the parameters of the law, and fulfilling the legal responsibilities assigned to it by the aforementioned laws.

Asked whether the FIAU favours any particular solution to resolve the issue highlighted by the initial ruling by the Constitutional Court, the spokesperson said, “it would be premature to discuss this point until a final judgement is handed by the Constitutional Court. In any case, what is certain is that the FIAU, and all those concerned, should favour a framework that is effective, efficient, and in line with international standards, whilst respecting the principles of due process.”

Nationalist Party’s spokesperson for finance, Jerome Caruana Cilia, told this newsroom, “the solution to the Government’s conundrum is actually quite simple: retain the investigative and prosecutorial roles of public authorities and empower our courts with the exclusive right to impose stiff penalties after a fair hearing of the case.”

He explained that had the Government taken up the proposal, it would have saved around €300,000 in legal fees paid by taxpayers and slashed the number of Constitutional cases by over a dozen.

This newsroom has also reached out for a comment from Justice Minister Jonathan Attard, however at the time of writing no response was provided.