FIAU loses third constitutional case for breach in right to fair hearing

Malta’s Constitutional Court has ruled against the Financial Intelligence Analysis Unit (FIAU) for the third time in four months, for issuing a fine that was found to be unconstitutional.

Lombard Bank was slapped with a €340,058 fine in October 2020 following an on-site compliance review carried out in 2019, however following the judgement, the court ruled the administrative penalties null and void.

In a statement, the bank said, “The First Hall Civil Court, in its Constitutional Jurisdiction today delivered a judgement ruling, inter alia, that the FIAU decision in the Bank’s regard as well as the relative administrative penalties are null and void as they are considered unconstitutional and in breach of the bank’s right to a fair hearing by an independent and impartial court as enshrined in the Constitution of Malta.”

The outcome of this case echoes two other recent Constitutional Court rulings which were brought forward by firms that received a fine from the FIAU. In both cases the court ruled in favour of the firms, therefore nullifying the fines imposed by the FIAU.

During Monday (yesterday) Parliamentary sitting, Nationalist Party MP Chris Said asked Finance Minister Clyde Caruana whether the Government is considering legislative amendments against the law regulating the FIAU’s powers.

While Minister Caruana said he could not comment on the judgements since the term of appeal has not yet expired, he did say he found them concerning:

"It is worth pointing out that these decisions that were given by the first Court are of concern with regard to the enforcement mechanism on violations of anti-money laundering regulations, especially when the country has just gone through the FATF greylisting process precisely because there was a lack of effective enforcement against violations of this type."

The recent judgement concerning the FIAU and Lombard Bank is also not yet final and may still be appealed.