FIAU to continue giving out ‘unconstitutional’ fines as appeals still pending

The Financial intelligence Analysis Unit says it cannot stop handing out fines, despite a number of judgements by the courts having declared the penalties imposed as unconstitutional, as the decisions are currently subject to appeals.

Since the court judgements are under appeal, the decisions are not final, an FIAU official said, adding that the FIAU is still obliged to carry out its work.

One such case was by Phoenix Payments Limited. The company was claiming to have suffered a breach of the constitutional right to a “fair trial by an independent and impartial court established by law.” The court ruled that the administrative fine inflicted in this case was indeed punitive in nature and that the Constitutional fair trial safeguards applied, as a result. “While it is true that…a subject person on whom an administrative punishment had been imposed has the right of recourse to the Court of Appeal…this court finds that this does not neutralise or correct the anti-constitutionality of the proceedings before the FIAU,” said the judge in reply to the defendants’ argument that Phoenix had not exhausted its ordinary remedies before filing Constitutional proceedings. “The right to a fair trial applies from the moment the person is accused and not after a decision is given by an entity [the FIAU] which is not a Court under the Code of Organisation and Civil Procedure.” In recognition of the fact that the law itself was being declared unconstitutional, and that the FIAU was simply carrying out its duties as obliged to under that law, it was not ordered to bear costs, which were to be borne solely by the State Advocate. The case is now under appeal.

Asked what the FIAU is doing and how it will work around this problem, the unit’s Acting Director Alfred Zammit said that this issue needs to be settled as soon as possible.

He looks forward to the final outcomes of the appeals, “as this will give us clarity on the system.”

There are a number of cases ongoing, he said. “In the end, whatever happens we need to make sure that we have a very robust and technically tested system. It wouldn’t be right to react prematurely.”

He said that no court has disagreed with the breaches found by the FIAU, but rather with the fines imposed.

He said that the system Malta has today is the result of interactions that it had with international standards bodies as well. “It has also been closely evaluated by the FATF, by the European Banking Authority. The laws we have in place have been there for quite a long time.”

The situation arising now, he said, came about as the FIAU has increased its supervisory outreach, “because we carried out more examinations. This led us to finding more instances of non-compliance and that is where we had to take action.”

The FIAU is carrying out research with other countries “to understand their setups.”

“There are countries that have the exact same setup we have in Malta, there are countries with other setups also. We are not sitting and waiting,” he said. “While we are looking forward for the court procedures to close, at the same time we are trying to learn as much as we can to understand other countries’ setups.”

Asked if, in the meantime, the FIAU has stopped issuing fines, Zammit said that the FIAU cannot do so. “We need to continue exercising our responsibilities (…) Our role is to implement the law.”

It was pointed out that there have been more than one case where the court declared that the method the FIAU is using to fine people is unconstitutional. Another FIAU official said, however, that it is not finalised (referring to the appeals), “so we cannot stop doing our work otherwise then we would not be doing our job.”

Zammit said that “we are all looking forward to having clarity and the final ruling by the court to be issued as soon as possible.”

“We cannot simply stop. Enforcement plays a very important element in a country’s framework,” Zammit said. “The levels of compliance have increased significantly for many reasons. One of those reasons is the fact that there has been increased enforcement. This is true in Malta and other countries.”

Since the court decisions are under appeal, the judgement is not final, an FIAU official said, adding that the FIAU is still obliged to conduct its work.

Asked if they have a backup plan in case the decision goes against the FIAU’s current system, Zammit said: “We are carrying out a lot of research. But you need to understand that this is not an FIAU matter. What is being challenged is the law, and there are other laws which are similair to those regarding the FIAU. So it’s not just the FIAU, which is why it is very important to exhaust all measures and ensure that if any changes need to be made, these changes will work in the favour of the country’s framework.”