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Maltese courts refuse to uphold FIAU “ILLEGAL AML FINES” and refuse EU referral.

14/06/2024

The Maltese Financial Intelligence Analysis Unit [FIAUs] has been dealt dozens of court judgements by the superior courts which have declared:-

  • Its fines and sanctions policy to be “COMPLETELY ILLEGAL”
  • Because supervised entities have no fair right of hearing.

Mr Justice Toni Abela has said in his judgments:-

  • The FIAU’s onerous fines were punitive and “quasi-criminal”, and therefore should be issued by a court or juridical body that gives such companies the basic right of being tried by an independent and autonomous tribunal.
  • The FIAU’s punishments were “completely illegal because they are not sanctioned by any law and the law reigns over everyone.”
  • The FIAU’s fines were so punitive that they force the appellant companies to wind up operations.
  • Punitive fines could only be issued by bodies that offered the necessary legal protections and that those who did not, would not find the court as their defence,

Mr Justice Toni Abela

  • Described the FIAU’s sanctions policy, through which the fines are calculated, as “convoluted, opaque and byzantine”.

The FIAU’s policy, as stated its fines.

  • “Should be punitive and act as a deterrent to non-compliance” where subject-persons would consider these penalties as a ‘mere cost of doing business’ but significant enough to impact on the annual income.”

€435,000 FINE FOR PHOENIX PAYMENTS WAS UNCONSTITUTIONAL

Following a decision in which the courts ruled its 2021 €435,000 fine for Phoenix Payments was unconstitutional.

  • The FIAU is appealing a judge’s ruling that.
    • Its administrative penalties are unconstitutional and
    • In breach of the rights of subject persons to be tried by an independent court.
  • The FIU requested to ask the European Court of Justice for
    • Guidance on the interpretation of EU law inside the Maltese courts and
    • Whether EU law gives it power to impose multi-million fines on money laundering non-compliance.

PHOENIX PAYMENTS CASE

  • The landmark judgment was handed down in a case brought by payment processing company Phoenix Payments against the FIAU’s power to act as
    • Investigator,
    • Prosecutor and
    • Judge
  • The Court ruled that the FIAU
    • Did not classify as a court as prescribed by law, and
    • That its power to impose administrative penalties on the basis of the Prevention of Money Laundering Act, was unconstitutional and therefore in breach of the European Convention of Human Rights.
  • According to this law, the FIAU may impose administrative penalties not exceeding €5 million.

MALTA’S FIAU REFUSED REFERRAL TO EU COURT

The FIAU request was turned down by the Constitutional Court:

  • “By law the Maltese State opted for administrative sanctions to be imposed by the FIAU.
  • It is the sanctions being imposed by the FIAU that are giving rise to various cases in which the persons subject are complaining that a breach of Art. 39 of the Constitution has occurred.”

The Constitutional Court, presided by Chief Justice Mark Chetcuti, said:-

  • “The issue in this case is the applicability and interpretation of Article 39 of the Constitution of Malta, given the choice made by the Maltese State,”
  • Article 39 provides that everyone charged with a criminal offence must be given a fair trial by an ‘independent and impartial tribunal established by law’.

The FIAU, as a government agency,

  • Insists it is empowered to supervise compliance by persons subject to anti-money laundering laws, with the power to impose administrative penalties on subject persons.
  • It insisted with the Constitutional Court that it is empowered by a European Union Directive of 2015, which states that member states can lay down such rules as required for their competent authorities to impose sanctions.
  • The FIAU insisted the Directive allows it to exercise its powers to sanction those in breach of money-laundering rules.

The FIAU wanted the ECJ to clarify whether Directive 2015/849 allowed it to impose administrative measures and sanctions

  • “Which may be classified as criminal although they are not a result of criminal law as normally understood” and
  • Whether Article 39 of the Constitution of Malta might “undermine the primacy, unity and effectiveness of EU law”.

Source

https://www.maltatoday.com.mt/news/national/129646/fiau_refused_referral_to_eu_court_over_fines_maltese_courts_refuse_to_uphold

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