Court decisions against FIAU to remain ‘secret’

2017 blanket rules may be unconstitutional


Court challenges to hefty administrative fines being dished out by the Financial Intelligence Analysis Unit (FIAU), initiated by financial services operators, will remain undisclosed thanks to a 2017 law introduced by the Labour government.

This effectively means that even court sentences against the FIAU will not be published by the Court, keeping a veil of secrecy on any decisions, including those in which the anti-money laundering regulator is found in breach of the country’s laws.

Constitutional experts told The Shift that although, in some cases, secrecy in Court proceedings may be justified, the law introduced in 2017 is “too wide” and may be in breach of the Constitution.

According to the experts, the validity of the 2017 law may expose the same FIAU to a constitutional challenge.

The Shift is informed that just a few days ago, the Court, presided by Judge Grezzju Mercieca, issued a judgment in a case instituted by Sata Bank against the FIAU over hefty fines imposed following alleged breaches of anti-money laundering rules.

It was only after the judgment was given that financial services operators discovered that the publication of the final court sentence is totally banned.

Financial services practitioners said that a blanket ban on court proceedings against the FIAU effectively means they cannot defend their claims in the best possible and legal manner as previous court decisions on which jurisprudence is normally based remains unpublished and secret.

They also claimed that the 2017 law puts financial services practitioners at a disadvantage because when the FIAU imposes administrative decisions on them their names are already exposed in press releases to the media.

“Through this law, the FIAU can accuse us publicly and impose the fines it deems fit while ‘damaging’ our reputation. But when the court finds breaches by the FIAU all remain secret. This is absurd,” a leading financial services practitioner said.

Asked about this situation, the FIAU confirmed that the government imposed this law in 2017 to safeguard the confidentiality of information and documents relating to Court proceedings.

“There may be instances in which the nature of the breach being appealed requires the disclosure of information that, if made public, could prejudice the conduct of an ongoing financial analysis or investigation as it would tip off the individual or entity concerned of the authorities’ interest in its activities and/or transactions,” an FIAU spokesman told The Shift.

“The confidentiality may also become necessary to disclose information that is either business-sensitive or which, if made public, may infringe the privacy of the customer concerned or otherwise prejudice the customer,” the spokesman added.

While admitting that it’s not straightforward, constitutional experts contend that a law making everything related to a review of FIAU’s actions secret is “very strange”.

“A moderate middle of the road approach would be the publication of at least parts of the judgment (for example as regards legal principles) without revealing names or other information which may give a clue as to person and transactions,” experts said.

“It is much more difficult to defend the constitutional validity of a blanket provision of secrecy,” they insisted.

Under pressure

Following the Moneyval report in 2019, the FIAU and other anti-money laundering regulators, including the MFSA and the MGA, have come under intense pressure to convince their international partners that Malta has indeed turned a page following years of turning a blind eye to money laundering infringements.

In a scathing report last year, Malta was given a year to put its house in order, if it wanted to avoid greylisting, which will effectively mean the beginning of the end of the lucrative financial services industry and other related sectors.

Moneyval experts found that the FIAU had been very lax in its supervision while prosecutions on anti-money laundering infringements were almost non-existent.

The assessment led to a ‘panic’ reaction by Malta’s anti-money laundering watchdogs, which imposed hefty fines on a number of operators, not necessarily consistently.

Many financial services providers and other practitioners are now challenging the regulatory authorities in Court.

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1 year ago

On principle, money laundering, tax evasion, and white collar fraud are crimes that shake the public good order and the public peace. They attack the state at its roots, taking away money which would otherwise be due to the National Coffers. There is no doubt about this.
It has been said that the publication of the judgement might be counter productive in the case of ongoing investigations. Really ? Gullible?
We have had enough of that bitter pill and acid medicine. The Konrad Mizzi Case, the Keith Schembri Case, the Muscat case are ample proof that it was not a court judgment which undermined investigation.
It is now amply proven that inaction, inertia, ineptitude and inaptitude have in these instances proven to have debilitating effect on the investigations.
Turning tails to heads of the coin, if the investigating authority would not like to have a court judgment interfere with their investigation, they know better than I do, that should they expedite matters and attend to their duties diligently, loyally, with dedication such eventuality would not arise.
One final thought, Once the hearing of the case goes on in public, once certain proceedings take so long to commence, once commenced they take a long time to be decided, would not that time lag have given any other suspect or accomplice all the time, possibility and probability of getting to know facts and figures which might then be quoted in delivering final judgement? This smacks foul. The law is protecting criminals and depriving us citizens of seeing that Justice is being done. Depriving us of the right to know who the criminals are what the crimes are that shatter our public peace, good order and justice. One of the first money laundering cases was investigated by me when there was no FIAU, no other Law nor any other authority except for the Administrative Secretary who did not perceive any utility in having Police Officers certified with an ACCA and Banking Laws. Players know the game and know how and when to score a goal unless someone might have interest to come to a nil-nil draw. Let us play fair.

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