On the last day of 2019, FIAU fined the then MFSA-regulated Maltese financial institution Corporate & Commercial FX Services Ltd (CCFX), some €156,202. The company immediately appealed this fine. The Malta Court of Appeal (Civil Inferior), after more than two years, delivered its judgment. According to Judge Lawrence Mintoff, the fine should have been €31,240. However, the criticized Maltese FIAU fined the company five times more than what the law permitted.
The case environment
In Aug 2020, the Maltese regulator MFSA announced that Corporate & Commercial FX Services Ltd (CCFX) failed to adhere to its regulatory obligations. Thus the regulator decided to withdraw the company’s license. According to Offshore Leaks, the beneficial owners of this institution have been the Spanish citizens Josefa Malava Gonzales and Jorge Pio Celemin Gomez.
For its violations, the FIUA fined CCFX some €156,202, which according to the court decision is €124,962 above the allowed level. The FIAU’s decision has destroyed the company and its business. The court sittings of such an appeal case are heard behind closed doors. Money collected from the fines is used for the operational costs of FIAU.
The judgment is not made public. The public only gets to know snippets of the judgment through a short note by FIAU on its website. The note is completely biased since it does not mention the wrongdoings of FIAU in dishing out a fine 5 times more than what the Judge ruled.
The FIAU knows all details of how the Courts rule on various issues. However, other subject persons who appeal FIAU fines are at a clear disadvantage since they do not get hold of these court files or judgments.
The disputed regulator
The FIAU officials who decide to whom to dish out fines or not, and the size of the fines, include FIAU director Kenneth Farrugia, his deputy Alfred Zammit, Elena Tabone, Jonathan Pyyall, and Daniella Mizzi. They meet behind closed doors on unannounced dates. Moreover, these officials do not publish their conflicts of interest. FIAU officials include Kristina Arbociute who worked for XNT, a company investigated by the FBI.
The MFSA General Counsel, Edwina Licari, used to sit on the board of Governors of FIAU when this 156k fine was dished out. She still enjoys a 100k salary at MFSA despite the scandal around the disgraced former MFSA CEO Joe Cuschieri and their joint Las Vegas trip.
The FIAU has been harshly criticized for being weak with the strong and strong with the weak. The FIAU deputy director Alfred Zammit signed a clean bill of health to Pilatus Bank.
The Constitutional Court (Appeal) asked the Constitutional Courts to deliver the judgments on a number of cases that have been filed against the FIAU. The 11 subject persons who sued FIAU, are arguing that the FIAU is acting as judge, jury, and executor and in doing so is breaching Malta’s Constitution. The Constitution makes it clear that only a court led by a Judge or Magistrate can dish out hefty fines, which are considered criminal in nature.
