Several Maltese financial institutions, including Lombard Bank, are challenging the legality of administrative fines dished out by the Financial Intelligence Analysis Unit (FIAU) in court. Claiming that its rights were breached in the FIAU’s applications of sanctions against it, Lombard Bank initiated legal proceedings in Malta’s Constitutional court. FIAU fined the bank when Malta faced the possibility of being grey-listed by Moneyval and the Financial Action Task Force (FATF). Eventually, Malta was grey listed nevertheless.
While appealing this fine before the Court of Appeal, Lombard Bank has also initiated a Constitutional case, arguing that the FIAU breaches the Constitution and the European Convention for Human Rights. The Constitution of Malta states that administrative penalties can only be decided and imposed by a Court presided by a Magistrate or Judge. The Constitution also states that any court proceedings must be held in public.
While FIAU officials who issue administrate fines do not declare their conflicts of interest in public, the unit’s decisions are taken behind closed doors, and the companies and individuals under scrutiny do not have a right to be represented in such meetings. The internal committee that decides who is fined or not includes Alfred Zammit, who hit the headlines for signing off a clean bill of health to Pilatus Bank. The owner of Pilatus Bank was later charged with money laundering in the US.
Lombard Bank also argued that the FIAU is not an independent and impartial tribunal. Other FIAU officials include Rudolf Muscat and Kristina Arbociute.
Despite suggestions to the contrary by the Venice Commission, Malta’s Government conferred the power to impose fines which can amount to millions of euros, so far exercised exclusively by courts presided over by independent judges and magistrates, to ‘authorities’ mostly made up of politically-appointed persons of trust with no guarantees of impartiality and independence.
Malta’s Judge Lawrence Mintoff, who is hearing the bank’s appeal, decided that it would be futile to continue hearing the case until the constitutional case is decided, which will determine if the FIAU has violated the Constitution and the European Convention for Human Rights.
Judge Mintoff stated that if Lombard Bank wins the constitutional case, the proceedings before the Court of Appeal would be null, and therefore, he felt it would be prudent to postpone judgment.
More than a dozen other companies and professionals have launched similar legal proceedings against the FIAU. Evidently, it is just a matter of time before FIAU’s actions are declared to violate Malta’s Constitution.
