A judge ruled on Monday that the administrative penalties imposed by the Financial Intelligence and Analysis Unit are unconstitutional and in breach of the rights of people to be tried by an independent court.
This is not the first such decision and there are many other constitutional cases against the FIAU over this point of law.
In March, a judgment was handed down in favour of payment processing company Phoenix and, more recently, in favour of Insignia, a credit card service company that caters to the “ultra-rich”.
The latest judgment was handed down by Mr Justice Grazio Mercieca in a case brought by Lombard Bank which was fined by the financial services watchdog over alleged money laundering offences.
In October 2020, the FIAU found that the bank had breached five separate AML/CFT provisions. In one case, it had failed to properly ascertain the source of funds of a client who was a politically exposed person. Inspectors also found three other files which lacked adequate information about the source of wealth.
In its report, the FIAU expressed concern that not all of the bank's documentation was centralised. It noted "serious shortcomings" in the way Lombard had scrutinised certain transactions taking place through the customers’ accounts.
The bank fought back, claiming that its rights to a fair hearing had been breached and challenged the FIAU’s power to act as investigator, prosecutor and judge.
It argued that the FIAU was not an independent and impartial court and therefore out of line with the requisites of the constitution. It held that the law did not protect the bank’s rights and interests and therefore called on the court to rule that this was in breach of its right to a fair hearing.
In its case filed against the FIAU and the State Advocate, the bank argued that the FIAU investigation and the fine it imposed following its findings were arbitrary and breached its fundamental right to a fair hearing.
The bank also argued that the FIAU abused its discretion, acted arbitrarily, and abused its powers by finding Lombard Bank guilty of criminal charges that have no legal backing.
Lombard Bank argued it was also facing a lack of equality of arms, including its right not to incriminate itself during the FIAU investigation itself.
The judge upheld the bank’s argument that the Prevention of Money Laundering Act gave the FIAU the power to act as investigator, prosecutor, and judge, in breach of the Constitution which guaranteed that anyone accused of a crime is afforded a fair hearing by an independent and impartial court established by law.
Mr Justice Mercieca, however, did not rule on the bank’s other complaints once he had decided that the FIAU’s decision was null and without effect.
Once this decision became final, a copy was to be delivered to the Speaker of the House of Representatives.
Lombard Bank was represented by lawyers Louis de Gabriele, Kristina Rapa Manche and Diane Bugeja. Lawyers Ingrid Bianco and Jonathan Abela Friorento appeared for the FIAU while lawyer Fiorella Fenech Vella appeared for the State Advocate.