A fine issued by the Financial Intelligence Analysis Unit against a Malta-based investment services provider was a “blatant breach of its right to a fair hearing”, a court has ruled in another decision against the anti-money laundering watchdog.
Madam Justice Joanne Vella Cuschieri annulled the decision and the resulting €244,679 fine imposed by the FIAU on XNT Ltd over a series of anti-money laundering shortcomings.
She ruled that the administrative penalties imposed by the FIAU are unconstitutional and in breach of the rights of subject persons to be tried by an independent court.
This is not the first such decision and there are several 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, recently, in favour of Insignia, a credit card service company that caters for the “ultra-rich”.
Another judgment was handed down in a case brought by Lombard Bank, which was fined by the financial services watchdog over alleged money laundering offences.
XNT Ltd had been fined by the FIAU last year following an off-site compliance examination carried out in 2021.
The FIAU had said the company did not fulfil its obligations when it came to assessing and appropriately obtaining information on their clients despite them being involved in huge transactions.
Information and documentation were at times either not collected or not adequately obtained.
The company was found to be obtaining “generic information” on its clients’ income levels, employment and business activity. In several files reviewed, no supporting documentation was obtained to support the transactions.
In one customer file, incoming payments amounting to approximately €40 million over a period of three years had been approved. In total, four incoming transactions were reviewed with one of the transactions exceeding $24 million.
However, when supporting documentation in relation to these transactions was requested, the company only provided a confirmation letter that the customer holds an account and a business relationship with another bank.
The company filed a case, claiming its rights to a fair hearing had been breached and challenged the FIAU’s power to act as investigator, prosecutor and judge.
It argued the FIAU was not an independent and impartial court and, therefore, out of line with the requisites of the constitution.
In its case filed against the FIAU and the state advocate, XNT Ltd argued the FIAU investigation and fine imposed were arbitrary and breached its fundamental right to a fair hearing.
Madam Justice Vella Cuschieri agreed, ruling there was a “blatant breach” of the right to a fair hearing, noting the financial watchdog was not impartial when it imposed its fine.
Instead of awarding moral damages, as other judges had done in previous decisions, Madam Justice Vella Cuschieri decided to nullify the FIAU’s decision and the fine it imposed.
She also ruled that the case against the company must only continue after the State passes a law to set up an autonomous and independent entity to hear and decide the case “with respect and in compliance with the guarantees for a proper hearing”.