The Financial Intelligence and Analysis Unit has lost its bid to have an appeal against a court judgment declaring its administrative penalties unconstitutional referred to the European Courts of Justice.
Chief Justice Mark Chetcuti and judges Giannino Caruana Demajo and Anthony Ellul rubbished the request, ruling that it is up to the Maltese court to interpret the country’s constitution and not the European court.
They were ruling on an appeal the anti-money laundering body filed against one of the first judgments by the Constitutional Court which ruled that its penalties and administrative fines were unconstitutional and completely illegal.
In March last year, Madam Justice Audrey Demicoli handed down a landmark judgment in a case brought by a payment processing company fined by the financial services watchdog for alleged regulatory breaches, claiming that its rights to a fair hearing had been breached.
Phoenix Payments Ltd challenged the FIAU’s power to act as investigator, prosecutor and judge when it slapped it with a €435,000 fine in 2021.
While the company appealed the actual decision, it argued in court that aggrieved parties have no effective remedy to the FIAU’s decisions and administrative penalties.
Phoenix insisted that it had been denied a fair hearing before an impartial and independent tribunal, as guaranteed by the European Convention of Human Rights and the constitution.
Phoenix had been slapped with the hefty fine by the FIAU for a series of anti-money laundering breaches linked to cryptocurrency.
The company’s directors are Francesc Xavier Alabart Lopez, a Spanish national, Keith Farrugia, a Maltese national, and Marco Lavanna, an Italian residing in Switzerland.
When imposing its fine, the FIAU had said it found shortcomings in the way the business collected information on customers’ business and occupation and their source of wealth and source of funds.
The same was true when it came to ensuring it properly understood the anticipated level and nature of transactions, including the expected value and frequency of payments.
But Phoenix successfully argued in a case before the First Hall of the Civil Courts that the FIAU’s power to investigate and impose exorbitant administrative fines when it was not a court in its classical definition, was in breach of its rights to a fair hearing.
The court upheld its complaints, ruling that the FIAU did not classify as a court as prescribed by law and that its power to impose administrative penalties on the basis of an article on the Prevention of Money Laundering Act was unconstitutional and, therefore, in breach of the European Convention of Human Rights.
According to this law, the FIAU may impose administrative penalties not exceeding €5 million or twice the amount of the benefit derived from the contravention, breach or failure to comply, where this can be determined, or 10 per cent of the total annual turnover according to the latest approved available financial statements.
Madam Justice Demicoli had ruled that this power granted to the FIAU through this law was anti-constitutional and ordered that the judgment be passed on to the House of Representatives to take action on the matter. She also reversed the administrative penalty the FIAU had imposed.
In its appeal, the FIAU asked the court to refer the case to the European Court of Justice. It wanted its opinion on whether the Maltese courts could annul its decisions based on a European directive as transposed into national law based on the argument that the interpretation of the constitution ensures a higher level of protection.
It argued that the Maltese courts are obliged not to interpret Article 39 of the Constitution of Malta – which guarantees a fair hearing – in a way that undermines the supremacy, unity and effectiveness of European laws.
But the judges threw out these arguments since the European directive the FIAU was referring to leaves it up to member states to establish rules on sanctions and administrative measures that the competent authorities can impose “in accordance with this directive and with national law”.
They ruled that the European Court’s opinion that the FIAU was seeking was not required as the court did not need the ECJ’s opinion on a matter that was purely within its power to decide.
“The issue in this case is about the applicability and interpretation of Article 39 of the Constitution of Malta, due to the choice made by the Maltese state,” the judges ruled as they threw out the FIAU’s request.
https://timesofmalta.com/article/fiau-unconstitutional-fines-pending-court-appeals.1063443
Lawyers Kristina Rapa Manché and Edward Fenech Adami are representing Phoenix, while lawyers John Refalo and Ingrid Bianco are counsel to the FIAU. Lawyer Fiorella Fenech Vella appeared for the state advocate.
The FIAU has so far had nine scathing judgments declaring its fines as “completely illegal” and denouncing the “dictatorial procedures” operated by the FIAU which investigates, prosecutes and fines its subjects “in flagrant breach” of their basic fundamental right to be tried by an autonomous and independent body.
In the latest such decision, handed down in February, Mr Justice Toni Abela ruled that “…these punishments are completely illegal because they are not sanctioned by any law and the law reigns over everyone”.