A politically-exposed Russian with alleged ties to the mafia has been flagged by the FIAU after using a membership-only credit card service company which former Economy Minister Chris Cardona joined after leaving politics.  

Malta’s Financial Intelligence Analysis Unit this week announced that Insignia, a ‘luxury lifestyle management group’ has been fined €373,670 over a number of anti-money laundering compliance breaches.

The Valletta-based company caters for high-net-worth and Ultra-high-net-worth individuals, and had failed to raise a suspicious account with the authorities. 

The FIAU said that an onsite inspection had shown how the firm had failed to file a suspicious transaction report about its Russian client despite red flags.

Former minister Chris Cardona.Former minister Chris Cardona.

The inspection by the FIAU took place in 2019 when Cardona was still economy minister and had not yet joined Insignia. 

Cardona stepped down from politics last year after he was left out of Cabinet by Prime Minister Robert Abela. He had been under pressure to bow out of politics after he was named in connection with the murder of Daphne Caruana Galizia. He denies any wrongdoing

Insignia is a concierge and card service where membership is by invitation only. The company says it services customers “who represent extraordinary spending power”. “Clients include pre-eminent figures in business, politics, culture and sport,” the company says.

FIAU flags PEP with ties to the Russian mafia

Meanwhile, in a case uncovered by the FIAU, a politically-exposed person was rated as a high-risk client over media reports on his ties with the Russian mafia.

Insignia had obtained a source of wealth declaration form which only corroborated the information of the customer’s estimated earnings and assets, allegedly sourced from the client’s “entertainment businesses”. 

The FIAU said this was simply not enough given the heightened risk posed by the customer and his political status.

“At a minimum the company should have, in addition to the source of wealth declaration, requested the customer to provide documentary evidence to substantiate the declared income and the source that generated the customer’s funds and wealth,” the FIAU said. 

The FIAU went on to list a number of money laundering breaches by Insignia. 

In one case, the company onboarded a client in April 2018 who was considered to be ‘medium risk’, and later assigned a ‘high’ risk rating in January 2019. The risk increase came as the customer was in 2012 convicted of £2 million illicit tickets’ fraud racket.

The customer had carried out transactions using Insignia cards to employees of theatre ticket agencies and payments to online ticket platforms. These same platforms were connected to the fraudulent activities the customer was accused of in 2012. 

Despite having sufficient information to suspect that its customer was connected to money laundering, no report was submitted to the FIAU.

Insignia was found to have minimised the risk for customers from non-reputable jurisdictions, with its risk-scoring grid failing to identify the true risks, the FIAU said.

In one case, an Insignia client claimed to have an annual £150,000 income in the first months of 2019, then went on to make some €1.2 million in payments, including €208,500 to a car dealership in Monaco.

The compliance examination identified that for six files reviewed, a risk assessment was not carried out at all.

Furthermore, certain risk assessments were not performed until September 2019 for clients introduced by one of the company’s partners; hence Insignia was on-boarding customers without even understanding the risks involved through such relationships.

Moreover, for 21 files reviewed, risk assessments were carried out late, on average over two years after the customer’s account had been activated. 

The company had also failed to carry out the necessary enhanced due diligence measures in four files reviewed albeit classifying the customer as high risk. 

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