Attempts at secrecy: the FIAU internal ‘Sanctions Policy’

When a public authority like the FIAU, the super-agency for all things money-laundering, loses court case after case, it is not a normal or joyful situation. It is a cause for alarm, and we must stand up and take serious note. It is not business as usual. The FIAU has recently lost two other cases to add to its growing catalogue of misadventures.

I shall here focus on one aspect that struck me in these two judgments. It may partly explain why the courts appear so upset with the FIAU when it vainly tries to justify its often huge penalties, which are regularly contested in court.

The concern is the lack of openness and a refusal or reluctance to provide what appears to be vital evidence. Perhaps the worst moment is when the court asks the officials, dispatched by FIAU to give evidence on its behalf, to explain how its substantial fines have been calculated and quantified.

It appears from the judgments that the FIAU financial penalties are quantified based on an internal unpublished (secret) Sanctions Policy implemented by a non-statutory internal organ known as the Compliance Monitoring Committee. This secrecy appears unsustainable and militates against fair process and equality of arms.

The FIAU may wish to reconsider this practice. And it is not just the FIAU which has a transparency problem. Other public authorities claim to promote more and more transparency, but in reality, everywhere we see less and less of it.

See Truevo Payments Limited v FIAU and Vivaro Limited v FIAU, both decided by the Constitutional Court presided by Judge Dr Toni Abela on 27 June 2024. These two decisions are interesting for other reasons, and for the few choice words addressed to the Agency.

Attempts at secrecy: the MFSA’s ‘Publication Policy’

A few months ago, the MFSA thought it fit for some reason to introduce an unnecessary, misguided and disturbing ‘Anonymity Principle’.

This new regulatory invention has now cleared the way for the Authority to start concealing from the public the identity of offenders who have been fined penalties of up to €30,000 for regulatory transgressions.

This business of government itself sponsoring and organising festivals and concerts of all sorts is itself absurd

That is a terribly regressive step. What is also bad is that this framework is also partly uncertain and unpredictable seeing the MFSA has retained wide discretion in its favour.

This may occasion wasteful negotiations, pressures and the obvious risk of favouritism.

It seems the MFSA is no longer happy with the automatic naming and shaming of offenders - a significant achievement in its time. Another sign, perhaps, of regulatory accommodation and twisted priorities. It should be scrapped.

See Policy on the MFSA website:

https://www.mfsa.mt/wp-content/uploads/2023/06/MFSA-Administrative-Measures-Penalties-Publication-Policy.pdf

Attempts at secrecy: The Famous Tenor

Another recent addition to this absurd and upsetting saga of secrets and objection to transparency is the refusal by Mr Joseph Calleja to publish how much public funds have been given for his yearly music concerts etc.

First of all, this business of government itself sponsoring and organising festivals and concerts of all sorts is itself absurd. These activities should be left to the private sector and it is a black mark on our businesspeople that for any excuse they resort to begging for subsidies and public funding and in return churn out free tickets to privileged friends and sundry hangers-on.

Calleja’s advisors pleaded that due to his fame, he is not subject to normal rules.

Speaking for him, his representative was quoted in The Shift News as having asserted that disclosing his fees would undermine his reputation and might cause him embarrassment.

Worse, he went on to claim that whatever public funds he receives are, wait for it, “intrinsically confidential”.  No, they are not: they are exactly the opposite. If you receive public funds these should be transparent, above board and open to public information, and indeed also to scrutiny. 

David Fabri LL.D., Ph.D. has lectured and written on company and consumer law since 1994.  He has recently authored two books on the regulation of financial services and companies (Midsea Publications).

This opinion was first published in The Corporate Times.