A local provider of payment cards for the very rich is claiming that “abusive” action by the financial services watchdog is jeopardising the future of the company.
Insignia Cards Ltd has taken its grievances to court through a judicial protest filed against the Malta Financial Services Authority following events that have left the company practically unable to process payments by clients.
The company said it is holding the MFSA responsible for any damages incurred due to loss of business over renewed inspections.
Insignia,which is part of a larger group of companies and also VISA affiliated, was also recently fined €373,670 for anti money laundering breaches.
It said it had received a phone call from the regulator on December 15, requesting documents focusing on its business agreement with Insignia Global Solutions.
The requested documents, except for a legal opinion by an established Maltese law firm, were duly submitted by December 18.
However, three days later, a letter from the MFSA said that certain documentation and clarifications had not yet been handed over, even though Insignia insisted that the only missing document was the legal opinion which it had not managed to obtain at short notice, given the Christmas festivities.
It said that the Authority ordered Insignia to stop all processing of payments due by its clients, which had long been handled by Insignia Global Solutions (IGS) based in Hong Kong.
Such funds were needed to pay various service providers, including VISA, Insignia claimed, adding that blocking the processing of payments would mean great financial losses for the company.
It was next to impossible to come up with some alternative means of processing such payments before the end of the month, Insignia said.
The MFSA was meant to guide and regulate businesses, not put “spokes in the wheel,” said the company, pointing out that back in June 2019 it had been subjected to a “full scope examination” by the watchdog.
That was followed by a report, dated May 2020, wherein there was not the slightest comment about the company’s arrangements with IGS.
Now, MFSA was insisting that Insignia Cards’ previous management had failed to inform the Authority about such an arrangement.
Such “doubts” were only being voiced today, when the Authority appeared to be in a “state of panic” wanting to stop abruptly the arrangement and expecting the local company to set up some new arrangement within a matter of days.
Moreover, the Authority was planning another inspection at Insignia around mid-January when a review exercise of the company was still ongoing and was expected to last until March, Insignia said.
Its requests for the inspection to be postponed until March were completely ignored, and the authority still planned to go ahead with the January inspection.
Rather than allow Insignia’s new management to find its feet and upgrade operations within a reasonable time, the MFSA was manifesting a clear lack of consideration for the efforts of the company that had invested greatly in human resources to beef up its workforce, it added.
It had submitted documents including a fresh action plan, new onboarding policy and a remediation progress report.
Yet the authority evidently could not care less about the company’s precarious situation, said the protesting party, calling upon the regulator to immediately stop such “illegal and abusive” behaviour, whilst holding it responsible in damages and reserving the right to seek further legal action.
Lawyer Dominic Micallef signed the judicial protest.