Efforts by the Financial Intelligence Analysis Unit to effectively police the banking sector are being “greatly undermined” by delays in court proceedings, according to a national money-laundering risk assessment report.
The anti-money laundering unit has faced an avalanche of appeals against the penalties it issues for anti-money laundering breaches.
Both the size of such penalties and the FIAU’s ability to even issue fines have been successfully challenged in court.
The report – led by a committee that includes the police and FIAU – hits out at the fact that a number of appeals against the size of the fines have been pending for more than the six months set out by law.
It also questions whether the members of the judiciary hearing these appeals have the necessary know-how to do so.
"Appeals to sanctions imposed by the FIAU are heard by the court of appeal, and being a general court, the level of expertise necessary to confirm or otherwise the breaches determined by the FIAU and what factors to consider as to whether a sanction is proportionate, dissuasive and effective may be weak,” the report says.
When fines are “substantially” reduced by the court, the reason behind this reduction is often “not explained”, nor is any explanation offered as to how this reduced fine could act as a proportionate, effective and dissuasive measure.
“This happens even when the same court would have confirmed all, or the greater part of the breaches as identified by the FIAU, as well as their materiality and severity,” the report says.
The report does however note that except for a few banks, sanctions imposed by the FIAU on credit institutions are not appealed, as an agreement is reached to implement the directives imposed to address any gaps in their anti-money laundering systems.
It said the serious breaches by two credit institutions, a reference to the now defunct Pilatus Bank and Satabank, served as crucial lessons for Malta when it came to anti-money laundering laws.
“Both cases have received a lot of public attention, both locally and internationally, and demonstrated the authorities’ commitment and strength in detecting and enforcing effective and proportionate measures for serious breaches of anti-money laundering obligations.
“The MFSA has also taken effective measures for the risks identified in both credit institutions, leading to the European Central Bank withdrawing the banking licence of both institutions based on MFSA’s proposal,” the report says.