A Malta-based company which was fined more than €350,000 for anti-money laundering breaches has accused the FIAU of being on a “witch hunt” and accused it of being “unprofessional” and “unsophisticated”.
Insignia, which offers membership-only services to the ultra-rich, said it would be hiring the European Bank Authority Appeal Board to conduct a full review of its activities following the FIAU report and fine, which it said it will be appealing.
“Once this report will be issued, we will be making our final decision as to the extent of our retaliation and full response to the allegations and finding,” the company said.
The FIAU said earlier this month that the company, which describes itself as a “luxury lifestyle management group”, said the firm had failed to file a suspicious transaction report about a Russian client, despite warning signs that the client had ties to criminal organisations.
It also flagged a number of other breaches of anti-money laundering laws, including one instance when a client with a declared annual income of £150,000 made €1.2 million in payments, including €208,500 to a car dealership in Monaco.
The company was fined €373,670 by the FIAU as a result.
Insignia, however, said the financial investigators had got it wrong and had “zero understanding” of its business model.
It said the team which had investigated the company had been highly unprofessional and resorted to undisclosed “intimidation tactics” during a second compliance visit in 2019, which followed an initial visit two years prior.
That second visit came after the Council of Europe’s Moneyval assessors had put Malta on notice that it was at risk of being greylisted, and Insignia accused the FIAU of playing to the Moneyval gallery.
“The message that is coming across from the regulatory bodies is that they are scared of the report pending from MoneyVal and are trying to unjustly punish organisations without logic or merit,” it said. “This has to stop and accountability should be the priority.”
It also lashed out at “irresponsible media reporting” about the FIAU action.
The FIAU has dished out a series of record fines in recent months, with penalties reaching seven-figure sums at times.
Anti-money laundering efforts pay close attention to the way in which financial firms sign up, or "onboard", clients. But Insignia argues that clear differences between mass-market clients and ultra-high-net-worth individuals mean that the analysis process must distinguish between the two.
Insignia targets the latter and its president, Nada Tucakov, argued that financial crime analysts should be focusing on transaction monitoring, not the onboarding process.
“Onboarding a client brings no risk at all; however, it starts from the very first transaction that the client makes,” she said.
"Change is needed on all levels and perhaps it is time for authorities to look within and understand that change should be supported not eradicated."