An investment firm that was slapped with a record €1.2 million fine by the FIAU, has filed constitutional proceedings claiming that its rights had been violated.

It is also calling for the annulment of the fine.

MPM Capital Investments Ltd had originally been targeted in an inspection by the Malta Financial Services Authority in January 2016, during which the watchdog's officials had asked for a copy of the company servers, as well as its directors' personal data.

In October of 2019, the Financial Intelligence Analysis Unit conducted a compliance visit, reporting full cooperation by the company’s officials. 

In April of 2020, MPM Capital Investments Ltd informed the MFSA that it had filed for liquidation and was formally renouncing its licence. 

Two months later, the company received notice of the FIAU compliance review report claiming a potential breach of money-laundering regulations by the investment firm, which it duly responded to, filing its submissions on the matter.

The FIAU reached a decision in August, whereby it confirmed the breach and on September 2 notified the company that it was subject to a €1,183,887 administrative fine.

The penalty was allegedly based on a series of irregularities, with the company denying any wrongdoing, stating that it would contest the decision and seek all possible legal remedies. 

Indeed, the company filed an application before the First Hall, Civil Court in its constitutional jurisdiction, claiming that the procedure adopted by the FIAU, the underlying legal provisions resulting in the imposition of a fine, as well as the particular treatment meted out to MPM Capital Investments Ltd, breached fundamental rights. 

'Harsh fine tantamount to a penal sanction'

The so-called “administrative fine” was “so harsh” that it was tantamount to a penal sanction, in respect of which, the person charged would have a right to a fair hearing within a reasonable time before an independent and impartial court, it said.

Such a sanction could only be imposed by a court, and the FIAU was not an independent and impartial judicial authority, argued the applicant, pointing out that in this case, the unit had investigated, prosecuted and decided upon the matter, thus violating the principle of natural justice, nemo judex in causa propria (no-one is judge in his own cause). 

As for the “exorbitant and debilitating penalty” not only was it “excessive and undoubtedly disproportionate”, but it was also inadequate and unnecessary, inflicting a “too-onerous burden” upon the company. 

The computation of the fine had not been explained, argued the applicant’s lawyers.

Moreover, the procedure adopted by the FIAU did not ensure equality of arms, since the unit had all the time to investigate and decide upon the matter, while the firm was bound by the terms imposed by the FIAU itself.

The company’s limited resources did not match the FIAU’s infinite resources, the lawyers added.

During the compliance visit, all data had been seized, with no distinction made between information necessary for the investigation and personal data.

Additionally, the applicant claimed discrimination since others facing similar or identical allegations had been treated differently.

In light of such considerations, the company called on the court to declare the relative provisions of the money laundering act as anti-constitutional, declare that the applicant’s fundamental rights had been breached, annul all penalties and liquidate damages suffered on account of such breach. 

Lawyers Franco Galea, Victor Scerri and Clinton Calleja signed the application. 

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