Keith Schembri and Brian Tonna face up to 18 years in jail and a maximum fine of €2.5 million if convicted of money laundering.
The law on the prevention of money laundering, however, gives discretion to the attorney general on where the suspects should be tried and the sentence could be a lesser one.
If convicted by the Court of Magistrates, the punishment would involve a jail term of between one and nine years and a fine of between €20,000 and €250,000.
Schembri, the former prime minister’s chief of staff, and Tonna, his Nexia BT auditor, as well as Karl Cini, also from Nexia, were arrested on Monday on suspicion of money laundering after their assets were frozen by court order.
They were released after interrogation.
A long list of other people mentioned in the court’s ‘attachment order’ could face the same punishment if convicted.
The order came a few days after the news of the conclusion of a magisterial inquiry into claims that Schembri took a €100,000 kickback on passport sales from Tonna.
The inquiry was based on a leaked FIAU report that raised suspicions about two €50,000 transactions that passed between the pair via Pilatus Bank.
The men had claimed that the €100,000 was transferred to Schembri by Tonna in repayment of a loan.
The article in the Prevention of Money Laundering Act, which led to the arrests, stipulates that whoever is convicted of the crime faces between four and 18 years in jail and a fine ranging between €50,000 and €2.5 million.
The law also lays down that the AG can decide on where the suspect is to be tried: “In giving a direction, the attorney general shall give due consideration to the age of the offender, the prior conduct of the offender, the value of the property laundered and all the other circumstances of the offence.”
The suspect has the right to file an application before the court demanding that he be tried in the Court of Magistrates. The AG can change her mind at any time.
The court may also order the forfeiture of the proceeds or of any property derived from money laundering, even of immovable property passed on to third parties.
What is an attachment order?
An attachment order is issued by the Criminal Court on request of the attorney general when the AG has reasonable cause to suspect that a person is guilty of money laundering.
Also known as an investigation order, it grants investigators access to any material belonging to the suspects that is “likely to be of substantial value to the investigation”. They can enter any house or building to search for such material.
It is a blanket order on everything and it cripples you
Madam Justice Edwina Grima, who issued the order, agreed with the attorney general that there was reasonable suspicion that the persons mentioned in her application were guilty of a crime under the Prevention of Money Laundering Act.
Dozens of companies, local banks and authorities such as the Commissioner for Revenue, Customs, Lands and the Stock Exchange were given 24 hours to notify the authorities of all the possessions of the people in question, together with any goods, accounts, services or safety deposit boxes they have at Maltese financial institutions.
Why were the assets frozen?
An intrinsic part of an attachment order is the seizure of all assets, moveable or immovable, in the hands of those people against whom the order is issued.
This means all their assets have been ‘frozen’, in particular their bank accounts. According to law, they are only allowed to withdraw up to €13,000 a year.
However, companies are not given any provision to pay salaries or suppliers and are effectively stopped from operating.
Legal experts explained that an attachment order is “absolute” and companies simply cannot disburse any monies, not even to pay staff.
“It is a blanket order on everything and it cripples you. That is why many believe it is draconian,” said one expert.
“And there is no mechanism for anyone to attack it. The law does not provide for anyone to try reducing its effects.”
Third parties, however, have the right to file applications in court to release any of their possessions that might have got mixed up with the suspect’s frozen assets.
Why investigate the leak?
The attachment order went viral on Monday and was reported on some news portals and uploaded on social media platforms within minutes.
At law, broadcasting the attachment order or announcing its contents and the people mentioned in it is illegal.
Whoever is found guilty of disseminating information contained in an investigation order can, on conviction, be liable to a fine not exceeding €11,646 or to imprisonment not exceeding 12 months, or to both a fine and imprisonment.
The same punishment applies to those found guilty of contravening the attachment order.