Malta's FIU Chief Highlights Legal Constraints on Money Laundering Crackdown

Alfred Zammit, the director of Malta’s Financial Intelligence Analysis Unit (FIAU), has highlighted the agency's limitations in pursuing formal legal action against money laundering following a series of court decisions overturning fines imposed by the organization. In an interview with the Times of Malta, Zammit expressed his frustration over the lack of authority granted to the FIAU to conduct criminal investigations or prosecute individuals.

“I want to stress this: the law gives no power to the FIAU to conduct criminal investigations or take people to court on money laundering charges,” Zammit stated. “We only ensure compliance and provide intelligence; it is only the police that conduct criminal investigations leading to prosecutions.”

Zammit emphasized the FIAU's role in collaborating with government entities and international authorities while monitoring compliance with Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) regulations. He noted that one of his main priorities is implementing the FIAU Strategy, particularly through the optimized use of technology to enhance the unit's capabilities in preventing and detecting money laundering.

The FIAU has faced significant setbacks recently, with Malta’s courts canceling millions of euros worth of fines issued by the unit. For instance, a €400,000 fine against gaming company Online Amusement Solutions Limited was overturned in February, citing breaches of constitutional rights, particularly regarding the right to an independent and fair hearing. The FIAU was ordered to refund the fine and pay €20,000 in compensation to the company.

Most of the fines nullified by the courts have been due to the lack of a fair right of hearing for the supervised entities. Despite respecting the court's rulings, Zammit expressed concern over the impact of these decisions on the enforcement process. “We have appealed these constitutional decisions to seek final decisions from the highest court in Malta,” he said.

Malta has been under international scrutiny as a potential money laundering hub, being placed on the Financial Action Task Force (FATF) 'grey list' until its removal in 2022. Since then, there has been a noticeable drop in money laundering charges brought to court, with 57 cases in 2021 dropping to just 16 in 2023.

However, Zammit asserted that Malta’s removal from the FATF grey list did not affect the FIAU’s intelligence operations or the number of reports forwarded to the police. “Malta’s exit from the FATF grey list did not affect the FIAU’s intelligence work or the number of reports sent to the police for investigation, nor did it result in any decrease in the FIAU’s supervisory and enforcement work with subject persons,” he explained.

Zammit further defended Malta’s AML regime, stating, “With ample tools to prevent, identify and act against criminal activity, Malta’s AML regime is very strong and this is amply clear from how rigorous banks have become when onboarding customers. The suspicion reporting regime is functioning well as is evident by the ever-increasing number of STRs received by the FIAU.”

By fLEXI tEAM