In a judgement that was decided on 30th March 2023, the Maltese Constitutional Court declared that administrative fines issued by the Financial Intelligence Analysis Unit (“FIAU”) against a subject person were unconstitutional.
In view of the powers granted by the Prevention of Money Laundering Act, Chapter 373 of the laws of Malta (“PMLA”), and Prevention of Money Laundering and Funding of Terrorism Regulations, Subsidiary Legislation 373.01 of the laws of Malta (“PMLFTR”), the FIAU had issued a fine amounting to €435,576 against Phoenix Payments Limited, for shortcomings in its compliance with anti-money laundering obligations. Phoenix Payments Limited challenged the FIAU's decision and held inter alia that they were not given an effective remedy to the FIAU's decision.
The Constitutional Court declared that Article 13(2) of the PMLA and Article 21 of the PMLFTR damaged and prejudiced Phoenix Payments Limited's fundamental rights which are protected by Article 6 of the European Convention of Human Rights and Article 39 of the Constitution of Malta. This because inter alia Phoenix Payments Limited was not given a fair hearing by an independent and impartial court, it was not presumed innocent until proven guilty and there was no parity of arms during the FIAU's investigative procedure and decision to impose the fine. To this end, the Constitutional Court declared that Article 13(2) of the PMLA and Article 21 of the PMLFTR are null and without effect and the investigative procedure and the fine which was imposed by the FIAU were also null.
Although, there is no doctrine of precedent of judgements in Malta and it is still to be determined whether any changes to the law will be made and if so, the extent of such changes, this is a landmark judgement which effectively reduces the powers of the FIAU substantially.
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