Law and regulations that led to hefty fine by FIAU breached company’s rights, court finds

The law and regulations that govern the FIAU’s processes that led to a company being given a hefty administrative fine were found to have breached the company’s rights by the courts.

Insignia Cards Ltd filed a case in the First Hall of the Civil Court (in its Constitutional Jurisdiction) against the FIAU and the State Advocate.

The company said that on 24 November 2020, the FIAU communicated its decision to impose an administrative fine in the amount of €373,670. The fine was imposed after the FIAU found various shortcomings in the company’s operations.

Insignia Cards felt aggrieved by this decision and filed an appeal before the Court of Appeals.

But the company also had complaints of a constitutional nature with regards to the Prevention of Money Laundering Act and the Regulations against Money Laundering and the Financing of Terrorism, as well as the investigation conducted by the FIAU and its decision and, as such, also filed a constitutional application for the courts to take a decision on its complaints. This case was heard by Mr Justice Lawrence Mintoff.

Insignia filed the Constitutional case, as it believed that there were a number of regulations and provisions in the Act that breach its right to a fair hearing, and that the way the investigation was carried out also breached such a right. It argued that the FIAU is given the powers to act as investigator, prosecutor and court, and that there is an absence of adequate remedy of appeal and a breach of fundamental human rights

Among other things, the company argued that the FIAU is not an autonomous and impartial body and likened the situation to the police having the power to, after an investigation, but without any judicial process, condemn someone as guilty.

In his considerations, Mr Justice Mintoff said that once the law in issue violates the fundamental human rights of the company, all acts performed in the implementation of that law cannot be deemed to have been done in a way that safeguards the same fundamental human rights.

While upholding the complaints made by the company, the court said that the FIAU cannot be held responsible because it was observing the laws of the State. The State Advocate was ordered to pay the company €10,000 in moral damages.

This is the second landmark case that declared the law regulating administrative penalties handed down by the FIAU to be unconstitutional and in breach of the subject person’s right to a fair trial, with the first having been on 30 March.