Court declares FIAU procedures lacked the necessary safeguards to ensure fair hearing
Court rules the Financial Intelligence Analysis Unit’s (FIAU) enforcement procedure violates European Convention of Human Rights, as it acts as both investigator and adjudicator in the case
XNT Limited, an international investment services company, faced penalties amounting to €244,679 due to alleged violations of anti-money laundering and counter-financing of terrorism regulations.
The penalties were imposed on the company and were based on findings from a compliance review conducted by the FIAU, which identified serious offences, including transactions that exceeded the established thresholds without adequate due diligence.
The company offers international investment services company and was established in 2011 that offers global multi-asset financial services. In a previous case, a judge declared that the laws regulating the administrative fines imposed by Malta’s financial crime watchdog are in breach of fundamental rights.
The same company, XNT Limited, was informed of the fine in June 2022 by means of a letter and given 20 days to pay what was referred to as an “administrative fine,” of almost a quarter of a million euros. The judge had upheld XNT’s request to declare the Act and regulation to be in breach of its fundamental rights.
It was seen how the FIAU’s penalties must have jurisdiction to examine all relevant questions of fact and law. The Court highlighted that the administrative process conducted by the FIAU did not meet the necessary requirements for a fair hearing as required by the European Convention of Human Rights, as it was both the investigator and the adjudicator in the case.
Thus, the FIAU was responsible for both investigating the offences and imposing penalties.
The compliance review conducted by the FIAU revealed multiple transactions that exceeded the regulatory limits, with one transaction significantly surpassing the threshold. The committee decided to increase the penalty amount based on the risks associated with these transactions.
The court examined the severity of the penalties in relation to the financial circumstances of the appellant. It noted that while the penalties are punitive, they must also be proportionate to the nature of the violations and the financial capacity of the entity involved.
The court concluded that the FIAU’s position in handling the administrative process lacked the necessary safeguards to ensure a fair hearing.
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