Issue link: https://maltatoday.uberflip.com/i/1523374
6 maltatoday | SUNDAY • 27 MARCH 2022 OPINION 2 maltatoday EXECUTIVE EDITOR KURT SANSONE ksansone@mediatoday.com.mt Letters to the Editor, MaltaToday, Vjal ir-Rihan, San Gwann SGN 9016 E-mail: dailynews@mediatoday.com.mt Letters must be concise, no pen names accepted, include full name and address maltatoday | SUNDAY • 30 JUNE 2024 MPs need to step up if they are serious about fighting financial crime Editorial THE fight against financial crime is not an easy one given its cross-border nature and the com- plexities it involves. To counter this, legislators have over time granted supervisory and investi- gative authorities the tools to not only minimise the risk of money laundering but also to dissuade individuals and companies from going down the road of illegality. However, unfortunately, for the past couple of years we have been witnessing a saga through which hefty penalties issued by the Financial Investigations and Analysis Unit (FIAU) are being struck down by the Constitutional Court. The FIAU is Malta's an- ti-money laundering watchdog. Companies have been filing human rights cases on the basis that penalties are so high that they amount to criminal sanctions and thus the manner by which they are issued breaches their right to a fair hearing. The Constitutional Court on several occasions has agreed with this argument, striking down the origi- nal fine and applying in most cases a 90% discount on penalties. This has undercut the FIAU's ability to act as an effective money laundering watchdog. It must be said that the current regime of penalties, which equates to 10% of a company's turnover, was introduced in the wake of the Pilatus Bank debacle. Malta came under heavy fire from foreign institu- tions for having a weak financial services regulatory regime. Subsequently, through extensive consultations with the European Banking Authority, the European Commission, Moneyval and FATF, the supervisory and regulatory regime was revised to ensure Malta can be more effective in its fight against financial crime. The new penalties reflected the recommendation that they should be 'proportional and dissuasive'. However, this regime is now undermined as a result of repeated legal challenges that have seen companies win constitutional cases that effectively slashed the penalties to a pittance. According to the Malta Financial Services Author- ity CEO Kenneth Farrugia, the situation is leading to some companies adopting a cavalier attitude with regulators in the knowledge that hefty penalties will be struck down by the courts. And the situation is not limited to regulators like the MFSA and the FIAU. Only last week, the court struck down a penalty levied on a passenger who travelled through customs at the airport without de- claring cash in excess of €10,000. A few years back, the court also struck down the Electoral Commission's ability to investigate and fine political parties over failures to file their ac- counts. This has left the commission powerless to act when wrongdoing is flagged. Whereas the latter case is a purely domestic mat- ter, the cases involving financial services regulators have cross-border implications and may impinge on Malta's good standing as a jurisdiction. It is within this context that legislators have to step up to the plate and make the necessary legal changes to ensure that regulators can carry out their duty in an efficient, expeditious, fair, proportional and dis- suasive manner. Unless the law is changed, Malta risks returning back to the FATF greylist over its weak enforcement regime and this is not a prospect anyone would rel- ish. The law has to change to reflect the decrees of the Constitutional Court – Malta's judicial set up requires that people are afforded the right to a fair hearing, which includes the ability to defend your- self from accusations that are known to you and the right to appeal – but at the same time ensure the regulators can work effectively in their fight against financial crime. The status quo benefits only those who have crim- inal intent or are adamant in playing a high-stakes game with all the risks it entails in full knowledge that a crackdown by the authorities is unlikely to be damaging if things go south. Financial crime requires specific legal and ad- ministrative tools to be fought, otherwise the State would be giving the criminals and terrorists a blank cheque to do as they please. It may be difficult to reconcile the human rights approach with a regime that grants special powers to certain authorities, however it is not something im- possible to achieve. After all, several countries have enacted special laws to counter terrorism over the past two decades and there is no reason why finan- cial crime should not be treated in the same manner. Government has a duty to sit down with the Op- position and chart a way out of the current impasse that respects Malta's legal set up while giving entities like the FIAU and the MFSA the tools to be effective watchdogs. Quote of the Week "It seems that legislators have no appetite to change the current impasse and this can weaken our effectiveness in enforcement that risks creating problems with our foreign assessors at Moneyval and FATF, among others." MFSA CEO Kenneth Farrugia during a media briefing on the authority's annual report for 2023, warning that unless legislators change the law, the courts will keep striking down penalties issued by financial services regulators that are deemed to be unconstitutional thus weakening the regulatory regime. MaltaToday 10 years ago 29 June 2014 ARMS negotiating €2.5 million payment terms UTILITY billing company ARMS Ltd is nego- tiating payment plans with both the National- ist and Labour parties, which have amassed a staggering total of unpaid bills to the value of €2.5 million. Last Sunday, MaltaToday revealed that the Nationalist Party has energy and water bills running up to €1.9 million, while La- bour owes €600,000. "ARMS Ltd is treating political parties in the same way as other clients and negotiating pay- ment plans for the parties to pay their dues," a spokesperson for the Ministry of Energy claimed with MaltaToday. Alternattiva Demokratika has since accused ARMS Ltd, a state company, of giving prefer- ential treatment to the parties. "While the public is expected to pay its water and electricity bills in time or incur penalties or even disconnection, both leading political parties seem to have enjoyed particular priv- ileges," AD's spokesperson for energy Ralph Cassar, said. Both Prime Minister Joseph Muscat and Opposition leader Simon Busuttil insist that the parties are not being treated any differently from regular consumers. "Political parties must pay their water and electricity bills just like everyone else," Muscat said earlier this week. "Steps had already been taken during the past legislature and ARMS Ltd is proceeding on those steps." Busuttil refused to confirm his party has up to €1.9 million in unpaid bills, due to "com- mercial and financial information". Both MaltaToday and the Times of Malta have filed freedom of information requests on the subjects. MaltaToday's request is current- ly at the appeals stage after ARMS refused to disclose information on the monies owed by the political parties to Enemalta and the Wa- ter Services Corporation.