Malta’s Constitutional Court Reinstates €454,293 FIAU Fine Against Phoenix Payments

Malta’s Constitutional Court has reversed a prior ruling that deemed a significant fine imposed by the Financial Intelligence Analysis Unit (FIAU) as unconstitutional, marking a critical victory for the regulatory body.

The case centers around a €454,293 penalty levied by the FIAU against Phoenix Payments Ltd, a payments firm, over alleged failures in anti-money laundering (AML) compliance. While the company successfully contested the penalty in 2023 before the First Hall Civil Court, the Constitutional Court has now overturned that decision, according to a report by Malta Today.

Phoenix Payments had argued that the fine violated its right to a fair hearing under the European Convention of Human Rights. The firm contended that the penalties imposed by the FIAU amounted to criminal sanctions, thereby infringing on their procedural rights.

The FIAU, however, maintained that the fine was administrative in nature and distinct from the actual crime of money laundering. It argued that the imposition of fines for AML deficiencies does not constitute a breach of the European Convention of Human Rights.

In its March 30, 2023, ruling, the First Hall Civil Court sided with Phoenix Payments, declaring that the FIAU’s fines were indeed criminal in nature and that the company’s right to a fair hearing had been violated. This decision rendered the FIAU’s fine invalid.

However, the Constitutional Court has now overturned that ruling.

As reported by Malta Today, “The Constitutional Court has overturned a 30 March 2023 ruling by the First Hall of the Civil Court which had challenged a €454,293 fine imposed on Phoenix Payments Ltd by the FIAU for money laundering breaches. The Constitutional Court ruled that the penalty imposed by the FIAU ‘did not violate the European Convention of Human Rights,’ reversing the previous decision.”

This reversal represents a significant boost for the FIAU, which has faced challenges to several of its penalties in recent years. The Constitutional Court’s ruling reinforces the legitimacy of the FIAU’s authority to impose administrative fines for AML non-compliance without violating fundamental human rights provisions.

By fLEXI tEAM