Malta’s Financial Regulation Enforcement Agencies Face Scrutiny Amid Controversies and Growing Fines
The Financial Intelligence Analysis Unit (FIAU), Malta’s national central agency responsible for combating money laundering and terrorism financing, has been making headlines in recent years due to its enforcement of anti-money laundering legislation.
Recent Developments
According to the FIAU’s latest annual report, the agency forwarded 61 cases of suspected money laundering to the police for investigation in 2019, a significant increase from previous years. The agency also received over 2,500 suspicious transaction reports from banks, legal professionals, casinos, gaming companies, and real estate agencies, up by 65% from the previous year.
Controversies
The FIAU’s efforts have not been without controversy, however. In 2021, the agency issued fines totaling €12.4 million to financial institutions in Malta, a significant increase from €4.7 million in 2020. This has led some experts in the financial sector to speculate that the FIAU is exerting its “moral authority” to impose penalties.
One notable case that garnered media attention was the agency’s investigation into Pilatus Bank, which resulted in the owner, Ali Sadr Hasheminejad, winning his case against Malta at the International Centre for Settlement of Investment Disputes. Hasheminejad claimed that he was wrongfully prosecuted by Maltese financial authorities.
Criticism and Controversy
The FIAU has also been criticized for its expanded criteria for violations under anti-money laundering legislation, which some argue is leading to increased administrative penalties.
Expanded Criteria for Violations
- Some experts argue that the expanded criteria are too broad and may lead to unfair targeting of financial institutions
- Others claim that the criteria are necessary to combat increasingly sophisticated money laundering schemes
International Cooperation
Despite these controversies, the FIAU remains a crucial agency in Malta’s fight against financial crime. In 2022, it organized an international conference of bank account register administrators and other specialists from 21 European countries, which was endorsed by the European Commission.
International Conference
- The conference aimed to promote cooperation among European countries on anti-money laundering efforts
- Participants shared best practices and discussed common challenges in combating financial crime
Agency Operations
The agency’s activities are not disclosed on the public domain, and it operates independently without interference from other government agencies or authorities. Its annual budget is €11.5 million, with a staff of 136 employees.
Agency Structure
- The FIAU collects and analyzes financial intelligence to pass on to the police
- It receives suspicious transaction reports from various sectors, including banks, legal professionals, casinos, gaming companies, and real estate agencies
Conclusion
As Malta continues to grapple with financial regulation enforcement, the FIAU remains at the forefront of efforts to combat money laundering and terrorism financing. However, its methods and decisions continue to face scrutiny from experts in the financial sector.