GUEST POST: Malta’s Drive Against Money Laundering: From One Extreme To Another

Earlier this year, Parliament enacted The Proceeds of Crime Act, Chapter 621 of the Laws of Malta.  This provides for the setting up of the Asset Recovery Bureau.  It is good that an effort has been made to ensure the identification, tracing, freezing and confiscation of proceeds of crime, including laundered money, when in the past 20 years there have been nil effective results in this regard.  

One cannot forget, of course, the notorious case involving the confiscation of a Ferrari car that was subsequently sold by auction by the Government leading to the Government being condemned to pay damages when the AG lost a constitutional court appeal against the decision of a lower court. 

The inclusion, in this new law, of so many offences that can be punished by imprisonment for a term of at least one year to satisfy the condition for property to be confiscated is disproportional.

However, the prize for going overboard goes to other provisions of the Act.

A new section of the Court has been appointed to consider cases arising from the application of this Act, which oddly enough is not the Criminal Court but the Civil Court. Indeed the Act provides that procedures for confiscation of property, even of deceased persons or non-convicted persons, are of a civil nature.

The burden of proof required to establish a finding is that required in any civil proceedings as opposed to criminal jurisdiction. 

This means that the degree of proof required to confiscate private property is that of a balance of probabilities rather than the reasonable certainty applied in the criminal sphere.  To add insult to injury, the Act provides that no appeal on points of fact shall lie against the decisions of this special section of the Civil Courts. 

Another part of the legislation provides that where an accused of a relevant offence absconds, dies or in cases where proceedings against him cannot be brought to a conclusion because of his illness, but without any conviction having been reached, the Asset Recovery Bureau may bring an action before the Civil Court to declare that on the basis of the evidence produced before Court, the trial, had it come to a conclusion, would have resulted in a conviction and that therefore the property of the accused or suspect is to be confiscated.

Even more radical are other provisions whereby a similar action for confiscation may also be brought where the suspected person has not even been charged, let alone convicted, and this on the grounds that the prosecution ‘explains’ or alleges that the suspect was not so charged because he died or absconded before the prosecution could charge him!  

These provisions run manifestly counter to basic human rights, in particular the right to property and the right to a fair hearing enshrined in Articles 37 and 39 of our Constitution and Article 6 of the European Convention on Human Rights.  

On such an important issue, there has been no outcry or criticism from the Opposition who does not appear to have raised its voice in Parliament to ensure that the legislation is enacted with respect to the constitution and to citizens’ inalienable rights to a fair hearing and to the proper safeguards for the protection of private property.  

Similarly, the Chamber of Advocates does not appear to have realised that this piece of legislation was enacted by Parliament before the summer recess.  Chamber of Advocates has had only time to protest against attempts to limit the legal privilege enjoyed by its members, making it look like it is an absolute right when such privilege is only applicable in relation to threatened or actual litigation of a client and not when lawyers, like other independent professionals, act on behalf of clients in any financial or commercial transaction. 

Clearly, the swing of the pendulum has not only occurred, but it has swung too far.  When Malta allowed itself to be constantly associated with allegations in the international financial world of money laundering, adventurism and massive corruption amongst its political class, it rendered itself vulnerable to the wrath of the international gatekeepers in this sphere, most notably the OECD and FATF.

This culminated in the greylisting of Malta by the FATF last June, after the Maltese state or its institutions had already been rebuked by the European Parliament, Moneyval, the Council of Europe and the European Banking Authority.  Suddenly feeling under siege on all fronts and all over the world, the Maltese Government panicked and sought ways and means of alleviating the stark situation.  

From a stage of virtual complete impunity, we are now in the delicate stage of allowing selective persecution, rather than actual prosecution, of innocent persons and organisations, in the quest to demonstrate to the international community that the authorities have woken to their law enforcement responsibilities.  The authorities are doing this selectively, in the wrong way, and in flagrant disregard of the citizens’ human rights.

Meanwhile, on the domestic front, the law enforcement authorities in Malta have switched from turning Nelson’s eye to suspect transactions, perhaps even flagrant cases, to one of overzealousness.  

Suddenly, everything came to be considered money laundering, even petty crimes such as the theft of a can of tuna or the alleged tax evasion by a village mechanic or hairdresser. Freezing orders, from the odd dozen sought in the Courts over a period of five years, started to be requested and issued with almost daily frequency.

What is worse, the prosecuting officers – in spite of insisting on freezing orders and no bail for the accused – are often unable to reply to simple questions by the court as to the nature of the underlying crime, or as to the value with which the accused had enriched himself from the suspected activity.

It is only thanks to our Courts that senseless persecution of the accused was occasionally stemmed.  The recent rejection by the Criminal Court of an application by the Attorney General to have a freezing order issued against a former senior official at Pilatus Bank – who the prosecution admitted had not derived any financial benefit or gain from the alleged offence – comes to mind.  

Similarly, it had to be the courts, on two successive occasions, who denied arrest in the case of a US national wanted for extradition by the US when the prosecution failed to comply with both the substance and the form that Maltese extradition law and the conditions for arrest prescribes.

However laudable, and popular, international assistance against criminals is, one must never allow guarantees for personal freedoms to be arbitrarily overcome in a really democratic society.

Again, it is only thanks to our courts that there was some respite from draconian fines – normally imposed by the Courts for criminal offences – inflicted by the FIAU for technical non-observance of anti-money laundering regulations, and fairly so when the FIAU is neither an independent nor an impartial court.  

The Government has put the cherry on the cake by going from one extreme to another when it legislated in a manner that is manifestly contrary to the citizens’ constitutional safeguards.  

There is now little to protect the individual from the far-reaching, indeed overreaching legislation of Big Brother rather than the State bringing proper lawful convictions to fruition. If only George Orwell were around to witness this transition from undone to overdone.