Three men and a woman are being accused with money laundering through Italian channels by means of funds in the form of two bank drafts amounting to almost £1.4m.

The Court of Magistrates heard Police Superintendent Alexandra Mamo and court expert Martin Bajada explain the outcome of a five-year inquiry in the compilation of evidence against the four accused.

Two of the accused were allegedly directly involved in the money-laundering process, while the other two are a former employee of a local bank and an official of a stockbrokerage.

They are all pleading not guilty to money-laundering charges by means of two bank drafts for £411,740 and £959,530.78 respectively.

Magistrate Lawrence Quintano heard the results of a lengthy inquiry that started in October 2001, following a request from the Italian authorities.

The Maltese authorities had received letters rogatory that included a list of companies based in Malta that could have been involved in a carousel fraud case in Italy.

Superintendent Mamo explained how the Attorney General ordered the seizure of all the companies mentioned in the letters rogatory in August 2001.

Short after, on 18 October 2001 Magistrate Jacqueline Padovani opened an inquiry into the case and searches were carried out in properties related to two of the accused.

A number of documents related to the case, bank transaction documents and computer hard disks were found in the searches, stated Superintendent Mamo, adding that the documents indicated that money was transferred from Italian companies and deposited at a local bank and stockbroker in money-laundering operations.

The court expert, who was interrupted by the defence several times since it questioned the way in which the investigation of the documents was carried out, said the documents under scrutiny showed that in the case of the first bank draft – that for £411,740, an attempt was made to transfer funds from one local bank to another.

When the second bank refused to accept to open an account under the name of the company in question, the funds were never returned to the first bank. Instead, this bank issued a bank draft for £411,740 on the name of a particular company.

Mr Bajada went on to explain that the same bank issued another bank draft for £959,530.78 under the name of another company.

The two drafts then ended up at a local stockbrokerage; a substantial amount of the funds were deposited at an offshore bank in Malta, while the rest were distributed among different people by one of the accused.

The court ordered a ban on the names of the accused. As a result, no company names are being mentioned in order not to reveal the identity of the accused in any way.

The case has been deferred to 7 March.

Police Inspector Antonovich Muscat is prosecuting. Dr Joseph Giglio, Dr Martin Fenech, Dr Robert Abela and Dr Emanuel Mallia are defence counsel.