The Malta Independent 8 December 2021, Wednesday

Government ‘concludes’ FIAU found no reasonable grounds to suspect criminal activity

Helena Grech Saturday, 3 February 2018, 13:50 Last update: about 5 years ago

Government has come to the "logical conclusion" that the Financial Intelligence Analysis Unit (FIAU) did not find "reasonable grounds to suspect criminal activity" when referring to leaked reports in the media.

The statement came in a 44-page report replying to a rule of law report penned by MEPs erlier this year. A delegation of MEPs were investigating the rule of law in Malta after journalist Daphne Caruana Galizia was brutally murdered in a car bomb on 16 October.

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She had previously made serious allegations that third Panama company Egrant belongs to the PM's wife, Michelle Muscat. All involved have vociferously denied wrongdoing while the Prime Minister called for a magisterial inquiry to clear his family's name. The inquiry is currently ongoing.

In the wake of the allegations, multiple FIAU reports were leaked to the press. The reports detailed alleged wrongdoing about illicit payments surrounding Keith Schembri, Konrad Mizzi and former Allied Newspaper managing director Adrian Hillman. The FIAU has claimed that the reports were not conclusive. Again, all involved parties strongly deny wrongdoing.

In the rule of law report, the police were harshly criticised for failing to take action based on the report. The government, in its reply, stressed that in accordance with the law, the FIAU is empowered to conduct two types of reports, compliance reports and/or analytical reports.

It explained that compliance reports are carried out in accordance with administrative procedures, and that such reports may "record breaches or potential breaches of AML/CFT legislation [anti-money laundering] which can be dealt with administratively by the FIAU (which can now impose pecuniary penalties of up to €5 million)".

Government stressed that compliance reports are never sent to the police by the FIAU.

It continued to describe how analytical reports are sent to the police, and that anti-money laundering laws provide for such reports to be sent if the FIAU "has reasonable grounds to suspect that the transaction or activity is suspicious and could involve money laundering or funding of terrorism or property that may have derived directly or indirectly from, or constitutes the proceeds of, criminal activity".

In the rule of law report, the MEP delegation described a meeting with Police Commissioner Lawrence Cutajar and assistant commissioner Silvio Valletta. It was said that the "leaked FIAU reports were not backed by subsequent reports," meaning that no subsequent analytical reports were sent to the police.

"Government does not interfere in the work of the FIAU, but the logical conclusion from the absence of an FIAU analytical report is that the FIAU concluded that it did not have reasonable grounds to suspect criminal activity.

"In circumstances such as those it would clearly be a waste of police resources to investigate".

Reference was then made to a leaked FIAU compliance report about Pilatus Bank, located in Ta' Xbiex, where serious shortcomings were highlighted. The government stressed, to back its point, that another report was then issued and leaked showing that such shortcomings "no longer subsist".

In one leaked report, the FIAU writes: "In view of the above circumstances, the information available to the FIAU is deemed to be sufficient to conclude that a reasonable suspicion of money laundering and/or the existence of proceeds of crime subsists. It is therefore being recommended that this report be transmitted to the Police in terms of Article 31 (1) of the Prevention of Money Laundering Act (Chapter 373 of the Laws of Malta) for any action the Police may consider appropriate."

In another, it states: "The case was presented to the Financial Analysis Committee for final determination on 17th May, 2016. After reviewing the facts of the case, the Committee resolved that the information available to the FIAU is deemed to be sufficient to conclude that a reasonable suspicion of money laundering and/or the existence of proceeds of crime subsists. It is therefore being recommended that this report be transmitted to the Police in terms of Article 31(1) of the Prevention of Money Laundering Act (Chapter 373 of the Laws of Malta) for any action the Police may consider appropriate."

This therefore raises questions as to whether the above extracts from two leaked reports are compliance or analysis reports.

Speaking to the EP delegation, Police Commissioner Lawrence Cutajar had said that FIAU compliance reports never formally reached the Malta Police and that those reports that have fallen into the public domain were never formally reported to the Police.

He was being asked why the leaked reports had never led to police investigations. The Police Commissioner and other officials had underlined the limited competences of the Police to start investigations and argued that the leaked FIAU reports were not backed by subsequent reports.

 


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