The Civil Court's Asset Recovery Section, turned down a request by the Asset Recovery Bureau (ARB) and the Police Commissioner to forfeit over €531,085 held in a bank account.

The court ruled tax evasion does not generate new wealth but merely preserves pre-existing property by withholding an existing tax liability.

Judge Henri Mizzi delivered the judgment in a non-conviction confiscation proceedings filed regarding funds held in an ARQ Corporate Clients Account at Bank of Valletta on 16 September 2026.

ARQ Group is a partnership between the founding partners of Capstone Group, a mid-tier audit and accounting firm, and the law firm FFF Legal.

Back in 2020, the Malta Financial Services Authority had fined ARQ Fiduciaries for failure to submit declaration of beneficial ownership for trusts in which company acted as a trustee.

In January 2017, €531,085.96 was transferred from a Swiss bank account to ARQ Fiduciaries Limited in Malta to set up a trust for French national Jeanne Davide Gilbert Basiliou, intended for her medical needs.

During standard due diligence, advisors disclosed that the money had not been declared to French tax authorities.

Following Basiliou's death in December 2020, her son and sole heir, Dimitri Basiliou, intervened in the proceedings. He regularised his late mother's tax position in France by reaching a settlement of approximately €191,700 with French authorities, who subsequently confirmed no criminal charges would be filed.

Maltese authorities nevertheless sought full civil forfeiture of the funds under Chapter 621 of the Laws of Malta, arguing the entire sum was "tainted by crime" and had been laundered through the Maltese financial system.

The court rejected the state's argument, drawing a clear distinction between crimes like theft and tax evasion.

Judge Henri Mizzi went on to state that theft creates new illegal wealth, whereas tax evasion retains money already owned by withholding unpaid taxes. The 'proceeds of crime' in tax evasion is strictly the economic benefit gained, not the original underlying capital.

Under Article 43(2) of Chapter 621, non-conviction-based confiscation is strictly restricted to actual proceeds derived from crime, rather than the broader category of 'property involved in money laundering'.

The ARB and Police failed to quantify or request the specific tax benefit as an alternative claim.

Judge Henri Mizzi noted that it is not the court's duty to reframe or construct an alternative case for the prosecution.

The court accordingly dismissed all claims by the state, ordering the Asset Recovery Bureau and the Police Commissioner to bear court costs.