An FIAU fine is a criminal charge, but the appeal saves it

The Civil Court, First Hall, sitting in its constitutional jurisdiction under Madam Justice Rachel Montebello, decided on 6 July 2026 an application by Alchemy Markets Ltd, formerly NSFX Limited, against the Financial Intelligence Analysis Unit and the State Advocate.

The company attacked the provisions of the Prevention of Money Laundering Act (Chapter 373) and regulation 21 of the Prevention of Money Laundering and Funding of Terrorism Regulations under which the Unit had fined it, and the process that led to the fine. The court accepts that the penalty is a criminal charge and that the Unit is not an impartial tribunal, but finds no breach of any fundamental right and dismisses every claim with costs.

The facts

The Unit began a compliance examination of the company in October 2019 and wrote on 25 June 2020 setting out potential breaches of its anti-money-laundering obligations, to which the company replied in writing. On 29 September 2023 the Unit's Compliance Monitoring Committee imposed an administrative penalty of €494,115, reduced to €419,997, and published it under article 13C of the Act.

The company had already been fined by the Unit in 2016 for the same kind of breach. On 19 October 2023 it appealed to the Court of Appeal (Inferior Jurisdiction) under article 13A; that appeal was still pending.

In April 2024 it filed this action, asking the court to declare that articles 12A, 13, 13A, 13B, 13C, 18 and 19 of the Act and regulation 21 breach article 39(1) of the Constitution and article 6(1) of the Convention, that the investigation breached article 39(6)(a) and article 6(3), that the penalty rested on internal guidelines contrary to article 39(8) and article 7, and for the decision to be annulled with moral damages.

What the court held

Applying the Engel criteria, the court finds the penalty punitive and deterrent, as regulation 21(4) itself requires it to be «proporzjonata, effettiva u dissważiva», and severe, given the ceilings of €1,000,000, €5,000,000 or ten per cent of turnover and the reputational cost of compulsory publication. The charge is therefore criminal for article 6(1) and, following the Constitutional Court, for article 39(1), though it lies outside the hard core of criminal law.

The Unit is a government agency under article 15, run by a Board most of whose members the Minister appoints under article 18(2). Its supervision and enforcement sections and its Committee are internal arrangements with no statutory separation, all staffed and paid by the Unit, which also collects the penalties and may use them for its operations.

The court concludes that the Unit «mhux biss m'huwiex tribunal jew qorti, iżda jaġixxi wkoll bħala l-investigatur, il-prosekutur kif ukoll l-aġġudikatur» [is not only not a tribunal or court, but also acts as investigator, prosecutor and adjudicator] and can never be regarded as autonomous, impartial and independent.

That is not the end of the inquiry. For charges outside the hard core, Strasbourg allows an administrative authority to impose a penalty at first instance provided a judicial body with full jurisdiction then reviews it: a judgment against Italy (4 March 2014), a judgment against Sweden, Menarini Diagnostics v. Italy (27 September 2011) and Vegotex International v. Belgium (3 November 2022).

The Constitutional Court applied the same rule to article 39(1) in Phoenix Payments Limited v. FIAU (18 November 2024) and Online Amusement Solutions Ltd v. FIAU. Article 13A gives an appeal to the Court of Appeal «kemm fuq punti ta' liġi u fuq il-mertu» [both on points of law and on the merits].

That court may hear evidence, extend the six-month term, weigh proportionality and substitute its own decision. The in camera hearing and the bar on publication under article 13A(6) do not offend article 6, which itself allows publicity to be restricted; the hearing is oral and in the parties' presence, and the confidentiality protects the subject person's own clients.

On article 39(6)(a) and article 6(3), the letter of 25 June 2020 explained the facts and identified the specific regulation said to be breached, the company answered in detail, and the penalties are fixed and graded in article 13 and regulation 21. A company already fined in 2016 could foresee a finding of repeated and systematic breach.

On article 39(8) and article 7, the Implementing Procedures are guidelines under article 13(2) that create no separate obligation or penalty, the Sanction Tool serves uniformity of quantum, and the decision cited the regulation number and a separate penalty for each breach. Nullity of the decision was consequential on a breach and so fell with the rest.

Why it matters

A subject person fined by the Unit should treat the article 13A appeal as the fair hearing and ask the Court of Appeal for evidence, production of the Sanctions Policy and a review of proportionality, rather than bring a constitutional action that will be met with the full-jurisdiction rule. The finding that the Unit is investigator, prosecutor and adjudicator is on the record, but on this line of cases it is cured on appeal, not at first instance.

Where it sits

The case applies the autonomous notion of a criminal charge under the Engel criteria, the hard-core distinction drawn by the Grand Chamber in a case against Finland, and the rule that an administrative penalty survives article 6 where a court of full jurisdiction reviews it, drawn from the 2014 judgment against Italy cited above and Edizioni del Roma v. Italy (19 December 2020).

Domestically it follows the Constitutional Court in Phoenix Payments, Online Amusement Solutions and XNT Limited v. FIAU (18 November 2024). On legality it draws on a Strasbourg judgment against Malta, a judgment against Lithuania (20 October 2015) and a First Hall judgment of 14 January 2015.

Source

Civil Court, First Hall (Constitutional Jurisdiction), 159/2024, 6 July 2026: 159/2024