The regulatory authorities need to have enough trust and effectiveness when it comes to sanctioning to “not only bark, but bite where needs be”, Minister for Justice Edward Zammit Lewis said.
Currently, parliament is discussing an amendment to introduce a provision in the Constitution regulating administrative penalties of a financial nature and to reduce the discrepancy between the right to a fair trial as protected by article 39 of the Constitution of Malta, the same right as protected by Article 6 of the European Convention on Human Rights and case law of the European Court of Human Rights.
The Venice Commission had told the Maltese government that the proposed reforms in how fines are dished out by regulatory authorities should be implemented through a consitutional amendment, rather than an amendment to the Interpretation Act.
A constitutional amendment requires a 2/3rds parliamentary majority.
The Minister said that the current law “is anachronistic” as the regulatory authorities are well intentioned but lack genuine force or effectiveness when it comes to fighting against terrorism, organised crime and money laundering.
The intention of the government is to address administrative sanctions given by the relevant authorities. “These are not something which the Government is inventing, but rather something which stemmed out in the 80s,” the Minister said.
The regulatory authorities include the MFSA, the Malta Gaming Authority, FIAU, and so forth, which operate “at arm’s length” from the government and public administration.
The Monveyval and FATF are telling the country to ramp up the effectiveness of action, and that the sanctions need to be “effective, dissuasive, and proportionate”, the Minister remarked.
If these regulatory authorities simply continue to dish out small fines for certain mishandlings by companies, “these would be neither effective, dissuasive, or proportionate”, the minister said.
With this amendment, the Minister said that the internal processes of these entities will still be in place in the respective entities before imposing an administrative sanction, but the bill will also give the opportunity to hold a general appeal, so that if they feel aggravated, people would still have the opportunity to have their case heard in court.
“If you look at countries like Germany and France and the way they dealt with breaches of data protection, these countries’ entities fined them €30 million, €50 million or more. Why does Malta have to be different?” the Minister questioned.
“Either we end up in a situation where we argue from a strictly legal point of view, or we progress forward like every European country, we see that we have effective institutions, but it wouldn’t come at the expense of citizens and companies,” he said.
The reform would also ensure that courts are not inundated with such cases every time, as well as noting that criminal charges, such as money laundering, will remain under the remit of the courts.
Director of the FIAU, Kenneth Farrugia, said that if this bill goes through, it would lead to the institutions being more effective, and said that if not, such national regulatory entities were almost bound to become irrelevant.
Farrugia remarked that if this had to be implemented, the FIAU is also planning to have a settlement system, whereby if companies offer an action plan as to how they are going to sort out their issues, certain sanctions could be reduced and the name of the company wouldn’t be published if they comply.
There would also be apriori remarks, he said, as to how the companies should act so that they would be compliant before any action would be taken, and also ensure that the whole process is transparent and fair.