The Government of Malta – Response to the European Parliament's Mission Report dated
11 January 2018
1.

Introduction

The Maltese Government (the "Government") wishes to make clear at the outset that it is open
to discussion on the improvement of its political, judicial and prosecution institutions, and
welcomes recommendations which would lead to better governance. It has serious concerns,
however, that many of the recommendations proposed in the Mission Report will not
effectively serve this function as they are based on a report which fails to paint a true picture
of the Government, media and regulatory bodies. The Government's key aim in providing this
response is to open a constructive dialogue with the European Parliament so that, together, we
can work towards a better Malta.
Summary
The Government's main observations on the Mission Report are as follows:
1. The Report shows a fundamental lack of understanding as to the roles of the various
institutions in Malta which it describes, how those institutions perform their duties and
their powers under statute.
2. Significant elements of the information relied on by the Members in drawing up their
recommendations is out of date and/or inaccurate.
3. Criticisms are made of constitutional structures within Malta, or of decisions made by
the Maltese government, even though other Member States operate similar systems or
have made identical decisions.
4. The Government has brought about a significant amount of reform in the past 5 years
and continues this work with dedication and diligence; this has not been sufficiently
drawn out in the Mission Report.
5. Confidential information relating to the work of a criminal intelligence body (the FIAU)
was disclosed in the Mission Report without any prior authorisation.
Note

Malta has certain doubts as to the legality of the ad-hoc delegation in view of its composition
and the manner in which it operated. It did not wish those concerns to hold up its response to
the factual allegations made in the Mission Report, but Malta reserves all and any rights in this
respect.

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 2.

The Attorney General's powers under Article 4 of the Maltese Prevention of Money
Laundering Act

The Mission Report appears confused regarding: (1) what an investigation order is and when
it can be obtained; and (2) the Attorney General's powers under Article 4 of the Maltese
Prevention of Money Laundering Act 1994 (the "Money Laundering Act") in respect of
investigation orders.
The Money Laundering Act
Article 4(1) of the Money Laundering Act defines an investigation order as:
"Where, upon information received, the Attorney General has reasonable cause to
suspect that a person (hereinafter referred to as "the suspect") is guilty of the offence
mentioned in Article 3, he may apply to the Criminal Court for an order (hereinafter
referred to as an "investigation order") that a person (including a body or association of
persons, whether corporate or unincorporated) named in the order who appears to be in
possession of particular material or material of a particular description which is likely
to be of substantial value (whether by itself or together with other material) to the
investigation of, or in connection with, the suspect, shall produce or grant access to such
material to the person or persons indicated in the order; and the person or persons so
indicated shall, by virtue of the investigation order have the power to enter any house,
building or other enclosure for the purpose of searching for such material." (emphasis
added)
Article 4(7) of the Money Laundering Act refers to the court's involvement in the granting of
an investigation order:
"Before making an investigation order or an attachment order, the court may require
to hear the Attorney General in chambers and shall not make such order –
(a) Unless it concurs with the Attorney General that there is reasonable cause
as provided in sub article (1); and
(b) In the case of an investigation order, unless the court is satisfied that there
are reasonable grounds for suspecting that the material to which the
application relates –
(i)
Is likely to be of substantial value (whether by itself or together
with other material) to the investigation for the purpose of which
the application is made, and
(ii)
Does not consist of communications referred to in sub article
(3)(a) [i.e. communications covered by legal privilege or those
between clergyman and confessor]."(emphasis added)
The Attorney General's powers under the Money Laundering Act
The main points to draw from the legislation are:

2

 1. An investigation order is for the collection of material evidence; it is not an order to
request the police to initiate an investigation. A police investigation would ordinarily
be in progress before an investigation order is requested. Contrary to the suggestion in
the Mission Report, the Attorney General has no power at all to 'press charges' nor to
require the police to investigate alleged crimes.
2. As set out in article 7(b), the court will only grant the application for an investigation
order when the evidential material requested is shown to be "of substantial value
(whether by itself or together with other material) to the investigation". There are two
points to make on the interpretation of this statutory requirement: (1) prior to the grant
of an investigation order there needs to already be an ongoing police investigation; and
(2) in order for the Attorney General to identify with the requisite specificity the
material which is of substantial value, the ongoing investigation must be reasonably
advanced.
3. The Attorney General is only able to take steps to obtain an investigation order when
he "has reasonable cause to suspect that a person…is guilty of the offence". The
investigation order will only be granted by the Court when it is satisfied that there is
"reasonable cause as provided in sub article (1)" – which is that there is suspicion that
a person is guilty.
Media Reports on Money Laundering
The Mission Report appears to criticise the Attorney General for not approaching the court for
an investigation order on the back of various news articles alleging money laundering by
Politically Exposed Persons. Investigation orders are highly intrusive and it is for that reason
that they are only granted by the court and only in circumstances where the threshold of
reasonable cause has been met. Therefore, the Attorney General will only make a request for
an investigation order on the basis of a dossier of evidence, and not mere media reports. It is
worth noting that media reports may spark a police investigation into an individual or
organisation but, as set out above, such an investigation is not instigated either by the Attorney
General or via an investigation order.
3. The Appointment and Dual Role of the Attorney General
The Attorney General's Appointment
Since Malta's independence in 1964, and even before that, when an Attorney General vacancy
arises, the Attorney General appointed has always been the most senior lawyer in the Office of
the Attorney General (normally the Deputy Attorney General). Therefore, whilst the Prime
Minister is free to appoint any practising lawyer with at least twelve years' experience to the
office of Attorney General, in practice, there has invariably been only one clear candidate. This
ties in with the fact that the Attorney General's tenure does not come to an end upon a change
of government; the Attorney General enjoys security of tenure until retirement age equivalent
to that of a judge (unless he is guilty of misbehaviour or finds himself unable to act). The
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 appointment of the current Attorney General provides a clear example of how this works: Peter
Grech was appointed as Attorney General on 9 September 2010 when the Nationalist Party was
in Government; and on 9 March 2013 the Labour Party was voted into Government, yet Mr
Grech remains in his post to this day.
For the reasons set out above, the Attorney General appointment procedure is transparent, fair
and free from bias or political persuasion. The Office of the Attorney General has never
suffered incidents of bribery or allegations of corruption and the Office enjoys high levels of
public confidence (this fact has been recognised in the GRECO Fourth Evaluation report on
Malta).
The Dual Role
The fact that the Maltese Attorney General wears two hats is common in other Member States,
and does not impact in any way on his ability to properly and impartially perform his role.
Whilst the Attorney General is both the legal advisor to the Government and the public
prosecutor, the Office of the Attorney General is divided into two separate units which perform
the two separate functions. Those lawyers who work as prosecutors do not give constitutional
or civil advice to the Government, and vice versa.
In the Attorney General's role as legal advisor to the Government, the Attorney General acts as
guarantor for the legality of government actions, and not as a private lawyer to Ministers or
other Politically Exposed Persons. The Attorney General's function as legal advisor to
Government is no obstacle to his prosecuting function and does not suffer any interference by
Government in prosecutions. Proof of this is the many prosecutions of those holding public
office with the Government, including in the current administration. By way of example:
1. In June 2013, the Attorney General appealed a not guilty judgement of the Court of
Magistrates dated 31 May 2013 (Police vs. X case number 850/11) in respect of
allegations against a strong Labour candidate for the 2014 European Parliament. The
appeal was upheld and the accused was found to be guilty by a judgment of the Court
of Criminal Appeal made on 8 May 2014. The individual subsequently withdrew his
candidature.
2. After the police sought the advice of the Office of the Attorney General, charges were
brought against the Minister for Justice relating to a road traffic accident involving the
Minister's private vehicle. The Minister for Justice was subsequently found not guilty.
Furthermore, in his role as constitutional advisor, the Attorney General has taken opposing
positions to those taken by the party in Government or its close political allies. Two of the most
notable are: (1) Application No. 57/2015 "Perit Daniel Micallef noe et vs. Attorney General
and Others"; and (2) Application No. 33/2017 "General Workers Union vs. Attorney General
and Others".
The Government notes that there was no complaint or criticism of the Attorney General's dual
role when Malta acceded to the Council of Europe, to the European Union or to the European
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 Convention of Human Rights. Furthermore, Malta is not the only member of the EU to have
an Attorney General serving a dual role. For example, in the UK the Attorney General oversees
the Crown Prosecution Service, the Serious Fraud Office and the UK Government Legal
Department.
4. The Finance Intelligence Analysis Unit ("FIAU")/Pilatus Bank
This response should be read in conjunction with Malta's answers to the questionnaire sent to
the Members, provided as Annex 3 to this Response. Malta's answers provide significant detail
in respect of the role and structure of the FIAU, its powers and statistics relating to its work.
The FIAU is a highly effective organisation and carries out its work with diligence. This is
reflected in the Mission Report by reference to the FIAU's investigations into Pilatus Bank and
various reports produced by the FIAU identifying money laundering.
The criticisms which are levied against the FIAU appear to be based on a fundamental lack of
understanding by the Members as to what the FIAU does and inaccuracies/omissions in the
report.
Compliance Reports versus Analytical Reports
The Members appear to allege that by not providing compliance reports to the police, the FIAU
is failing to report instances of money laundering, therefore curtailing investigations which
could lead to criminal convictions. In this regard the Members refer to FIAU compliance
reports which did not reach the police, but were leaked to the public. The Members also ask
why the police did not start investigations based on the leaked compliance reports, insinuating
that the police are not doing their jobs either.
In fact, compliance reports are never sent by the FIAU to the police; they are reports produced
following the carrying out of supervisory work of an administrative nature. The reports may
record breaches or potential breaches of AML/CFT legislation which can be dealt with
administratively by the FIAU (which can now impose pecuniary penalties of up to EUR 5
million).
Article 16(1) of the Money Laundering Act provides that the FIAU is to send an analytical
report (not a compliance report) to the Commissioner of Police 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."
Therefore when the Mission Report refers to the police maintaining that the "leaked FIAU
reports were not backed by subsequent reports"; this means that no subsequent analytical
report was produced by FIAU and sent to the police. The 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.

5

 The leaked compliance reports referred to relate to compliance breaches by Pilatus Bank which
were subsequently remedied, and there is another compliance report recording that remedy.
The FIAU is an Intelligence Agency
Not all analytical reports made by the FIAU will necessarily lead to a criminal conviction. The
FIAU is an intelligence agency; it does not conduct criminal investigations, as those are a
matter for the police. Criminal investigations are invariably more challenging than FIAU
intelligence investigations as the burden of proof to convict is "beyond all reasonable doubt"
and the evidence gathered by the police to support a conviction needs to stand up to the scrutiny
of the Court process.
The Maltese police force have been criticised for failing to investigate Maltese PEPs on the
back of FIAU analytical reports sent by the FIAU to the police (or leaked)1. The Government
does not interfere with the work of the police, and is not privy to its detailed reasoning in
respect of individual decisions as to whether or not to prosecute. It can only infer that on police
consideration of the FIAU reports there was simply not enough in the way of evidence to launch
a full criminal investigation against the individuals in question. Examples referred to elsewhere
in this document demonstrate that the Maltese police and other authorities have not been slow
to progress prosecutions and/or investigations into politically sensitive matters. Furthermore,
the Government understands that the police have assessed all information collected on all
individuals involved in the Panama Papers and that information remains under review and on
file.
The Government has every confidence in the Maltese police force and continues to support it
by expending significant resources in strengthening the force, with a particular focus on
growing the Money Laundering and Economic Crimes Unit.
The Speed of Investigations
The Mission Report questions why the prosecution of the Russian whistle-blower Ms Maria
Efimova moved fast, whilst investigations concerning senior Government officials named in
the Panama Papers and under suspicion based on the leaked FIAU reports are said to be moving
slowly. The answer is simple: the allegations against Ms Efimova were of a straightforward
nature (an illegitimate expense claim) and the evidence was unequivocal. In contrast, the
allegations of money laundering and corruption are complex and the evidence is nuanced. If
challenging investigations are rushed then mistakes will be made and the police would no doubt
be criticised more.
The September letter from FIAU

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Page 27 of the Mission Report on "AML" sets out that "none of the FIAU reports regarding Maltese PEPs were investigated by the Police,
even though the FIAU concluded that "a reasonable suspicion of money laundering and/or the existence of proceeds of crime subsists" in the
case of the Prime Minister's Chief of Staff, Mr Keith Schembri, in relation to the Individual Investor Programme and his link to NEXIA BT's
Brian Tonna. The reports had been forwarded to the police "for any action the police may consider appropriate"".
Page 28 of the Mission Report on "AML" sets out that "The leaked +/- 130 pages "working document" of the FIAU on Minister Konrad Mizzi
(of which 4 pages of conclusions were leaked) did not yet lead to an investigation.

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 There are several notable inaccuracies/omissions in the Mission Report's account of the events
which led to the FIAU issuing the letter in September 2016 to Pilatus Bank.
Following an on-site visit to Pilatus Bank, the FIAU raised multiple compliance concerns and
produced an initial findings compliance report in May 2016. In response to this report, Pilatus
Bank contested the initial findings and substantiated its submissions with two external audit
reports produced by KPMG and Camilleri Preziosi Advocates (a law firm). In light of Pilatus
Bank's response (supported by the two external audit reports), the FIAU and MFSA carried out
a further on site examination. During this further examination, additional documents were
made available to the FIAU and MFSA which were not provided on the first visit.
By letter dated 26 September 2016, the FIAU confirmed that the shortcomings identified in the
first visit were no longer present, but expressed concern that information found on site during
the follow-up visit was not available during the first visit. The FIAU explained to Pilatus Bank
that this concern would be kept on record and that FIAU reserved the right to carry out future
supervisory work. Any contention by the Members that the FIAU were unconcerned by the
Pilatus Bank activity and just "closed the case" is wholly inaccurate. Pilatus Bank remains
under surveillance by FIAU and as long as it is operating as a bank, it always will do.
The Mission Report states that "Members also asked about the timing of the FIAU letter stating
Pilatus was compliant, as it coincided with the resignation of the then head of the FIAU, Mr.
Manfred Galdes" – however the Mission Report fails to record Malta's reply. The
Government's response is that the two are entirely unrelated.
5. The Commissioner of Police
The Mission Report calls into question the Commissioner of Police's independence. The
allegations are raised in the context of a perceived failure to investigate suspicions of money
laundering raised in FIAU reports relating to the Prime Minister's Chief of Staff. It is inferred
that this perceived failure has something to do with the Commissioner of Police being
appointed by the Prime Minister. This allegation is baseless for two reasons:
1. As explained in detail above: there was no failure to investigate. The Government
understands that a decision was made by the police to not launch a full investigation
due to insufficient grounds provided in the FIAU reports to warrant a full criminal
investigation.
2. To say that the Commissioner of Police is appointed by the Prime Minister is an
artificial explanation of the process. The Commissioner of Police has always been
appointed from amongst the longest serving and highest ranking police officers, who
will have served under different administrations. The only exception in the last 50 years
was for a short period in 1987-1988 when the newly elected (Nationalist Party)
administration brought in the Head of the Armed Forces to take charge of the police
force.

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 The current Commissioner of Police, Mr Lawrence Cutajar, began as a Constable in the
police in 1979. By 2000 Mr Cutajar rose to the rank of Superintendent and in February
2014 he was promoted to Assistant Commissioner and given charge of the Police
Immigration Branch. On 1 August 2016, Mr Cutajar was appointed as Commissioner
of Police; after 37 years in the police force.
6. Media
The Media Bill
The Mission Report recounts discussions with journalists relating to the defamation and libel
laws in Malta. The law is changing. The latest Bill on the updating of the regulation of media
and defamation matters is dated 22 November 2017 and provides a framework modelled largely
on the UK's Defamation Act 2013, which was introduced in the UK in order to strengthen the
protection of free speech. The latest Bill is a significant step towards providing safeguards for
free press and freedom of expression which Malta sees as essential to the state as a whole.
The regulation of the media is an extremely difficult task and one which is being hotly debated
in governments all over the world, not least the European Parliament. However, instead of
facilitating a debate with Maltese journalists about the current Bill and possible improvements
in the drafting, it appears that the discussion led by the ad-hoc delegation of MEPs was focused
on the past. We do not understand the relevance of criticisms based on old laws or earlier
versions of the Bill; by definition a "Bill" is a draft tabled for discussion by the legislature. The
Government's focus is on improving its media and defamation laws; it is discussing its
legislative changes openly with relevant stakeholders and moving forwards towards further
guaranteeing a free and safe media.
Broadcasting
The Mission Report attacks the independence of broadcasters and newspapers by stating they
are "owned by political parties" and "under the control of the government". This is a further
example of a lack of proper research and a deeper analysis of facts.
The ownership of certain broadcasters by political parties in Malta stemmed from a historic
distrust between the right and left. Historically, broadcasters were therefore set up by those
both in Government and in Opposition to ensure that the people of Malta heard both sides'
views. Whilst some broadcasters remain owned by political parties (each political party owns
one radio and one television broadcasting service), all other radio and television broadcasting
services belong to either the public service broadcaster (of which there are two radio and two
television broadcasting services), or are privately owned and run. The public broadcaster is
bound by a legal duty of impartiality in matters of political or industrial controversy. In order
to ensure such neutrality is maintained, the public broadcaster employs journalists from the
whole political spectrum and is regulated by the Broadcasting Authority (which is a regulatory
authority established by the Constitution). Media plurality is secured by the range of different
ownership interests in the major Maltese broadcasters and the majority of programming is
politically neutral.
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 7. The Caruana Galizia Murder
The Mission Report refers to "concerns on the absence of protection measures for Daphne
Caruana Galizia". As the delegation is well aware, Ms Galizia was offered police protection
but it was refused. If the Mission Report is suggesting that a journalist should be subject to
police protection against their will then we would consider this a dangerous step in terms of
media freedom.
The police investigation into Ms Galizia's murder was the most intensely worked and costly
that Malta has ever seen. The investigation was extremely complex and had the pressure of the
world watching, but despite that the Maltese police charged three individuals with murder and
with being members of a criminal organisation on 5 December 2017. A pre-trial hearing took
place on 19 December 2017 during which evidence was presented to the Court by the police.
During the hearing all three suspects pleaded not guilty and the Magistrate ordered that the
suspects were to face a full trial on the basis of the evidence before her. The Attorney General
must now draw up the precise charges with a full trial set to take place as soon as the committal
proceedings are completed.
8. Mr. Ferris
As a matter of national security, all FIAU officials and employees (both past and present) are
bound to strict confidentiality obligations. Criminal intelligence agencies across the world
operate under confidentiality obligations, and the Maltese FIAU is no different. As such, the
Government is unable to confirm the veracity of any statements made by Mr Ferris concerning
FIAU and its case work. Mr. Ferris' statements are his personal account and cannot be taken to
reflect the FIAU's position.
9. Non-Government Organisations
All participants in the round table discussion with non-government organisations (of which
there were many) are either former activists of the Nationalist Party, which is the Government's
main opposition party, or are known to be sympathetic to its political views. Whilst that is not
a reason to discount their views necessarily, it should be noted that this is not a diverse group
and certainly not representative of all "non-government organizations active in the field of Rule
of law and the fight against corruption".
Despite the polarised political stances of the participants and the Government, we note that
during the interview "trust was expressed in the judiciary system and in particular in
magistrates and courts".

10. The Judiciary and Justice Reform
Judicial reform, including Constitutional amendments, has been a focus of the Government
since 2013. This has resulted in significant improvements in legislation concerning the
appointment of members of the judiciary and maintaining judges' impartiality. Such continuing
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 improvements are a demonstration of the importance the Government places on upholding the
rule of law in Malta.
We refer to Annexes 1 and 2 to this response, which provide detailed information on the
position of the judiciary under the Constitution of Malta and the various legal and practical
measures taken in the justice sector to strengthen the rule of law in the last five years:
Annex 1: The process of Justice Reform and Other Democratic Reforms in Malta
Annex 2: The Position of the Judiciary
11. Other Subsidiary Issues
Separation of Powers: The Government refutes any suggestion that Malta has "unclear
separation of powers", implying systematic interference by the Executive with the judiciary.
Cases involving human rights follow the judgments of the European Court of Human Rights
and several cases are decided against the Government every year. Furthermore, a Constitutional
Court granted the Opposition party two additional seats in Parliament, clear evidence that the
judiciary is entirely independent from the Government.
Implementation of anti-money laundering legislation: The Government has expended
significant resources on strengthening the police force and FIAU. Some of those resources have
been deployed in significantly increasing the work force in the Money Laundering and
Economic Crimes Units in the police force. This continues to be a primary focus of the
Government.
The impartiality of civil service appointments, including the FIAU: civil service appointments
are made by the Public Service Commission (a constitutional body). The Board of Governors
of the FIAU is appointed from the Office of the Attorney General, The Malta Financial Services
Authority, the police and the Central Bank. FIAU employees are offered jobs pursuant to an
open call guaranteeing equality of access to employment. The process is mandated by Article
110(6) of the Constitution of Malta, and is the same for all other public sector organisations.
The Individual Investor Programme ("IIP"): This programme has been given the provocative
name of "Sale of Passports" in the Mission Report. The grant of citizenship under the IIP is
subject to very strict due diligence processes. Those granted passports will have come under
detailed scrutiny and are subject to limitations which relate to "good conduct" requirements. It
is also worth noting that programmes such as the IIP are not unique to Malta; with the
appropriate checks and balances these schemes can improve societies by increasing diversity.
Malta's compliance with the European Anti-Money Laundering Directive: As of December
2017, this Directive is fully implemented in Maltese law. The European Anti-Money
Laundering Directive was transposed through the Prevention of Money Laundering

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 (Amendment) Act, 2017 (Act XXIX of 2017 enacted on 1 December 2017) and through the
publication of five Subsidiary Legislation Instruments on 20 December 20172.
Malta's compliance with the Capital Requirements Directive: The Capital Requirements
Directive was transposed through amendments to the Banking Act 1994 (Chapter 371 of the
Laws of Malta), the Investment Services Act 1995 (Chapter 370 of the Laws of Malta), with
twelve further Regulations and Banking Rules3. The EU Commission recently identified some
issues with the legislation and the Malta Financial Services Authority is currently working on
amending legislation in full co-operation with the EU Commission.
The Whistleblower Protection Act 2013: The Mission Report recommends that the Act should
be revised to cover workers in the public sector. The Whistleblower Protection Act is already
applicable to workers in the public sector, and has been since 2014. Furthermore, the Criminal
Code puts in place procedures which make it possible for civil society organisations to provide
evidence of white collar crime to the police and inquiring Magistrates.
Libyan Petrol: As far as the Maltese police are aware, the smuggling of Libyan petrol does not
take place within the Maltese territory or territorial waters. The Maltese Judiciary, police and
Trade Authorities are already fully cooperating with Italian and Libyan authorities in their
investigations.
Malta's participation in the European Public Prosecutors Office ("EPPO"): The Government
has no objection in principle to joining the EPPO and is in fact currently working on preparing
the necessary preparatory work. The Government does wish to point out that joining to EPPO
is purely voluntary and out of the 28 Member States, only 20 have joined the EPPO.
The Tax Compliance Unit: Annex 3 contains information regarding the Tax Compliance Unit.
The Tax Compliance Unit handles tax-related investigations and is currently investigating 29
cases of tax related offences arising out of the Panama Papers, with another 20 cases at the preaudit stage. The Government is committed to strengthening the Tax Compliance Unit and is
currently looking into ways in which it can achieve this goal.
Magistrate Inquiries: The Maltese legal system provides a route for any person or organisation,
even a private individual, to request that a judicial authority carry out an investigation into a
2

The five Subsidiary Legislation Instruments are: (1) LN 372/2017: Prevention of Money Laundering and Funding of Terrorism Regulations,
2017; (2) LN 373/2017 Trusts and Trustees Act (Register of Beneficial Owners) Regulations, 2017; (3) LN 374/2017 Companies Act (Register
of Beneficial Owners) Regulations, 2017; (4) LN 375/2017 Civil Code (Second Schedule) (Register of Beneficial Owners – Associations),
Regulations, 2017; and (5) LN 376/2017 Civil Code (Second Schedule) (Register of Beneficial Owners – Foundations), Regulations, 2017.
3

The eight Regulations are: SL. 204.06 Central Bank of Malta (Appointment of Designate Authority to implement Macro-Prudential
Instruments) Regulations, 2013; SL. 371.05 Administrative Penalties, Measures and Investigatory Powers Regulations, 2015; SL. 371.11
European Passport Rights for Credit Institutions Regulations; SL. 371.15 Supervisory Consolidation Regulations, 2015; SL. 371.16 Banking
Act (Supervisory Review) Regulations, 2015; SL. 371.13 Banking Act (Capital Adequacy) Regulations, 2012; SL. 370.15 Investment Services
Act (Supervisory Review) Regulations, 2014; and SL. 370.25 CRD (Administrative Penalties, Measures and Investigatory Powers)
Regulations, 2014.
The four Banking Rules are: Banking Rule BR/01 – Application Procedures and Requirements for Authorisation of Licences for Banking
Activities under the Banking Act 1994; Banking Rule BR/07 – Publication Of Annual Report And Audited Financial Statements Of Credit
Institutions Authorised Under The Banking Act 1994; Banking Rule BR/12 – The Supervisory Review Process Of Credit Institutions
Authorised Under The Banking Act 1994; and Banking Rule BR/15 – Capital Buffers Of Credit Institutions Authorised Under The Banking
Act 1994.

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 suspected crime. This access to the judiciary is open to anyone and requires no prior approval
from the police, Attorney General or the Government. The Mission Report (page 27) refers to
five such investigations.
Some of the Key Legislative and Constitutional developments in Malta since 2013 (in date
order):


Removal of the prescription of corruption offences committed by politicians.
Implemented by: The Criminal Code (Amendment) Act, 2013 (Act IV of 2013) enacted
on 14 June 2013; and The Protection of the Whistleblower Act, 2013 (Act VIII of 2013)
enacted on 19 July 2013.



Enacted various laws to grant wider civil liberties and gender equality. Implemented
by:
o Civil Unions Act, 2014 (Act IX of 2014) enacted on 17 April 2014;
o Gender Identity, Gender Expression and Sex Characteristics Act, 2015 (Act XI
of 2015 of 14 April 2015 as amended by Acts XX of 2015 and LVI of 2016);
o Affirmation of Sexual Orientation, Gender Identity and Gender Expression Act,
2016 (Act LV of 2016) enacted on 9 December 2016;
o Cohabitation Act, 2017 (Act XV of 2017) enacted on 7 April 2017;
o Marriage and Other Laws (Amendment) Act, 2017 (Act XXIII of 2017) enacted
on the 1 August 2017.



Introduced the right of appeal from decisions of the Attorney General on the choice of
court in case of arraignment for drug and money laundering crimes. Implemented by:
The Various Laws (Criminal Matters) (Amendment No 2) Act, 2014 (Act XXIV of
2014) enacted on 1 August 2014.



Reformed its drug laws to focus on assisting genuine victims of addiction. Implemented
by: The Drug Dependence (Treatment not Imprisonment) Act, 2015 (Act 1 of 2015)
enacted on 20 February 2015.



Increased Trade Union Rights. Implemented by: The Various Laws (Trade Union
Membership of Disciplined Forces) Act, 2015 (Act IV of 2015) enacted on 20 February
2015.



Imposed the legal regulation of political party financing. Implemented by: The
Financing of Political Parties Act, 2015 (Act XXIV of 2015) enacted on 28 July 2015.



Prevented the lengthy detention of irregular migrants. Implemented by: The Reception
of Asylum Seekers Regulations as amended by the Reception of Asylum Seekers
(Minimum Standards) (Amendment) Regulations, 2015 (LN 417 of 2015) enacted on
11 December 2015; and The Procedural Standards for Granting and Withdrawing

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 International Protection Regulations, 2015 (LN 416 of 2015) enacted on 11 December
2015.


Strengthened the rights of people with disabilities. Implemented by: The Equal
Opportunities (Persons with Disability) (Amendment) Act, 2016 (Act XXIV of 2016)
enacted on 10 May 2016.



Introduced the rights of disclosure, translation and interpretation to suspects and those
held under arrest. Implemented by: The Various Laws (Criminal Matters)
(Amendment) Act, 2014 (Act IV of 2014) enacted on 18 March 2014 and the Criminal
Code (Amendment) Act, 2016 (Act XXXVII of 2016) enacted on 19 July 2016.



Liberalised its laws on artistic freedom. Implemented by: The Criminal Code
(Amendment) Act, 2016 (Act XXXVII of 2016) enacted on 19 July 2016.



Strengthened the Commission for Administration of Justice by entrenching it in the
Constitution, establishing the Judicial Appointments Committee, and establishing the
Committee for Judges and Magistrates as a completely independent organ within the
judiciary (and only including members of the judiciary) to take charge of disciplinary
cases involving members of the judiciary (see Annex 2). All of these measures were
implemented by: The Constitutional Reforms (Justice Sector) Act, 2016 (Act XLIV of
2016) enacted on 5 August 2016.



Introduced the right to be assisted by a lawyer during police interviews: Implemented
by: The Criminal Code (Amendment No. 2) Act, 2016 (Act LI of 2016) enacted on 28
November 2016.



Implemented the Fourth Anti-Money Laundering Directive and Capital Requirements
Directive. Implemented by: The Prevention of Money Laundering (Amendment) Act,
2017 (Act XXIX of 2017) enacted on 1 December 2017 and the following five Legal
Notices (Subsidiary Legislation Instruments) enacted on 20 December 2017:
o LN 372/2017: Prevention of Money laundering and Funding of Terrorism
Regulations, 2017;
o LN 373/2017 Trusts and Trustees Act (Register of Beneficial Owners)
Regulations, 2017;
o LN 374/2017 Companies Act (Register of Beneficial Owners) Regulations,
2017;
o LN 375/2017 Civil Code (Second Schedule) (Register of Beneficial Owners –
Associations) Regulations, 2017; and
o LN 376/2017 Civil Code (Second Schedule) (Register of Beneficial Owners –
Foundations) Regulations, 2017.



Recently passing a law providing for pre-appointment parliamentary hearings with
respect to important public appointments to Ambassadorships and to leading roles in
13

 regulatory authorities. This will be implemented by: an Amendment to the Public
Administration Act, which received the final Third Reading in the House of
Representatives on 30 January 2018.

14

 Annex 1: The process of Justice Reform and Other Democratic Reforms in Malta
This Annex aims at giving a general description of various legal and practical measures taken
in the justice sector, inter alia, to strengthen the rule of law, the separation of powers, the
independence of the judiciary, the justice system and media freedom in Malta over the last five
years.
From the onset of the administration elected in March 2013, the Government of Malta has
given great importance to reform the justice system.
Both the general public and the business community expect an efficient justice system, which
does not hinder the enforcement of individual rights and economic growth, but rather
complements and facilitates them.
The Justice Reform Commission and the Stockholm Programme measures
By the end of 2013, the Justice Reform Commission presented a report containing 450
proposals for a wholesome reform in the Justice system.
At the same time the new Government had the duty to implement the pending measures from
the Stockholm program which had not yet been implemented. The Government therefore
embarked on a two-pronged exercise of implementing both the pending Stockholm program
measures and proposals from the final report of the Justice Reform Commission in a consistent
and expedited manner.
Concurrently, the Government kept all channels of communication open with the key
stakeholders. Priority was given to proposals aimed at expediting legal procedures in the civil
and criminal sphere and to those pending measures from the Stockholm program which was
nearing the statutory deadlines for implementation.
New systems and new rights which have been introduced have already made a
significant difference from a quantitative perspective (in terms of the efficiency of Court
procedures) and from a qualitative point of view (in terms of new rights under law):
1. The right of disclosure upon arrest which gives people under arrest and those facing
criminal proceedings the right to request access to the information held about them,
normally by the police. This would enable the suspects to contest their arrest and better
prepare their defence.
2. Prompt implementation of the relevant directives relating to Sexual Exploitation of
Minors, Management and recovery of assets deriving from criminal activity, and those
relating to new procedural rights (information and translation) in case of arrest.
3. The right of appeal from decisions of the Attorney General on the choice of court in
‘either way’ proceedings in case of arraignment for drug-related crimes. Prior to this
introduction of a right of appeal, the Attorney General could unilaterally choose
whether the accused was to be tried in the Court of Magistrates as a Court of Criminal
Judicature or whether the accused should undergo a trial by jury in the Criminal Court.
Accused persons have now been given a new right to appeal from the decision of the
Attorney General. Moreover, a set of guidelines has been drawn up in order to regulate
the exercise of the Attorney General’s discretion in a foreseeable manner.
4. The implementation of the concept of plea-bargaining in all criminal courts. This
possibility, previously only limited to the most serious offences, has been extended to
15

 all criminal courts, thus expediting procedures. Through this concept, the accused and
prosecution can propose a punishment which can be given by the Courts should the
accused decide to plead guilty. The punishment to be awarded is subject to the
agreement of the Court.
5. The implementation of the concept of early sentencing upon entering a guilty plea in
committal proceedings without the need to undergo the whole committal process.
Before this amendment was put into place, a person accused of a serious crime had to
go through all the committal proceedings regardless of the plea which one registered
during those proceedings.
6. Substantial reforms were implemented in the drug laws which focus on assisting the
genuine victims of addiction as patients rather than treating them as criminals. With
this reform, persons charged with simple possession for personal use of a small quantity
of an illicit substance shall appear in front of a specialised board which will have the
discretion to either impose fines or recommend rehabilitation programs;
7. The strengthening of the Witness Protection Program in order to incentivise key
witnesses to volunteer information to the Police to crimes which may have been
committed and which do not fall within the ambit of the Protection of the Whistleblower
Act.
8. The implementation of the new Succession Regulation which greatly facilitates
succession that involves an inter-state dimension as explained in the relevant
Regulation.
9. The right to be assisted by a lawyer was extended to the interrogation stage,
implementing the EU Directive 2013/48 on the right of access to a lawyer in criminal
proceedings and in European arrest warrant proceedings, and on the right to have
a third party informed upon deprivation of liberty and to communicate with third
persons and with consular authorities while deprived of liberty. This strengthens
the rights of the accused or suspected persons whilst at the same time ensuring
that justice is duly served.
Other Legislative Amendments
Various Laws (Justice Reform) (Civil Procedure) Act
On 15 February 2016, the various Laws (Justice Reform) (Civil Procedure) Act was brought
into force after being unanimously approved by the House of Representatives. In effect, this
piece of legislation amends the Code of Organisation and Civil Procedure (Chapter 12 of the
Laws of Malta) to implement further proposals taken from the Justice Reform Commission
Report, simplifying substantially civil procedure and increasing the remit of the Civil Courts.
In effect this Act:
-

Increases the competence of the Small Claims Tribunal to EUR 5,000 (from EUR 3,494.50);
Increases the competence of the Court of Magistrates (Civil Jurisdiction) to EUR 15,000 (from EUR
11,646.87);
Facilitates the notification of judicial acts without the need to seek authorisation of the Courts in
case of unsuccessful notification;
Grants additional powers to the Court of Civil Appeals – to effect corrections in judicial acts
without the need to send back the relevant case to the court of First Instance, to fast track cases
which are apparently frivolous and vexatious, and to fast track cases in which the parties to the
16

 -

case decide – on a voluntary basis – to restrict the submission of their pleas and counter-pleas to
written submissions (as opposed to written and oral submissions);
Facilitates judicial sales by auction;
Facilitates the process of interdiction and incapacitations;
Introduces the concept of ex-tempore judgments in the Small Claims Tribunal and in warrants of
prohibitory injunctions; and
Facilitates, as explained above, the cancellation of existing powers of attorney.

The Civil Code (Amendment No2) Act 2016
Another piece of legislation which was approved and brought into force on the 1st April, 2016, is Act
XIV of 2016. This Act aims to facilitate procedures concerning the sale of immovable property held in
co-ownership by a number of co-owners.
The Act was very well received by the public at large as it addresses a situation where immovable
property is held in co-ownership and where the owners would find it difficult to agree on its terms of
sale. This lack of agreement would lead to properties being left vacant and derelict. This legislation
decreased drastically – to 3 years from 10 years or, in some cases, 5 years - the number of years for
which the majority of the shareholders of the co-owned property had to wait before filing an
application in Court asking it to authorise the sale of the property notwithstanding the objection of
the minority, subject to the Court’s ascertainment that the conditions of sale are fair and just.
The three year period had immediate application, meaning that any property which was held in coownership on the 1 April 2013 or any time before that could thereafter be sold in a more expedite
manner. In a small island like Malta, this measure will certainly lead to important environmental
sustainability benefits.

The Constitutional Reform (Justice Sector) Act, 2016 (Act No. XLIV of 2016)
This Act, decided upon unanimously by the House of Representatives, is based on three pillars:
-

Transparency and Independence of the Judiciary

-

Accountability of the Judiciary

-

Enhancement of the conditions of the Judiciary

On the part relating to the accountability of the members of the Judiciary, special attention has
been given to the need to respect the crucial principle that the Judiciary must be judged by its
own peers.
As of 2015, one Judge and one Magistrate have been appointed following this new mechanism
of appointment.
This Act:
-

Strengthens the Commission for Administration of Justice by entrenching it in the
Constitution;

-

Introduces a Judicial Appointments Committee as a Sub-Committee of the Commission for
the Administration of Justice composed of the Chief Justice, Attorney General,
Ombudsman, Auditor General and President of the Chamber of Advocates, all sitting ex
17

 officio. The Judicial Appointments Committee has the function of receiving and examining
expressions of interest from persons interested in being appointed to the post of Judge or
Magistrate other than persons occupying one of those positions and to keep a permanent
register of such expressions; to conduct interviews or assessments of candidates; to advise
the Prime Minister through the Minister responsible for Justice on its evaluation of such
candidates; to advise (the Prime Minister when so requested) on persons who already hold
an office as established in the Constitution with regard to their eligibility and merit to be
appointed to an office in the judiciary; to advise on appointment to any other judicial office
or office in the Courts as the Minister responsible fo Justice may from time to time request.
This effectively improves the current scenario whereby the members of the Judiciary are
appointed directly by the President, acting upon the advice of the Prime Minister.
-

Introduces a second sub-committee under the Commission for the Administration of Justice
called “Committee for Judges and Magistrates”, which shall consist of three members of
the Judiciary elected by the judiciary itself. The Committee shall exercise discpline on
Judges and Magistrates, having the right to issue warnings, impose pecuniary penalties on
the Members of the Judiciary or suspend Judges and Magistrates from duty for breach of
the provisions of the Code of Ethics for members of the Judiciary.
This effectively improved on the previous scenario whereby members of the Judiciary, in
the case of a breach of the Code of Ethics, could either be summarily warned by the
Commission for the Administration of Justice or be referred to Parliament for impeachment
with no effective middle ground to relatively serious breaches of the Code of Ethics which,
however, do not merit impeachment.

-

Incorporates the Members of the Judiciary (Pensions) Act which introduces the right to a
service pension, and gratuity to members of the Judiciary and the Attorney General. This
will vastly improve the conditions of employment of the Judiciary.

The criteria upon which the Judicial Appointment Committee evaluates the applicants were
issued by the Committee itself with the approval of the Minister for Justice.
The criteria for eligibility are the following:
1.

A number of years practicing as an advocate as established by the Maltese Constitution;

2.

During the evaluation period, the applicant has to have a valid warrant that enables the
applicant to practice as a lawyer in Malta and the applicant cannot be subject to any
legal impediment to occupy a judicial role.

The criteria for evaluation are:
1.

Capacity to express oneself in Maltese and English and to communicate in both
languages in a clear manner;

2.

Integrity, correctness and honesty in public and private life;

3.

Knowledge of the law, procedure of the Courts and professional experience;

4.

Hardworking, capacity to work under pressure, due diligence, analytical and decisive
capacity;

5.

Impartiality and independence;

18

 6.

Absence of involvement in commercial activities or business or a financial situation
that casts doubt on the capacity of the person to hold judicial office;

7.

Capacity to work in a team; and

8.

Knowledge of the code of ethics for the members of the judiciary and willingness to
undertake further professional and continuous development.

Modernisation of the Justice System
Concurrently, a number of new technological and procedural systems have been introduced to
cut down on bureaucracy and delays in the civil courts.
1.

Information sent to lawyers via SMS in case of postponements in the Civil Courts;

2.

The transmission of decrees and transcripts of evidence of witnesses of the Civil Courts
by e-mail to lawyers;

3.

E-filing of applications in the Small Claims Tribunal and Appeals from those decisions.
Later this was extended also to applications in the Adminsitrative Review Tribunal;

4.

Email notification to lawyers and legal procurators of information as to whether
summons to witnesses have been duly served or not;

5.

Online access to acts, warrants and court case information available to legal
professionals in the civil sphere;

6.

Online access granted to citizens to view acts related to their case;

7.

All these benefits of IT-improvements are given as a free service to legal practitioners
and the general public;

8.

An enhanced online facility for advocates and legal procurators to access all judicial
acts linked to their names. This system aids legal professionals to virtually track of all
acts presented in their names. A system of tagging the cases in which an advocate or a
legal procurator has an interest, even though he/she may not be party to the case. The
system automatically updates legal professionals with any developments relating to the
case in question;

9.

The introduction of the possibility for legal practitioners to update their contact details
online with the introduction of the sixth phase of the ‘Lecam’ online case management
system;

10. The introduction of an online register for testamentary searches was created in order to
facilitate searches of public and secret wills;
11. An electronic register for the termination of mandates (powers of attorney) was created
bringing to an end the cumbersome and unclear procedures previously invovled in such
termination. With the introduction of the electronic register, an easier and more efficient
process to terminate mandates came into existence. This also means that expenses
involved to terminate mandates were reduced considerably from around €1,500 – 2,000
euro to a mere €50 euro; and

19

 12. Fines imposed by the Magistrates or judges can now be paid online instead of being
paid at the Court. This created an efficient system for the payee while at the same time
ensuring that the identity of the individual is protected.
Additional technological tools are expected to be introduced. These include:
1.

2.

3.

E-filing of appplications to legal entities in the Court of Magistrates. This initiative is a
follow up of previous initiatives that continue to create a culture of electronic
interactions with the Court.
Extension of the pilot project initiated in traffic sittings regarding notification of
citations and witnesses to other halls. This will help reduce the backlog benefitting the
citizen, the persons in the legal profession as well as the police department.
Electronic register listing companies and persons declared solvent will be created.

As of 1 May 2016, all acts presented to the First Hall of the Civil Court are being scanned in
order to minimise space requirements, to facilitate access for both legal practitioners and
parties, and to prevent any mishaps where the file is misplaced or at times lost.
In addition, as of the end of June 2016, legal practitioners can submit and pay online fees for
judicial letters which do not require confirmation on oath. This will aid legal practitioners to
present such acts instantaneously with more efficiency, without the requirement of their
physical presence in the Court Registry.
Concurrently, the Government has also increased the physical space in the Law Courts with
the opening of the new Judiciary Building which now houses the Judges’ chambers. This was
a decision undertaken not only to cater for the needs of the present Judiciary but also with the
prospect of gradually and sustainably increasing the number of members of the Judiciary which
currently amount to less than the average number of members of the judiciary per given unit
of population in the EU. Moreover, the Judiciary requires infrastructure which enables the
judiciary to hear more cases as well as to decide more cases. To facilitate this, three new halls
are currently being built, one of which is already being used. For this to occur, it was necessary
to relocate the Court Archives of the Civil Court from the Main Courts in Valletta to a place in
Floriana as well as to relocate the training room and the library to make space for these three
new halls. In addition, a new enlarged Family Court Registry was opened. This will provide
ample space to increase the number of staff at the Court Registry and facilities for the legal
profession and the public.

Analysis of Statistical Data
2016
Malta started analysing court data using the efficiency parameters employed by the
Commission in the Justice Scoreboard. This process enabled the analysis of the efficiency
trends since 2011 and their comparison with present performance.
2011 – 2016 annual data: Civil Courts
Clearance Rate
20

 Constitutional Court
Court of Appeal, Superior Jurisdiction
Court of Appeal, Inferior Jurisdiction
Civil Court, First Hall
Civil Court, Family Court
Court of Magistrates, Civil Jurisdiction
Administrative Review Tribunal
Small Claims Tribunal
Land Arbitration Board
Rural Leases Control Board
Rent Regulation Board
Overall CR

2011
120
66
51
104
116
118
25
120
103
125
89
99

2012
80
50
56
113
109
115
40
117
167
145
122
99

2013
139
57
74
115
106
102
40
100
536
205
103
98

2014
85
80
82
103
90
90
149
123
137
157
139
102

2015
110
80
112
106
105
104
411
123
115
167
81
112

2016
100
82
141
102
104
120
114
106
562
106
123
107

Disposition Time

Constitutional Court
Court of Appeal, Superior Jurisdiction
Court of Appeal, Inferior Jurisdiction
Civil Court, First Hall
Civil Court, Family Court
Court of Magistrates, Civil Jurisdiction
Administrative Review Tribunal
Small Claims Tribunal
Land Arbitration Board
Rural Leases Control Board
Rent Regulation Board
Overall DT

201
1
332
119
2
705
103
4
791
835
175
5
345
237
3
224
5
143
4
831

2012
451

2013
257

2014
394

2015
301

2016
254

1635
711

1674
917

1286
841

1539
545

1356
385

926
525
765

879
576
908

947
677
958

875
528
843

873
503
782

1463
377

2036
445

1408
284

495
156

1464
252

1119

835

1797

1857

290

1435

837

3020

1139

1521

1202
777

1206
834

1030
812

1443
668

715
703

Following the excellent performance of the civil courts throughout 2015, 2016 shows a minor
reduction in the overall efficiency of the same courts. The Clearance Rate across all civil courts
(1st and 2nd Instance) decreased from 112% in 2015 to 107% in 2016, but this rate is still
encouraging because for the first time since 2011, only one civil court registered a negative
Clearance Rate below 100% (at the same time, this court registered the best Clearance Rate
since 2011). Any Clearance Rate over 100% indicates that the courts are still resolving more
cases than their incoming case load, testifying to the efforts of the judiciary to address the
pending caseload. In fact, the most rewarding result achieved in 2016 relates to the reduction
of the pending caseload beyond the 10,000 case benchmark. For the first time since data has
21

 been collected in the year 2000, the civil courts closed 2016 with a pending caseload of 9815
cases. In all civil courts except one, there was a reduction in the pending caseload over that of
2015.
2016 also sees a minor increase in the length of proceedings, from 668 days in 2015 to 703
days in 2016. This increase in length of proceedings is not pervasive throughout all the civil
courts, but results from an increase in the length of proceedings within three specific first
instance courts. This increase is mainly due to circumstantial issues, whilst the remaining civil
courts registered varying degrees of improvement in their length of proceedings over the
previous years.
2011 – 2016 annual data: Criminal Courts
Clearance Rate
201
1
Criminal Court of Appeal, Superior Jurisdiction 42
Criminal Court of Appeal, Inferior Jurisdiction 66
Criminal Court
196
Court of Magistrates, Criminal Jurisdiction
98
Overall CR
97

201
2
67
65
167
99
98

201
3
133
91
78
106
106

201
4
214
78
105
99
98

201
5
500
61
112
101
100

201
6
67
77
267
101
100

201
2
123
7

201
3

201
4

201
5

462

633

201
6
116
8
102
2

Disposition Time
201
1
126
Criminal Court of Appeal, Superior Jurisdiction 5
Criminal Court of Appeal, Inferior Jurisdiction
Criminal Court
Court of Magistrates, Criminal Jurisdiction
Overall DT

623
624
291
300

760
608
290
302

704
638
106
9
279
291

851
128
5
305
321

127
7
151
8
335
358

973
293
315

2016 saw an increase in the incoming and resolved caseload of the criminal courts. Despite this
increase, the Court of Magistrates, Criminal Jurisdiction that accounts for 96% of the incoming
caseload of 2016 managed to retain a Clearance Rate of 101% just like that of 2015. In addition,
two other courts registered an improved Clearance Rate in 2016, but unfortunately, this
improvement was not enough to counterbalance the decrease in the performance of the
Criminal Court of Appeal (Superior Jurisdiction), thereby yielding an overall criminal courts’
Clearance Rate of 100%. Whilst in principle this means that the courts are just about managing
their incoming caseload, in effect, there was still a marginal increase in the pending caseload
over that of 2015 by 66 cases. That being said, the rate of increase of the pending caseload has
been consistently slowing down since 2014, and this bodes well for a reduction in the pending
caseload of the criminal courts in 2017.

22

 The increase in the number of resolved cases has mainly to account for the reduction in the
length of proceedings. In fact, in 2016 the criminal courts registered the lowest Disposition
Time in the past three years. Three out of the four criminal courts managed to decrease their
Disposition Time, including the Court of Magistrates that has the biggest caseload. This result
is very encouraging, and highlights the need to assist the courts of first instance to further their
success and obtain higher levels of efficiency, whilst at the same time, addressing the factors
that might be contributing to the decrease in performance in the courts of second instance.
2017
Criminal Courts
The 2017 data for the Criminal Courts is very encouraging given that there was a marked
improvement in all three parameters used to assess the efficiency of the courts.

When comparing data over the past six years, we see that 2017 registered the highest Clearance
Rate at 112%. This means that the difference between the number of resolved cases and the
number of incoming cases was significantly in favour of the resolved caseload, thereby
contributing to this optimal result data, this means that overall there was a 13% reduction in
the number of pending cases in front of the criminal courts.

23

 The drop in the number of pending cases contributed to the overall improvement in the length
of proceedings. Indeed, despite the fact that the number of resolved cases in 2017 was less than
that registered in 2016, the overall disposition time decreased from 315 days in 2016 to 306
days in 2017. This was the 3rd consecutive year in which the criminal courts registered an
improvement in the length of proceedings, and all efforts need to be made in order to sustain
this improvement and, possibly, surpass it in the coming years.

2017: Civil Courts
The following is an outline of the main efficiency parameters of the civil courts for 2017 and
a comparison of these results with the results obtained since 2013.

24

 Overall Clearance Rate, Disposition Time and Pending caseload

Civil Courts:
CR and DT for January - December
2013 - 2017
850

834

115

112

812

800
750
700

102
98

107

107

703

710

110
105
100

668

650

95

600

90
2013

2014

2015
DT

2016

2017

CR

The overall Clearance Rate for the civil courts for 2017 remained stable at 107% which means
that throughout the past year, the number of resolved cases superseded the number of incoming
cases. This also means that despite the changes in the number of incoming and resolved
caseloads over the past year (see below), the judiciary retained the same ratio of resolved cases
to incoming cases. The positive Clearance Rate resulted in a continued diminishing of the
pending caseload, with the closing pending balance in 2017 being that of 9458 cases.

Civil Courts
Pending caseload 2013 - 2017
12000
11500

11455

11240

11000
10274

10500

9815

10000

9458

9500
9000
2013

2014

2015

2016

2017

Notwithstanding the above, the length of proceedings has increased marginally by seven days
from 703 days in 2016 to 710 days in 2017. This mainly results from a decrease in the number
of resolved cases, which at 4861 cases, is the lowest since 2013. Hence as one can see, the
number of incoming and resolved cases for 2017 indicates that despite the positive Clearance
Rate, the number of incoming and resolved cases were both comparatively lower than those of
previous years. Thus, despite a decrease in the number of incoming cases, the decrease in the
number of resolved cases directly impacts the length of proceedings.
25

 Incoming & Resolved Caseloads
2013 - 2017
6000
5000

5614
5101 5012

4975 5055

5094

5029

4746

4000

4861
4543

3000
2013

2014
Overall Incoming

2015

2016

2017

Overall Resolved

Comparative analysis of efficiency indicators according to Instance
When analysing the efficiency parameters of the first Instance courts with those of the second
Instance courts, we realise that over the past three years, a consistent pattern has been emerging.

Indeed, the reversal of patterns in the above charts indicates that whilst the Clearance Rate and
Disposition Time of the second Instance courts have been improving year after year, those of
the first Instance courts have been regressing. Given that the majority of the cases lie within
the first instance courts, it can be surmised that the increase in the overall length of proceedings
26

 of the civil courts is heavily influenced by the increase in the Disposition Time of the first
instance courts.
Legal Aid
In 2015, former office of the Advocate for Legal Aid was transformed into an agency in order
to ensure that it is fully sustainable and independent. In fact, being a fully self-sufficient
Agency it is no longer paid through the budget of the Attorney General’s Office, avoiding any
potential appearance of conflict of interest that may arise. In order to strengthen this Agency
and ensure that a good service is provided to the beneficiary of such service, the honoraria to
which legal aid lawyers are entitled have nearly trebled. Moreover, a Head Legal Aid Lawyer
has been appointed full-time ensuring that he is fully independent. Remuneration for legal aid
lawyers has been increased to ensure that a better service is provided for all citizens.
Court Experts
Until recently there was no data regarding court experts who may be appointed by the Court,
except for that required explicitly by law. Therefore, the Justice Department embarked on an
exercise to create such lists for both the civil and criminal law fields. This was compiled after
examining details of those who have already been appointed by the court. An expression of
interest was moreover issued for those who are interested to be eligible for appointment as
court experts. Applicants were obliged to complete a due diligence form and a compiled list
was then submitted to the judiciary.
Mediation
The Government has also enacted amendments to the Mediation Act by means of Act VIII of
2017 enacted on the 24th February 2017. The aim of these amendments is to further incentivise
the use of ADR procedures.
The amendments will, inter alia, empower the Minister responsible for Justice to introduce
compulsory mediation. Moreover, it introduces the use of Mediation in lease disputes. Another
introduction is the use of videoconferencing or any other technological means to faciliate longdistance communication. It also empowers the Courts to determine whether a dispute before them is
best tackled through mediation.
The Government is committed to expand the Mediation Centre, and remains committed to see that
recourse to mediation will be successful. In fact, the fees for mediation have remained at minimal cost
and a mediation process can be lodged with the mediation centre for the sum of €50. Lawyers and
advocates shall also be entitled to their professional fees according to the taxed bill of costs so this
will also incentivise members of the legal profession to encourage their clients to seek mediation,
when this is possible. Moreover, in order to further bolster the system, where a dispute is settled in
full during the mediation process the parties are entitled to a refund amounting to 50% of the
registration fee.
Strengthening the Court Human Resources

27

 The Government further invested in human resources in the courts. In the past two years,
Judges of the Civil Courts were assigned with an experienced full-time lawyer (called Court
Attorney) chosen by the judges themselves, with the duty of assisting in the drafting of
judgements (on average three judgements per week), writing memoranda on pending lawsuits
and assisting the Judge in the drafting of court orders. The intention is to keep building on this
project which has been very successful so far.
The Court is in the process of engaging 23 new court assistants and 15 judicial assistants tasked,
inter alia, with the collection and transcription of evidence. All new court staff are being given
in-house training upon engagement and are also expected to attend additional training courses
throughout the year.
Judicial Studies Committee
The Judicial Studies Committee has been strengthened with more personnel. Also, the
Committee entered into a program driven by the International Organisation of Migration,
assisted by the Irish Government, to give specialised training on migration matters for the
judiciary and prosecutors.
Representation of the Sexes in the Judiciary

With the Government’s impetus in favour of more women in the Judiciary the percentage of women
in the Judiciary has increased. In fact earlier in 2016 Madam Justice Edwina Grima became the first
woman to preside over a trial by jury.

Increasing transparency

Apart from Justice Reform, the Government gave full priority to the need to implement new legislation
which leads to better governance and more transparency.

Since 2013 other crucial laws were approved by the House of Representatives: a law excluding
prescription in case of criminal charges of corruption involving politicians, an ambitious Protection of
the Whistleblower Act and a Financing of Political Parties Act, regulating donations to political parties,
which came into force effect on 1 January 2016.

Freedom of the Media
The Bill on the Media and Defamation which is currently at Committee Stage in Parliament
mainly aims at updating and re-writing the Maltese law on libel and slander in a manner which
strengthens respect for the right to freedom of expression in a substantial manner.
The right to freedom of expression is the basis of all media activity and is also one of the main
pillars of the democratic system.
28

 Previous amendments to the Criminal Code (enacted by Act XXXVII of 2016 on the 19 July
2016) have already widened the freedom of artistic expression. The Bill will widen freedom of
journalistic expression extensively.
The Bill will introduce the following main changes:
1.

For words to be defamatory these must be such as to cause, or be likely to cause, serious
harm to a person’s reputation. This should discourage the filing of actions in libel and
slander on the basis of statements which do not bring about serious consequences to a
person’s reputation;

2.

The defences to an action for defamation are being strengthened to be brought into line
with the latest case law of the European Court of Human Rights. At the same time the
privacy of individuals is going to continue being protected, so however that such
protection will not extend to public figures where what is said has significant relevance
to the individual’s public functions or to persons who although not being public figures
are involved in incidents of public interest;

3.

The list of publications which are privileged since they report on events in respect of
which there is a public interest for the public to be informed, and which leads to more
journalistic freedom, is going to be extended;

4.

The Media and Defamation Act will include no criminal offences and the few criminal
offences currently found in the Press Act which will be retained will be transposed in the
Criminal Code. A large number of criminal offences which interfere with freedom of
expression and which are currently found in the Criminal Code are to be repealed;

5.

The maximum amount of damages which can be awarded in an action for libel is going
to remain the same as provided at present under the Press Act (EUR 11,640);

6.

Defamation by words and not by publication is not going to remain a criminal offence
but will give rise to a civil action where the maximum amount of damages awardable
will be €EUR 5000;

7.

In the hearing of causes for libel and slander a system of preliminary hearing will be
introduced whereby the Court will consider whether a case can be decided summarily.
Alternative means of dispute resolution and settlement in this field such as through
explanatory statements, apology or mediation, are encouraged;

8.

In establishing the amount of damages the Court will also be obliged to take into account
the effect which the payment of the damages will have on the person ordered to pay. This
measure aims at better safeguarding the principle of proportionality;

9.

Editors of websites will have additional defences at their disposal which are different to
those available to editors of the written press and to broadcasters and this due to the
specific nature of websites which receive comments from the public;

10. When a statement has already been published or when the same statement is published
several times, specific rules will regulate the time barring of the action and the possibility
to file a collective action in respect of the same statement;
11. The right of reply will be retained but failure to respect this right will now give rise to a
civil rather than a criminal remedy;

29

 12. A new article will make provision in respect of the defamation of deceased persons when
such a defamation has an effect on living persons;
13. Registration of editors, other than editors of broadcasting services, and publishers will be
on a voluntary basis and will not apply to editors and publishers of websites. The
possibility of having the Media Register administered by the media itself is also provided
for;
14. Due to the sensitive nature of regulations in the media field, regulations enacted under
the Act will require prior approval by parliamentary resolution before they can come into
force;
15. The protection of sources will apply to every editor, publisher, author, operator of a
website or broadcaster;
16. The Code of Organisation and Civil Procedure will be amended to prohibit the issue of
precautionary warrants in respect of actions for defamation;
17. The Electronic Communications Regulation Act will be amended so that merely
defamatory statements written or spoken on a website and which give rise to an action
under the new law will no longer constitute an offence against the Electronic
Communications Regulation Act; and
18. Actions for criminal libel which will be pending at the time when the new Act comes
into force will be discontinued.

30

 Annex 2: The Position of the Judiciary
The following provisions outline the position of the judiciary under the Constitution of Malta.
1) Appointment of Judges
Article 96 of the Constitution of Malta deals with the appointment of judges and sub-article
(1) thereof states that judges of the Superior Courts are appointed by the President acting
in accordance with the advice of the Prime Minister. Sub-article (3) of Article 96 of the
Constitution provides that before the Prime Minister gives his advice in accordance with
sub-article (1) in respect of the appointment of a judge of the Superior Courts, other than
the Chief Justice, the evaluation of the Judicial Appointments Committee established by
Article 96A of the Constitution shall have been made. The only exception to this rule is
provided in sub-article (4) of Article 96 of the Constitutioni.
2) Article 96A of the Constitution establishes the Judicial Appointments Committee
which is responsible for giving advice to the Prime Minister through the Minister for
Justice based on its evaluation on the eligibility and merit of candidates for appointment
to the Office of judge of the Superior Courts (other than the office of Chief Justice) or of
magistrate of the Inferior Courts.
The Offices of judge and magistrate are separate and a magistrate is not promoted to the
office of judge automatically. An expression of interest by a Magistrate to be appointed
to the Office of Judge can only be referred to the Judicial Appointments Committee by the
Prime Minister. The same provision applies in respect of a person occupying the office of
Attorney General, Ombudsman and Auditor General.
3) The Committee for Judges and Magistrates established in terms of Article 101B of the
Constitution exercises discipline on judges and magistrates and if the said Committee
finds that the judge or magistrate has breached the Code of Ethics for members of the
judiciary it may suspend the member of the judiciary for a period of not more than six
months on half pay or when it is of the opinion that the case merits removal of the member
of the judiciary, it reports its findings to the Commission for the Administration of Justice
for the latter to investigate the findings and pending the outcome of such investigation the
Commission for the Administration of Justice shall suspend the member of the judiciary.
A member of the judiciary may be removed from office in accordance with Article 97 of
the Constitution. Sub-article (2) thereof provides that a judge of the Superior Courts shall
be removed from his office by the President upon an address by the House of
Representatives supported by the votes of not less than two-thirds of all the members of
the House and seeking for such removal on the grounds of proved inability to perform the
functions of his office, whether arising from infirmity of body or mind or any other cause,
or proved misbehaviour. Article 100 (4) of the Constitution provides for the application
of Article 97 (2) of the Constitution to the office of magistrate and Article 91(5) applies
the same provision to the Attorney General.
31

 When a notice in accordance with Article 97 (2) of the Constitution is given in the House
of Representatives on the basis of misbehaviour or inability to perform the functions of the
office of judge or magistrate, such a motion is referred, in terms of Article 9 of the
Commission for the Administration of Justice Act (Chapter 369 of the Laws of Malta)
to the Commission for the Administration of Justice established by Article 101A of
the Constitution for investigation.
4) The Judicial Appointments Committee is established in terms of Article 96A of the
Constitution of Malta and consists of five members that qualify as members on the basis
of the office that they occupy. These are:
(a)
(b)
(c)
(d)
(e)

the Chief Justice who acts of Chair;
the Attorney General;
the Auditor General;
the Commissioner for Administrative Investigations (Ombudsman); and
the President of the Chamber of Advocates.

The members are not appointed for a period of time and they enjoy full security of tenure.
5) The Commission for the Administration of Justice is established in accordance with Article
101A of the Constitution of Malta and consists of ten members being:
(a) the President of Malta who acts as Chairman of the Committee;
(b) the Chief Justice who shall be the Deputy Chairman and presides over the Commission
in the absence of the Chairman;
(c) the Attorney General, ex officio;
(d) two members elected for a period of four years by the judges of the Superior Court
from among themselves;
(e) two members elected for a period of four years by the magistrates of the Inferior
Courts from among themselves;
(f) two members appointed for a period of four years are appointed by the Prime Minister
and the other by the Leader of the Opposition, being in each case, a person of at least
forty five years of age, and who enjoys the general respect of the public and a
reputation of integrity and honesty; and
(g) the President of the Chamber of Advocates, ex officio.
The Committee for Judges and Magistrates established in accordance with Article 101B
of the Constitution of Malta consists of three members of the judiciary. These members
cannot be members of the Commission for the Administration of Justice and are elected
from amongst judges and magistrates according to regulations issued by the Commission
for the Administration of Justice. In the case of disciplinary proceedings against a
magistrate two of the three members of the Committee shall be magistrates and in the case
of disciplinary proceedings against a judge two of the three members of the Committee
shall be judges. The election of the members of the committee is regulated by the
32

 provisions of the Committee for Judges and Magistrates (Election of Members)
Regulations (SL. Const. 07).
6) Qualifications
Article 96 (2) of the Constitution of Malta provides that “(2) A person shall not be qualified
to be appointed a judge of the Superior Courts unless for a period of, or periods amounting
in the aggregate to, not less than twelve years during which he has either practised as an
advocate in Malta or served as a magistrate in Malta, or has partly so practised and partly
so served”. Article 100 (2) of the Constitution of Malta provides that “(2) A person shall
not be qualified to be appointed to or to act in the office of magistrate of the inferior courts
unless he has practised as an advocate in Malta for a period of, or periods amounting in
the aggregate to, not less than seven years”.
In accordance with Articles 96 (3) and 100 (5) of the Constitution of Malta the Judicial
Appointments Committee shall evaluate the candidates for the office of judge or
magistrate. The Judicial Appointments Committee conducts interviews and evaluations of
candidates for the offices of judge or magistrate as to their eligibility and merit and for this
purpose it may also request information from any public authority.
7) Condition of service and security of tenure of judges;
The remuneration of members of the judiciary is paid from the Consolidated Fund in
accordance with Article 107 of the Constitution. The salary is established in accordance
with the Judges and Magistrates (Salaries) Act (Chapter 175 of the Laws of Malta).
Moreover, upon retirement from office, the members of the judiciary are eligible for a
pension in accordance with the Members of the Judiciary (Pensions) Act (Chapter 564 of
the Laws of Malta).
Members of the judiciary enjoy security of tenure of their offices. Article 97 (1) of the
Constitution provides “(1) Subject to the provisions of this article, a judge of the Superior
Courts shall vacate his office when he attains the age of sixty-five years”. Article 97 (2)
of the Constitution provides for the instances when a judge may be removed from office:
“(2) A judge of the Superior Courts shall not be removed from his office except by the
President upon an address by the House of Representatives supported by the votes of not
less than two-thirds of all the members thereof and requesting for such removal on the
ground of proved inability to perform the functions of his office (whether arising from
infirmity of body or mind or any other cause) or proved misbehaviour”. Article 100 of the
Constitution deals with the appointment of Magistrates and Articles 100 (3) and (4)
provide that “(3) Subject to the provisions of sub-article (4) of this article, a magistrate of
the inferior courts shall vacate his office when he attains the age of sixty-five years; (4)
The provisions of sub-articles (2) and (3) of article 97 of this Constitution shall apply to
magistrates of the inferior courts”.

33

 If a motion in terms of Article 97 or 100 is passed against a member of the judiciary, the
charges against the member of the judiciary are investigated by the Commission for the
Administration of Justice.
8) Transfer of judges;
The distribution of duties of judges and transfer of judges is regulated by Article 11 of the
Code of Organization and Civil Procedure (Chapter 12 of the Laws of Malta). Article 11
(1) provides that “(1) The President of Malta shall assign to each of the judges his duties
by assigning to him the court or the chamber of the court or section in which he is to sit
ordinarily, and may transfer a judge from one court or chamber or section of a chamber to
another; Provided that a judge may be assigned to sit ordinarily in more than one court or
more than one chamber or section of one or more courts”.
Article 11 (3) of Chapter 12 of the Laws of Malta provides that “(3) Where more than one
judge is assigned to sit ordinarily in a court, or in a chamber or section of a court, the
distribution of duties in general between the said judges shall be made by the Chief Justice,
and the registrar shall assign cases and other judicial acts to the judges as directed by the
Chief Justice, provided that, except where cases or judicial acts are assigned according to
general directives or according to rules made pursuant to sub-article (6), where the Chief
Justice may be challenged or may abstain from taking cognizance of a case for any of the
reasons mentioned in article 734 (1) (a), (b), (c), (d) (ii) and (iii), (e) and (g), the assignment
of such a case shall be made by the Senior Administrative Judge referred to in sub-article
(11)”.
Article 101A (13) of the Constitution provides as follows:
“(13) The powers of the President under any law with regard to the subrogation of judges
and magistrates and to the assignment of duties of judges and magistrates shall be
exercised on the advice of the Minister responsible for justice, so however that, the
Minister shall, in advising the President, act in accordance with any recommendation on
the matter by the Chief Justice:
Provided that where the Chief Justice fails to make a recommendation to the Minister,
and in any case where the Minister deems it so appropriate, the Minister may advise the
President on the matter, in any manner which, in the circumstances, he considers
appropriate:
Provided further that in any such case he shall immediately publish in the Gazette, a notice
of that fact together with the reasons therefor, and he shall make a statement of such fact
in the House of Representatives not later than the second sitting immediately after he has
so advised the President.”
9) Disciplinary proceedings against judges.

34

 The discipline of judges and magistrates is regulated by Article 101B of the Constitution
of Malta. The Committee for Judges and Magistrates exercises discipline on judges and
magistrates in the manner prescribed in Article 101B of the Constitution.
Article 101B (5) of the Constitution provides that “(5) Disciplinary proceedings against a
judge or a magistrate shall be commenced upon a complaint in writing and containing
definite charges made to the Committee by the Chief Justice or by the Minister responsible
for justice, for breach of the provisions of the Code of Ethics for Members of the Judiciary
or of a code or disciplinary rules for members of the judiciary promulgated according to
the same procedure according to which the said Code of Ethics is promulgated which are
from time to time applicable to the members of the judiciary. The complaint shall also
include the grounds upon which each of such charges is based”. If, the Committee
following prima facie consideration of the complaint considers that there are not sufficient
grounds to commence disciplinary proceedings, the Committee refrains from further
consideration of the case (Article 101B (5) of the Constitution). If, on the other hand,
following the consideration of the complaint, the Committee considers that there are
sufficient grounds to continue disciplinary proceedings the Committee shall appoint a date
for the hearing of the proceedings (Article 101B (8) of the Constitution). If the Committee
finds that the judge or magistrate has breached the Code of Ethics for Members of the
Judiciary it can impose any one of the sanctions provided in Article 101B (10) of the
Constitution.

“(4) Notwithstanding the provisions of sub-article (3), the Prime Minister shall be entitled to elect not to comply
with the result of the evaluation referred to in sub-article (3):
Provided that after the Prime Minister shall have availed himself of the power conferred upon him by this subarticle, the Prime Minister or the Minister responsible for justice shall:
(a) publish within five days a declaration in the Gazette announcing the decision to use the said power and
giving the reasons which led to the said decision; and
(b) make a statement in the House of Representatives about the said decision explaining the reasons upon
which the decision was based by not later than the second sitting of the House to be held after the advice
was given to the President in accordance with sub- article (1):
Provided further that the provisions of the first proviso to this sub-article shall not apply in the case of appointment
to the office of Chief Justice”
i

35

 ANNEX 3

1. Definition of Money Laundering
Money Laundering is criminalised under the Prevention of Money Laundering Act (Chapter
373 of the Laws of Malta). Pursuant to Article 2 of the Prevention of Money Laundering Act
(the "PMLA"), Money Laundering is defined as:
(i) the conversion or transfer of property knowing or suspecting that such property is
derived directly or indirectly from, or from the proceeds of, criminal activity or from
an act or acts of participation in criminal activity, for the purpose of or purposes of
concealing or disguising the origin of the property or of assisting any person or persons
involved or concerned in criminal activity;
(ii) the concealment or disguise of the true nature, source, location, disposition, movement,
rights with respect of, in or over, or ownership of property, knowing or suspecting that
such property is derived directly or indirectly from criminal activity or from an act or
acts of participation in criminal activity;
(iii)the acquisition, possession or use of property knowing or suspecting that the same was
derived or originated directly or indirectly from criminal activity or from an act or acts
of participation in criminal activity;
(iv) retention without reasonable excuse of property knowing or suspecting that the same
was derived or originated directly or indirectly from criminal activity or from an act or
acts of participation in criminal activity;
(v) attempting any of the matters or activities defined in the above foregoing subparagraphs (i), (ii), (iii) and (iv) within the meaning of article 41 of the Criminal Code;
or
(vi) acting as an accomplice within the meaning of article 42 of the Criminal Code in respect
of any of the matters or activities defined in the above foregoing sub- paragraphs (i),
(ii), (iii), (iv) and (v).
The Prevention of Money Laundering Act also defines the term "criminal activity" (under
article 2) as any activity, whenever or wherever carried out, which under the law of Malta or
any other law, amounts to a criminal offence. This means that under Maltese law money
laundering may subsist from the commission of any criminal offence, which also includes tax
evasion, whenever or wherever committed.
Acts of money laundering are punishable, under article 3(1) of the PMLA, by: (i) imprisonment
for a term of up to 18 years; (ii) a fine not exceeding €2,500,000; or (iii) both. It is important
to note that both legal persons (i.e. companies and corporations) and the officers of legal
persons at the time of the commission of the offence can be found guilty of money laundering.
This is provided for under articles 3(2) and 3(4) of the PMLA.
2. Entities responsible for handling suspicious transactions reports in Malta
2.1 Name and mission statement

36

 The Financial Intelligence Analysis Unit (the "FIAU") is the sole entity responsible for the
handling of Suspicious Transaction Reports ("STRs") in Malta. The FIAU is a government
agency set up under article 15 of the PMLA, having its own distinct legal personality and is
operationally independent and autonomous.
Article 16(1) of the PMLA sets out the general responsibility of the FIAU, being the collection,
collation, processing, analysis and dissemination of information with a view to combatting
money laundering and the funding of terrorism. The same article also lays down the specific
functions of the FIAU, as follows:
(a) to receive reports of transactions or activities suspected to involve money laundering
or funding of terrorism or property that may have derived directly or indirectly from,
or constitute the proceeds of, criminal activity made by any subject person in
pursuance of any regulation made under article 12, to supplement such reports with
such additional information as may be available to it or as it may demand, to analyse
the report together with such additional information and to draw up an analytical
report on the result of such analysis;
(b) to send any analytical report as is referred to in paragraph (a) to the Commissioner of
Police for further investigation if having considered the report received under
paragraph (a), the Unit also 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;
(c) to monitor compliance by subject persons and to cooperate and liaise with
supervisory authorities to ensure such compliance;
(d) to send to the Commissioner of Police together with any analytical report sent in
accordance with paragraph (b) or at any time thereafter any information, document,
analysis or other material in support of the report;
(e) to instruct any subject person to take such steps as it may deem appropriate to
facilitate any money laundering or funding of terrorism analysis in general or the
analysis of any particular report received by the Unit under paragraph (a);
(f) to gather information on the financial and commercial activities in the country for
analytical purposes with a view to detecting areas of activity which may be vulnerable
to money laundering or funding of terrorism;
(g) to compile statistics and records, disseminate information, make recommendations,
issue guidelines and advise the Minister on all matters and issues relevant to the
prevention, detection, analysis, investigation, prosecution and punishment of money
laundering or funding of terrorism offences;
(h) to promote the training of, and to provide training for, personnel employed with any
subject person in respect of any matter, obligation or activity relevant to the
prevention of money laundering or funding of terrorism
(i) to consult with any person, institution or organization as may be appropriate for the
purpose of discharging any of its functions;
37

 (j) to advise and assist persons, whether physical or legal, to put in place and develop
effective measures and programmes for the prevention of money laundering and
funding of terrorism;
(k) upon request or on its own motion, to exchange information with any foreign body,
authority or agency which it considers to have functions equivalent or analogous to
those mentioned in this subarticle and with any supervisory authority in Malta or with
any supervisory authority outside Malta which it deems to have equivalent or
analogous functions as a supervisory authority in Malta, subject to such conditions
and restrictions as it may determine, including the prior conclusion, if it deems so
necessary, of any memorandum of understanding or other agreement, to regulate any
such exchange of information, where that information may be relevant to the
processing or analysis of information or to investigations regarding financial
transactions or activities related to money laundering or the underlying criminal
activity, or funding of terrorism and the natural or legal persons involved; and
(l) to report to the Commissioner of Police any activity which it suspects involves money
laundering or the underlying criminal activity, or funding of terrorism and of which
it may become aware in the course of the discharge of any of its functions.
2.2 Powers of the FIAU
The PMLA allocates various powers to the FIAU to enable it to carry out its functions in an
effective and efficient manner. A brief explanation of the most important powers available to
the FIAU follows:


Power to impose sanctions for AML/CFT breaches - The FIAU is empowered by
Regulation 21(3) of the Prevention of Money Laundering and Funding of Terrorism
Regulations (the "PMLFTR") to impose administrative sanctions for breaches of
anti-money laundering and counter-financing of terrorism obligations, as well as
breaches of lawful requirements, orders or directives issued by the FIAU.



Power to publish administrative sanctions - Article 13A of the PMLA requires the
FIAU to publish the administrative sanctions it imposes, when such sanctions equal
or exceed €1,500 in value. Publication takes place on the FIAU's website.



Power to postpone the execution of suspicious transactions - The FIAU is
authorised to delay the execution of suspicious transactions for a maximum period
of 3 working days and under Article 28 of the PMLA.



Power to issue monitoring orders - Article 30B of the PMLA enables the FIAU to
request obliged entities to monitor transactions carried out through particular
account/s and to transmit information to the FIAU.



Power to issue directives in writing and order the termination of business
relationships - In pursuance of its functions at law and in accordance with the terms
of Article 30C of the PMLA, the FIAU may issue directives in writing requesting
obliged entities to do or to refrain from doing any act. More specifically, by virtue
of Regulation 18 of the PMLFTR, the FIAU may order the termination of a business
relationship established by an obliged entity.
38

 

Power to demand information to pursue its functions - The FIAU has the authority
at law to request the production of information and/or documentation from any
person for the purpose of carrying out its analytical function (Article 30 PMLA &
Regulation 15(11) PMLFTR) and all its other functions at law (Article 30A PMLA).
Obliged entities must respond to such requests for information within 5 working
days (Regulation 15(11) PMLFTR) and in a timely manner or within a timeframe
indicated by the FIAU with respect to all other persons. Article 26(2) also empowers
the FIAU to compel the production of documents from obliged entities when
monitoring their compliance with AML/CFT obligations.

2.3 The FIAU's structure and resources
The FIAU consists of a Board of Governors, which sets out the policy to be adopted by the
Unit and oversees its implementation, and a Director who oversees the operation of the FIAU.
In fulfilling his tasks the Director is assisted by a deputy director and permanent staff members
organised in four different sections, these include the analysis section, the compliance section,
the legal and international relations section and the administration and IT section. Each section
has its own manager. The total staff of the FIAU consists of 30 employees, with further human
resources expected to be recruited shortly.
2.4 Interaction with other competent authorities
In pursuance of its analytical functions the FIAU cooperates closely with the Malta Police.
Cases in which the FIAU identifies a reasonable suspicion of money laundering or funding of
terrorism are passed on to the Malta Police for further investigation. This procedure is set out
and regulated by Article 31 of the PMLA. For this purpose the FIAU forwards the analytical
report compiled following the conclusion of the FIAU's analytical exercise. Moreover the
FIAU and the Malta Police cooperate on an ongoing basis through the exchange of information
to assist each other in their functions at law. A police liaison officer (who is the FIAU's point
of reference within the police force) is appointed to facilitate the cooperation between the two
authorities. The FIAU also cooperates with other authorities in carrying out its analytical
functions and, as mentioned before, the FIAU has the power to request the production of
information and documents from any government ministry, authority and department.
In its capacity as a supervisory authority for AML/CFT purposes, the FIAU interacts and
cooperates with various other supervisory authorities. The FIAU currently has memoranda of
understanding to regulate cooperation with the Malta Financial Services Authority (the
"MFSA") (which is the prudential supervisor of various financial sector entities) and the Malta
Gaming Authority (responsible for the regulation of the gaming sector). A newly set-up
AML/CFT Unit within the MFSA carries out AML/CFT on-site compliance visits of financial
sector operators on behalf of the FIAU. Currently talks are underway to extend this modus
operandi between the FIAU and the Malta Gaming Authority for a more effective oversight of
the gaming sector given the wider range of gaming operators that will be covered with the
transposition of the 4th EU Anti-Money Laundering Directive. Article 27 of the PMLA, which
regulates the FIAU's cooperation with supervisory authorities, authorises the FIAU to request
other supervisory authorities to assist it in monitoring obliged entities for AML/CFT purposes.
It is also worth mentioning the Joint Committee for the Prevention of Money Laundering and
Funding of Terrorism, which is an ad-hoc committee chaired by the FIAU. This Committee,
which meets four times a year, brings together the various domestic competent authorities
involved in the fight against money laundering and funding of terrorism as well as
39

 representatives of obliged entities subject to AML/CFT obligations. The Committee serves as
a platform for the discussion of various issues relating to AML/CFT. The competent
authorities, apart from the FIAU, represented on this Committee include the Malta Police, the
Attorney General's Office, the Malta Financial Services Authority, the Malta Gaming
Authority and Customs.
3. Statistics on the FIAU's activities
3.1 Statistics on suspicious transaction reports (STRs)
In 2015 the FIAU received a total of 281 STRs. More detailed statistics and distribution of
reports per sector can be found on the FIAU's Annual Report which is published on a yearly
basis. A link to the 2015 Annual Report can be found here:
(http://www.fiumalta.org/library/PDF/annualreports/AnnualReport2015.pdf)
So far in 2016 the total number of STRs received amount to 493.
AML/CFT On-site Visits Statistics
In 2015 the FIAU and the MFSA carried out 71 on-site AML/CFT compliance visits on
financial sector operators and non-financial businesses and professions. Figures are being
presented in the below table. Further detailed information can be found on the FIAU's 2015
Annual Report.
On-site Compliance Visit Statistics: 2015
MFSA

FIAU

Financial Institutions

28
24
19

DNFBPs
Total

24

47

Given that the Enforcement Unit within the MFSA, which is responsible for the conduct of onsite compliance visits, started operating as of January 2016, it is not possible to further subdivide the visits carried out by the said authority in the course of 2015 between Financial
Institutions and DNFBPs.
On-site Compliance Visit Statistics: 2016
MFSA

FIAU

Total

Accountants/Auditors

17

17

Legal Professionals

12

12

40

 Company Service
Providers

7

Credit Institutions

2

2

Financial Institutions

4

4

Fund Administrators

1

1

Fund Manager

1

1

Insurance Broker

1

1

Investment Service
Providers

6

2

9

1

7

Notaries

15

15

Real Estate Agents

13

13

Retirement Scheme
Administrator
Tied Insurance
Intermediaries

6

6

Trustees &Fiduciaries

6

6

Total

34

60

94

It is to be noted that a number of entities subject to on-site visits carried out in 2016 also carry
out additional activities. Thus, an investment services provider also carries out the activity of
a credit institution, nine of the accountants/auditors also provide tax advisory services, nine of
the legal professionals visited also act as company service providers as do sixteen of the
accountants/auditors visited.
3.2 Statistics - Administrative Sanctions
Infringements of AML/CFT obligations that are identified during these on-site compliance
examinations as well as off-site monitoring and other information obtained from supervisory
authorities are subject to administrative sanctions which are imposed by the FIAU.
During the year 2015, the FIAU imposed a total of 56 administrative penalties and 20
reprimands in writing. The total figure for penalties levied in 2015 amounted to €160,100. The
figure includes two aggregate penalties of €40,900 and €40,100 imposed separately on two
investment services companies for breaches of their customer due diligence obligations. Other
administrative sanctions (including both administrative penalties and reprimands) were
imposed on trustees and fiduciaries, advocates, accountants and auditors, notaries, insurance
brokers, credit institutions, company service providers and providers of investment services.
41

 Administrative Penalties: 2016
Sector

Administrative Amount
Penalties

Credit
Institutions

4

€ 77,650

a) failure to carry out ongoing
monitoring to ensure consistency
with the customer profile and to
establish source of funds of a PEP;
b) failure
to
obtain
sufficient
supporting
information
and
documentation to establish the
source of the funds;
c) failure
to
gather
sufficient
information on the source of wealth
and the source of funds of the
transaction;
d) failure to submit a Suspicious
Transaction Report;
e) applicants for business or the
beneficial owners were not
adequately
identified
and/or
verified;
f) failure to apply an Enhanced Due
Diligence measure as laid out by
Regulation 11(2);
g) failure to ensure that all data,
information and documentation on
the beneficial owners are kept up to
date;
h) failure to establish a Customer
Acceptance Policy;

Financial
Institutions

1

€ 5,500

a) failure to reply to a request for
information;
b) replied late to a request for
information;
c) failure to submit the Annual
Compliance Report.

& 16

€ 4,000

failure to submit
Compliance Report

10

€ 3,250

a) failure to submit the Annual
Compliance Report
b) failure to retain a copy of the
customer due diligence documents

Accountants
Auditors

Notaries

42

Reason for breach

the

Annual

 c) failure to establish a Customer
Acceptance Policy
Company
12
Service Providers

€ 3,000

failure to submit
Compliance Report

the

Annual

Trustees
Fiduciaries

& 5

€ 2,875

failure to submit
Compliance Report

the

Annual

Estate 7

€ 1,750

failure to submit
Compliance Report

the

Annual

the

Annual

Real
Agents

Collective
Investment
Schemes - PIF

4

€ 1,000

failure to submit
Compliance Report

Legal Firms

1

€ 1,000

failure to submit
Transaction Report

Insurance
Brokers

1

€ 250

failure to submit
Compliance Report

the

Annual

Investment
Services
Category 1A

1

€ 250

failure to submit
Compliance Report

the

Annual

€ 26,500

failure to submit
Compliance Report

the

Annual

-

Various subject 106
persons*

168

a

Suspicious

€ 127,025

* A further 106 Administrative Penalties have been issued in 2016 in relation to nonsubmission of ACR2016, amounting to €26,500. These penalties are still not segregated by
Sector since internal data processing exercises are still ongoing.

43

 3.3 The Revenue Departments
a) The Income Tax Acts provide for a number of instances (as per attached list in Annex A)
where a tax related default is considered a criminal offence and the Commissioner for
Revenue may request the Commissioner of Police to take action against an individual who
is in breach of the Acts;
b) Within the Inland Revenue Department and the VAT Department lies the Tax Compliance
Unit which handles tax-related investigations. Tax related crimes are prosecuted by the
Police. There is no particular organisation which deals specifically with tax-related crime.
However, the Police Department has an Economics Crimes Unit which deals with financial
crime;
c) Police officers prosecute charges on tax crimes and the penalty regime is listed in the
attached document (Annex A). Individuals who are prosecuted are mainly those who collect
monies on behalf of the Government of Malta and fail to submit such proceeds to the Inland
Revenue Department or the Value Added Tax Department. Individuals employing other
persons and directors of companies (which act as employers) have been found guilty of
committing a crime against the Revenue Acts both at the level of the courts of first instance
(the Court of Magistrates) and at the level of the courts of second instance (The Court of
Criminal Appeal). Problems have been encountered as a result of some to Constitutional
Court decisions whereby it was decided that additional taxes imposed for late filing and
non-payment of taxes were, because of their severity, to be considered to be punitive in
nature and therefore, in the nature of criminal penalties. It was held at Constitutional Court
level that In circumstances where such penalties were imposed by the tax authorities, the
Commissioner of Police was precluded from initiating criminal prosecution because of the
ne bis in idem principle as the imposition of high additional taxes (penalties) was
considered to constitute a criminal punishment (irrespective of whether such fine had been
paid or otherwise at the time of prosecution);
d) Since 2010 the Commissioner of Police, on behalf of the Commissioner for Revenue, has
prosecuted 4042 employers who failed to submit documents and payments after deducting
tax from the wages of their employees. To date 291 judgements were delivered. During
2016, the VAT Department prosecuted 392 persons who held a VAT number but failed to
submit their return / returns including payment and 163 judgements were delivered.
Criminal procedures by the VAT Department have been carried out since 1995;
e) With regards to the Panama Papers, the Tax Compliance Unit is currently investigating 29
cases and another 20 cases are at pre-audit stage;
f) The Inland Revenue Department has no information with regards to the Bahama Leaks.

44