LAW5012 Money Laundering Adriano Spiteri

Tracing, freezing and confiscating the proceeds and instrumentalities of crime is

fundamental to the effectiveness of measures to combat money laundering and

terrorist financing1. The Prevention of Money Laundering Act (PMLA) provides for

mechanisms which assist in combating these criminal activities and prosecuting

persons involved, in order to preclude the culprit from dissipating / benefitting from

the assets deriving from illegal sources.

These mechanisms include the following measures, namely, measures to be taken to

confiscate property once there is a conviction of money laundering; measures for

freezing the assets of the person once he is charged with a money laundering offence

and also measures for issuing an investigation and/or attachment order when a person

is suspected of having committed money laundering2.

The success of criminal proceedings depends upon an investigation’s successful

outcome. The pre-trial measures which assist in this and which are contemplated in

the PMLA are the Monitoring Order, the Investigative Order and the Attachment

Order.

The Monitoring Order

For successful criminal proceedings, a thorough investigation is required. The first tool

for battling money laundering is the monitoring order. This order is an investigative

1
Santiago Otamendi, 'Anti-money laundering and counter terrorist financing for judges & prosecutors' (Paper
2018) <https://www.fatf-gafi.org/media/fatf/documents/reports/AML-CFT-Judges-Prosecutors.pdf> accessed
12 May 2019
2
FIAU Implementing Procedures Part 1

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LAW5012 Money Laundering Adriano Spiteri

tool through which a Bank is ordered to monitor transactions / banking operations,

and track the movements of money from one account to another for a specified amount

of time, and thus be in a position to provide a more detailed account into the suspected

person’s (being either a natural person or a legal entity) activities. This type of order is

issued by the Criminal Court upon the Attorney General filing a request to the said

Court, after information received causes him to reasonably suspect that a person is

guilty of money laundering3. The Bank is then obliged to communicate the resulting

information to the person or authority indicated by the Attorney General, and, once

the information is collated, the person or authority receiving the information shall

transmit that information to the Attorney General4.

The PMLA also confers a similar power to the Financial Intelligence Analysis Unit

(FIAU)5, and thus, when a person or entity is suspected of carrying out transactions

related to money laundering or funding of terrorism, the FIAU may demand a subject

person to monitor the suspect’s operations for a limited period of time. In fact, when

the FIAU suspects that a subject person may have been used for any suspicious

transactions involving money laundering or that property being held by a subject

person derived from proceeds of or acts of participation in criminal activity, then the

FIAU may request the subject person to monitor for a specified period the transactions

or banking operations being carried out by the suspected person through an account/s

in the name of any natural or legal person suspected of an offence relating to money

laundering or financing of terrorism, or carried out through an account/s suspected to

3
Article 4B of Chapter 373 of the Laws of Malta and Article 435AA of the Criminal Code
4
Article 4B of Chapter 373 of the Laws of Malta
5
Article 30B of Chapter 373 of the Laws of Malta

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LAW5012 Money Laundering Adriano Spiteri

have been used in the commission of a money laundering offence which could provide

information about a money laundering offence or the circumstances thereof 6 . The

subject person is then bound to report back to the FIAU with all the information

compiled from such monitoring so as to allow the FIAU to use that information for the

purpose of carrying out its analysis and reporting functions.

The monitoring is done in secret, that is without the account holder being made aware

that his transactions are being monitored. In fact, the law penalizes anyone who tips-

off or discloses any information 7 , since this would undoubtedly undermine the

measure’s effectiveness and lead to the investigation being prejudiced.

Once all the findings which are made through monitoring are passed on to the

Attorney General, he would be able to reach an informed decision on the case, and if

the initial suspicions of the illicit activity are then substantiated with documentation,

a fully-fledged investigation is initiated or continued by the Executive Police 8.

The Investigation Order

Another tool which is mentioned in the PMLA is the investigation order. The Act gives

additional powers of investigation whereby, upon information received, the Attorney

General may apply to the Criminal Court for an investigation order so that when any

person, whether natural or legal, named in the order, appears to be in possession of

6
Article 30B of Chapter 373 of the Laws of Malta
7
Article 4B(2) of Chapter 373 of the Laws of Malta
8
Yvonne Farrugia ‘A Holistic Analysis of the Provisions of Freezing and Confiscation Orders and the
Effectiveness of Interim Remedies Available to the Parties in the Case’, Dissertation, University of Malta [2018]

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LAW5012 Money Laundering Adriano Spiteri

information which is likely to be of substantial value to the investigation of, or in

connection with, the suspect, shall produce or grant access to such material9.

While the requisite for a monitoring order is a broad suspicion which is to be

confirmed through monitoring mechanisms, an investigation order is issued by the

Criminal Court when the Attorney General has reasonable cause to suspect that a

person is guilty of money laundering10. The investigation order helps in gathering as

much information as possible, and it could also lead to the identification of other

individuals and entities involved in the criminal organisation. Furthermore, the Police

can also be empowered by the Criminal Court to automatically enter buildings and

houses to collect other information relevant to the investigation11.

During the investigation, material collected should not contain communication

records between an advocate or a legal procurator and a client, as well as any

communication concerning a confession to a clergyman 12 , since such material is

considered to be privileged, however, the law expressly stipulates that the

investigation order shall have effect notwithstanding any obligation as to secrecy or

other restriction upon the disclosure of information 13 , and therefore all other

professions do not enjoy this exemption.

9
Frank Caruana and George Farrugia, 'Money laundering and international financial crime in small
states with special reference to Malta' [2003] BOV review
10
Yvonne Farrugia ‘A Holistic Analysis of the Provisions of Freezing and Confiscation Orders and the
Effectiveness of Interim Remedies Available to the Parties in the Case’, Dissertation, University of Malta [2018]
11
Article 4(1) of Chapter 373 of the Laws of Malta
12
Article 4(3)(a) of Chapter 373 of the Laws of Malta
13
Article 4(3)(b) of Chapter 373 of the Laws of Malta

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LAW5012 Money Laundering Adriano Spiteri

Once again, the element of secrecy is of utmost importance here, and therefore any

tipping off or disclosure of any details to the suspected individuals and entities is a

criminal offence, provided that it shall be a defence for the person so charged to prove

that he did not know or suspect that the disclosure was likely to prejudice the

investigation.14

The Attachment Order

In most cases, an investigation order is almost invariably accompanied by another type

of order, namely the attachment order15, as through this, the investigators are given a

complete package, especially if their aim is to confiscate the proceeds of crime at the

end of the criminal proceedings16. The attachment order can otherwise be requested

on its own at a later stage.

Although issued during the investigation stage, the attachment order is not an

investigative tool, but a preservation one, as it aims to preserve the findings of evidence

that is likely to be dispersed by the suspect, or rather, assets belonging to the person

being investigated for having proceeds allegedly derived from criminal activity, though

for a short period of time, found pursuant to the issuance of an investigation order17.

14
Article 4(2) of Chapter 373 of the Laws of Malta
15
Dr Joseph Giglio, 'The various types of orders relating to anti-money laundering' (Article 2015)
<https://theaccountant.org.mt/the-various-types-of-orders-related-to-anti-money-laundering/> accessed 12
May 2019
16
Yvonne Farrugia ‘A Holistic Analysis of the Provisions of Freezing and Confiscation Orders and the
Effectiveness of Interim Remedies Available to the Parties in the Case’, Dissertation, University of Malta [2018]
17
Marica Borg ‘Asset Tracing and Freezing: Relevance and Repercussions’ Dissertation, University of Malta
[2016]

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LAW5012 Money Laundering Adriano Spiteri

The Attorney General holds the authority to file a request for an attachment order

based on reasonable grounds for suspicion that a serious crime has been committed18.

In this case, the suspect is officially made aware that he is under criminal investigation,

as he would be one of the recipients of the Court Decree informing him that all his

assets have been frozen. The suspect is also bound to declare in writing to the Attorney

General within twenty four hours from the time that he is so notified with the

attachment order, the nature and source of all money and other movable property so

attached, and furthermore the suspect is prohibited from transferring or otherwise

disposing of any movable or immovable property19. Nonetheless, the law establishes a

timeframe of forty-five days during which the in necessary analysis of data is to be

conducted, and if sufficient grounds exist, it can be extended once for another equal

term. Unless fresh information is available with regard to a serious crime, no other

attachment order can be made in respect of the same suspect.

Acting in a manner which is prejudicial to the effectiveness of the attachment order or

disclosing that it has been made is also tantamount to a criminal offence 20 punishable

in the same way as disclosures related to investigation orders are.

The fact that the law provides that the forty five day period shall be put on hold for

such time as the suspect is away from the Maltese Islands, has raised issues where the

attachment order is issued in respect of more than one suspect and one of them

18
Article 4(6) of Chapter 373 of the Laws of Malta
19
Article 4(6)(b) and (c) of Chapter 373 of the Laws of Malta
20
Article 4(6A) of Chapter 373 of the Laws of Malta

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LAW5012 Money Laundering Adriano Spiteri

happens to be away from the Islands. It has since been clarified by the Court that the

forty five day period is only held in abeyance with regard to the person who is away

from the Islands and continues to run normally with regard to the person or persons

who are in Malta 21 . However, the question remains whether the attachment order

would still be operative on the garnishees when the validity period is held in

abeyance22.

Apart from the pre-trial measures, the PMLA also mentions trial measures, which

include the freezing order and the confiscation order.

The Freezing Order

In the case of a freezing order, a reasonable suspicion of money laundering is no longer

required, as in this case the suspect would have been charged in Court. Consequently,

the request for such an order is made in Court in the presence of the accused who

would thus be represented by his lawyer, as opposed to the situation where the

Attorney General requests the Criminal Court to issue an investigation, attachment or

monitoring order23.

21
Marica Borg ‘Asset Tracing and Freezing: Relevance and Repercussions’ Dissertation, University of Malta
[2016]
22
Marica Borg ‘Asset Tracing and Freezing: Relevance and Repercussions’ Dissertation, University of Malta
[2016]
23
Dr Joseph Giglio, 'The various types of orders relating to anti-money laundering' (Article 2015)
<https://theaccountant.org.mt/the-various-types-of-orders-related-to-anti-money-laundering/> accessed 12
May 2019

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LAW5012 Money Laundering Adriano Spiteri

By means of these orders, any property which the accused has, including that which

was obtained through legal means, will be frozen and the accused will also be

prohibited from receiving any income, except for the amount of €13,976.24, or from

carrying out any financial transactions. In this way, the accused would be precluded

from disposing of any proceeds connected to the crime and which he could have

benefitted from. Due to the fact that freezing orders would pose financial problems for

the accused, the law tries to address this issue by providing that a freezing order may

be varied and consequently the Court may also authorise the payment of debts due to

bona fide creditors and which were contracted before such order was made and can

also authorize the accused to transfer property24.

Failing to issue a freezing order in time would give an opportunity to the accused to

disperse his assets in order to frustrate a consequent Court judgement ordering the

confiscation thereof, and thus, the earlier it is applied for and granted, the more

successful it will be in hindering the dispersion of the proceeds of crime25.

The Confiscation Order

The justification for the confiscation order relies upon the principle that no one should

be allowed to benefit from his own wrongdoings26. Therefore, once the person has been

convicted of a money laundering offence, a confiscation order, with regard to the

proceeds of crime or of such property, shall be ordered by the Court. This confiscation

24
Proviso (a) and (b) of Article 5 (1) of Chapter 373 of the Laws of Malta
25
Marica Borg ‘Asset Tracing and Freezing: Relevance and Repercussions’ Dissertation, University of Malta
[2016]
26
Marica Borg ‘Asset Tracing and Freezing: Relevance and Repercussions’ Dissertation, University of Malta
[2016]

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LAW5012 Money Laundering Adriano Spiteri

is in addition to any punishment to which the person convicted may be liable according

to law. The proceeds of the offence or of such property the value of which corresponds

to the value of the proceeds of the offence will be forfeited in favour of the Government

of Malta27.

Confiscating or freezing assets deriving from money laundering will prevent the

criminals from using or enjoying the fruits of the criminal wrongdoings, either directly

or through third parties. Therefore, failing to use the money laundering mechanisms

allowed by the law, would lead to the channels through which laundered funds are

passed to remain uninterrupted. However, although the law has established various

mechanisms to aid in combatting money laundering, according to the National ML/FT

Risk Assessment of Malta28, the capacity and expertise of law enforcement agencies is

not sufficient to fully support investigations, prosecutions and asset recovery, thus

translating into low levels of convictions and confiscation compared with the money

laundering/funding of terrorism risk profile.

27
Article 3(5)(a) of Chapter 373 of the Laws of Malta
28
Dr Edward Scicluna, 'Risks of the ML/TF National Risk Assessment System' (Report 2018)
<https://mfin.gov.mt/en/Library/Documents/Result_of_the_NRA_2018.pdf> accessed 12 May 2019

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LAW5012 Money Laundering Adriano Spiteri

Bibliography

Dissertations

Borg Marica ‘Asset Tracing and Freezing: Relevance and Repercussions’ Dissertation, University of
Malta [2016]

Farrugia Yvonne ‘A Holistic Analysis of the Provisions of Freezing and Confiscation Orders and the
Effectiveness of Interim Remedies Available to the Parties in the Case’, Dissertation, University of
Malta [2018]

Santiago Otamendi, 'Anti-money laundering and counter terrorist financing for judges & prosecutors'
(Paper 2018) <https://www.fatf-gafi.org/media/fatf/documents/reports/AML-CFT-Judges-
Prosecutors.pdf> accessed 12 May 2019

Laws, Regulations and Guidelines

FIAU Implementing Procedures Part 1

Chapter 373 of the Laws of Malta, Prevention of Money Laundering Act

Chapter 9 of the Laws of Malta, Criminal Code

Online

Frank Caruana and George Farrugia, 'Money laundering and international financial crime in small
states with special reference to Malta' [2003] BOV review

Dr Joseph Giglio, 'The various types of orders relating to anti-money laundering' (Article 2015)
<https://theaccountant.org.mt/the-various-types-of-orders-related-to-anti-money-laundering/>
accessed 12 May 2019

Dr Edward Scicluna, 'Risks of the ML/TF National Risk Assessment System' (Report 2018)
<https://mfin.gov.mt/en/Library/Documents/Result_of_the_NRA_2018.pdf> accessed 12 May 2019

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