FIAU caseload soars by 30 per cent in 2017

FIAU caseload soars by 30 per cent in 2017

Director Kenneth Farrugia highlights concerns about protecting FIAU's reputation

The director insisted the FIAU had operated “without political interference”. Photo: Chris Sant Fournier

The director insisted the FIAU had operated “without political interference”. Photo: Chris Sant Fournier

The Financial Intelligence Analysis Unit forwarded 34 cases of suspected money laundering to the police for further investigation last year, including four involving bribery and corruption.

According to its 2017 annual report, FIAU officials also shared 17 additional reports with the police after obtaining further information.

The year was the FIAU's busiest to date, with the number of investigations underway rising from 567 in 2016 to 780 - an increase of almost 30 per cent. 

For the sixth year running, fraud was the main crime uncovered by the agency, accounting for a quarter of the cases referred to the police for further investigation.

One in five cases forwarded to the police involved Malta-registered companies or bank accounts used by foreign entities to launder money.

As had been the case in previous years, funds suspected to be the proceeds of drug trafficking in Malta featured in some of the cases.

There were also cases of money laundering originating from usury.

For the third year running, the FIAU unearthed a case of suspected financing of terrorism.

Reputational risk

The latest annual report of the government’s anti-money-laundering agency offers a rare glimpse into its secretive world. 

According to its director Kenneth Farrugia, the FIAU's main challenge last year was its battle to protect its reputation, following a series of leaks and disclosures. 

Referring to several leaked FIAU reports and “unsubstantiated allegations on the unit’s operations and its members”, Mr Farrugia insisted the agency had operated “without any political interference”.

Mr Farrugia took over the agency reins last year, nine months after its former head, Manfred Galdes, resigned in the wake of the Panama Papers controversy.

One of its former investigators, Jonathan Ferris, claims to have been axed just as he was preparing to investigate high-ranking government members.

The annual report of the government agency offers a rare glimpse into its secretive world

The FIAU has been at the centre of a political storm surrounding probes into the once-secret offshore holdings of Tourism Minister Konrad Mizzi and the Prime Minister’s chief of staff, Keith Schembri.

The reports Mr Farrugia referred to, leaked following alleged inaction, set the ball rolling for calling an early election last year.

According to Mr Farrugia, the disclosures and allegations exposed FIAU officials to “unnecessary safety and security risks”.

READ: FIAU silent on leaked Konrad Mizzi report

FIAU chair Peter Grech, the Attorney General, commented in the annual report: “The FIAU was often in the news in 2017, particularly due to the leaking of a small number of politically sensitive FIAU reports to politicians and the media.”

This, Dr Grech said, had impacted the public understanding of the FIAU’s functions as an intelligence agency which “conducts its work under cover of strict confidentiality mandated by law”.

More tip-offs, but under-reporting remains

The number of suspicious transaction reports investigated last year was “unparalleled, according to the FIAU annual report.

A total of 778 reports were handled, a 177 per cent increase in just two years. Another 78 cases, following tip-offs from other sources, were also looked into.

Kenneth Farrugia took over the FIAU last year.Kenneth Farrugia took over the FIAU last year.

The FIAU said despite the increase in tip-offs, a significant lack of reporting was “still evident”. As had been the case in 2016, the FIAU said it noted a significant increase in the number of reports from remote gaming companies. The 151 per cent increase, or 131 reports, was mainly related to foreigners with “limited connections to Malta”. Other increases were also noted in reports filed by financial institutions, independent legal professionals, auditors and company service providers.

Reporting by trustees and fiduciaries dropped by 47 per cent compared to 2016, and reports from accounting professionals decreased by 67 per cent.

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