Updated | Constitutional change to give regulators more bite defeated after Opposition votes against

Opposition says regulators with government-appointed members cannot be trusted to dish out hefty fines unless sanctioned by a court of law • Edward Zammit Lewis decries lost opportunity

A constitutional amendment to give regulators more bite did not garner a two-thirds majority in parliament
A constitutional amendment to give regulators more bite did not garner a two-thirds majority in parliament

A constitutional amendment to give regulators more bite when dishing out hefty fines and sanctions was defeated in parliament on Wednesday after the Opposition voted against.

The amendment required a two-thirds majority to pass. With 34 votes in favour and 25 against, the constitutional change did not get the required minimum of 45 votes.

The amendment put forward by Justice Minister Edward Zammit Lewis sought to introduce a constitutional clause that allows independent administrative and regulatory authorities to impose administrative penalties or measures “which may have the characteristics of a charge or punishment of a criminal nature”.

However, it also sought to impose on regulators the obligation to ensure due process is followed in dishing out the fines and injured parties would have the right to appeal before the law courts.

Zammit Lewis told parliament the constitutional amendment was needed to ensure that enforcement by regulators was effective and served as a deterrent.

He urged the Opposition to support the changes because rejecting them would send out a negative signal to the international community.

“Let us not allow those who want to escape hefty fines because of wrongdoing, get their way by giving them the chance to challenge the sanctions by opening constitutional cases,” he said.

But Opposition MP Joseph Ellis said the changes proposed by the government undermined the principle of due process on fines that in some instances could reach millions of euros. 

Opposition MP Chris Said insisted that the changes will undermine the guarantees of a fair trial and due process enshrined in the Constitution, while Therese Comodini Cachia said that authorities with government-appointed members could not be trusted with dishing out fines of a criminal nature, which is why the courts had to be involved.

Zammit Lewis rued what he described as “a lost opportunity” to give regulators the necessary bite to enforce sanctions that are effective, dissuasive and proportionate.

“Do not come here complaining in the months ahead that authorities are not doing their job properly because it will be your fault for not supporting this change that would have ensured their effectiveness,” the minister said.

FIAU warning on need for legal comfort

Ahead of the parliamentary sitting, Financial Intelligence Analysis Unit director Kenneth Farrugia said the constitutional amendment will give regulators the legal comfort to carry out effective enforcement.

He warned that without such legal protection it would be impossible to carry out effective enforcement as requested by the Financial Action Task Force that greylisted Malta.
“If we don’t have this protection at law, the FATF greylist deadline of January 2023 will not be met before 2026 because one of the issues raised was the need to have compliance on the ground through effective, dissuasive and proportionate sanctions,” Farrugia said.

He said the FIAU had worked on improving its internal processes to ensure operators that it supervises are given due process when faced with regulatory action.

The change would have given regulatory authorities the necessary bite in the discharge of their duties after this function was successfully challenged in two constitutional court cases in the past.

One of the court cases had been instituted by the Nationalist Party against the Electoral Commission when it initiated an investigation in line with the law governing the finances of political parties over allegations that party official wages were paid by a private company.

The Opposition has argued that administrative fines or sanctions equivalent to those of a criminal nature should be imposed by a court and not regulatory authorities to ensure due process.

The court rulings have stifled authorities like the Financial Intelligence Analysis Unit when issuing hefty fines for breaches by financial institutions and practitioners.