Credit card company fined €373,000 accuses FIAU of ‘Moneyval witch-hunt’

A luxury credit card company fined €373,000 has accused the Financial Intelligence Analysis Unit of carrying out a witch-hunt over an impending Moneyval assessment that is haunting Malta’s financial system.

Insignia Cards, which recently recruited the former Labour economy minister Chris Cardona, accused the FIAU of issuing an “unfounded and unsubstantiated” fine for allegedly serious shortcomings, which the company will appeal.

The membership-only credit card provider for ultra-rich spenders was fined €373,670 over money-laundering compliance breaches during a 2019 inspection. In one serious case, a PEP (politically-exposed person) was rated as high-risk due to his adverse media links pertaining to ties with the Russian mafia.

In a statement, Insignia Cards accused the FIAU’s inspection team of being “unprepared” and of having “zero understanding of the business model and the approach which was taken was more suited for business which operates in the mass market field.”

“The conclusions of the FIAU report in no way suggest the existence of a suspicion nor the presence of money laundering and it is Insignia’s intention to fully dispute the allegations and the fines imposed and appeal each and every one of the findings.”

An initial FIAU visit was carried out in 2017. But a report on that visit was only issued 24 hours before a second visit in 2019, Insignia Cards claimed. “This of course took place [after the] negative Moneyval report that was issued with allegation of total lack of supervision and authority in respect of regulated companies. The manner in which the second visit of 2019 was conducted was highly unprofessional and the intimidation tactics used by the staff representing FIAU and the agency employed by MFSA, external advisory firm FTI Consulting, was rather shocking and surprising to say the least.”

Insignia said it will be inviting the European Bank Authority Appeal Board to conduct a full review of its activities. “Once this report will be issued, we will be making our final decision as to the extent of our retaliation and full response to the allegations and finding.”

It said it had also engaged Hogan Lovells and Baker McKenzie, two international law firms, to redefine its client onboarding strategy.

Insignia president Nada Tucakov said regulators were failing to understand “the exact moment” that risk arises in taking on clients.

“Very often the misconception is that the client risk is during the onboarding stage, this is absolutely incorrect, and we have proven this with extensive work conducted by Hogan Lovells and Baker McKenzie. The risk which most financial institutions face is at the point that the clients start to engage with the financial institution or their products. The onus has to be put on transaction monitoring, and institutions need to take more ownership in running the client portfolios in this way.”

The company is defending its onboarding of medium and high-risk clients who tend to use the luxury card service for large transactions.

“The message that is coming across from the regulatory bodies is that they are scared of the report pending from Moneyval and are trying to unjustly punish organisations without logic or merit. This has to stop, and accountability should be the priority.”

The company also claimed it had suffered from “fabricated journalism” and claimed the media only wanted to “publish negative news rather than look at the positive changes that are taking place in the industry”.