The Constitutional Court of Malta has declared a regulation imposing a 55% penalty on travelers carrying over €10,000 in cash unconstitutional. The court argued that this regulation effectively reduced the judicial process to a “mechanical exercise” devoid of judicial discretion. The case arose from an incident three years ago involving Igaale Ali Muuse, who was arrested at Malta Airport with €165,548 in cash.
On the day of his arrest, Muuse was about to board a flight to Istanbul when a customs sniffer dog detected the cash in his suitcase, which had already been loaded onto the aircraft. Despite his declaration of carrying no more than €10,000, Muuse was charged with breaching Cash Control Regulations.
Initially, Muuse pleaded not guilty but later admitted to the charge in August 2022 after being given time to reconsider. Consequently, the Magistrates’ Court fined him €85,601, representing a 55% penalty on the amount exceeding €10,000, plus an additional €50 fine. Muuse appealed this judgment, challenging the regulation on grounds of disproportionate punishment, legal arbitrariness, and lack of judicial discretion.
The First Hall, Civil Court in its constitutional jurisdiction, initially dismissed Muuse’s claim, asserting no breach of rights. However, upon appeal, the Constitutional Court overturned this decision.
Chief Justice Mark Chetcuti, along with Justices Giannino Caruana Demajo and Anthony Ellul, ruled in favor of Muuse. They declared that Regulation 3(5)(b) of the subsidiary legislation on cash control constituted a “disproportionate interference” with Muuse’s right to the peaceful enjoyment of his property.
The court referenced EU case law, noting that cash control measures were designed to prevent money laundering and the financing of terrorism. While the EU directives allowed member states to establish penalties that were “effective, proportionate, and dissuasive,” Malta’s regulation, amended in 2020, mandated a 55% penalty on excess cash plus a €50 fine. For amounts exceeding €30,000, the excess was deposited with the Tax Commissioner for up to 90 days pending investigation.
In Muuse’s case, no further action was taken despite sufficient time for investigation, highlighting the court’s concern over the regulation’s rigidity. The State Advocate defended the regulation, claiming it prevented arbitrariness by setting clear penalties. However, the court disagreed, emphasizing that the harsh penalties applied uniformly, regardless of individual circumstances, undermined judicial discretion.
The court concluded that such regulations disproportionately infringed on property rights and mandated that each case should be judged on its specific facts and circumstances. Consequently, the regulation was deemed unconstitutional.
The judgment has significant implications for Malta’s cash control regulations and will prompt a review to ensure penalties are fair and proportionate. The ruling has been forwarded to the Court of Criminal Appeal and the Speaker of Parliament for further action.
This decision underscores the importance of maintaining a balance between regulatory measures and fundamental rights, ensuring that justice is both fair and justly administered.
