Due process before the SICCFIN Audit Report Review Commission (CERC)

2023 01 14 Arnaud ZABALDANO

The role of the CERC. The CERC is an advisory body commissioned by the Minister of State. It is made up of nine members (two government advisors, appointed as Chair and Vice-Chair of the CERC, two judges from the Court of First Instance and five individuals appointed by the Minister of State on account of their area of expertise). Its role is to review the audit reports produced by SICCFIN which highlight serious, repeated or systematic breaches attributable to an individual or organisation subject to such audits in violation of their due diligence obligations with regard to money laundering, terrorist financing and corruption. Following the proceedings, the CERC produces a report expressing an opinion on the alleged breaches and, where necessary, sends the Minister recommendations regarding sanctions, which can range from a warning to more severe penalties (a ban on conducting certain operations, a temporary suspension of functions, a temporary revocation of the right to operate and work permit, substantial monetary penalties, etc.).

Strengthened due process.

The outcome of proceedings can have significant consequences for the defendant. It seems right that the proceedings should be bound by a respect for due process. The latter was significantly strengthened by Act No. 1.520 of 11 February 2022 supplementing Act no. 1.503 of 23 December 2020 strengthening measures to combat money laundering, terrorist financing and corruption. What does this include?

Independence and impartiality of CERC members.

Any member of the Commission shall inform the Chair of any existing or potential conflict of interest to which they may be subject. The defendant is given details of the Commission’s membership at the same time as the summons. The defendant can ask that one of the members recuse themselves if there is a compelling reason to doubt their impartiality. The relevant conditions are set out in Sovereign Ordinance No. 9.170, dated 4 April 2022.

The right to respect for the defence.

The defendant by the CERC has the right to fair and equitable proceedings offering the guarantees that are essential to his or her defence, which encompasses a series of basic rights that permeate the entire proceedings. What are these rights?

Notification of grievances. The CERC shall notify the defendant, in writing, of the grievances likely to be considered as breaches. These grievances include “a detailed statement of the alleged facts and the provisions that they are believed to contravene. They are accompanied by a copy of the audit report produced by the SICCFIN officials and all of the documents on which this report is based.”

Reasonable timeframe. Grievances must be notified within 18 months of being referred to the CERC by the Minister of State. Failure to comply with this deadline means that sanctions cannot be imposed.

Written observations. On receipt of the notification of grievances, the defendant has two months to submit his or her written observations. The Chair of the CERC may, based on a justified request from the defendant, extend this period by no more than one month.

Copy of the file. The defendant may obtain a copy of the file available to the Commission by submitting a request to the CERC Secretariat.

Testimony. The defendant may request that testimony is heard, in their presence, from any individual that they believe will be useful to their defence (excluding members of SICCFIN or other civil servants). The CERC may also avail itself of this opportunity.

Summoning of the defendant. The defendant is summoned to provide explanations. The summons “indicates the action taken as a result of any request for testimony and informs the defendant of the identity of any individuals from whom the Commission has decided that it would be useful to hear.” During their hearing, the defendant may be assisted by legal counsel of their choice.

Deliberation. The rapporteur appointed for the case shall not be present when the Commission deliberates.

Right to communication. Following notification of the Minister of State’s decision, the defendant may obtain a copy of the CERC’s reasoned opinion.

The legitimacy of the sanctions taken against those concerned, and therefore the effectiveness of measures to combat money laundering, terrorist financing and corruption, is based on respect for due process as outlined above.