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Keith Schembri, Maltese Prime Minister Joseph Muscat's chief of staff, is seen in an Oct. 9, 2018, file photo.MATTHEW MIRABELLI/AFP/Getty Images

Malta police arrested Keith Schembri, who was the chief of staff of former Prime Minister Joseph Muscat, early on Tuesday as part of an investigation into money laundering of funds derived from kickbacks on sales of Maltese passports.

Schembri was arrested just after midnight, hours after a court issued an order for all his assets and those of his family and companies to be frozen, police sources confirmed.

Schembri, who has always denied wrongdoing, resigned in November, shortly before Muscat announced he was too was stepping down.

The resignations followed the arrest and arraignment of Yorgen Fenech, suspected by police of being the mastermind in the 2017 murder of anti-corruption journalist Daphne Caruana Galizia. Fenech has denied complicity in the killing.

Schembri had been a close friend of Fenech and attended meetings during which Muscat was briefed by the police on the murder investigations.

The allegations of kickbacks of up to 100,000 euros from passport sales and the laundering of the funds were made three years ago by then opposition leader Simon Busuttil. A magisterial inquiry into the allegations was concluded earlier in September but its outcome was not revealed.

Malta started selling passports to wealthy foreigners in 2014, with strong take-up mostly from rich Russians, Chinese and others in the Arab gulf.

In a court application through his lawyers shortly after his arrest, Schembri protested that he had not been made aware of the contents of the inquiry report.

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