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Anti-Money Laundering – Domestic and European developments

AUTHOR(S): Michael Jackson, Tara Doyle, Dualta Counihan, Elizabeth Grace, Philip Lovegrove, Shay Lydon, Joe Beashel, Anne-Marie Bohan, Liam Collins, Gavin Coleman
PRACTICE AREA GROUP: Asset Management and Investment Funds
DATE: 08.07.2015


Anti-money laundering and counter terrorist financing (“AML / CTF”) remains a key priority for the Central Bank of Ireland (the “Central Bank”) and has been listed as an enforcement priority every year (including this year) since 2011 when the Central Bank published its first ever list of enforcement priorities.  The Central Bank will continue this focus in 2015 ahead of the mutual evaluation of Ireland by the Financial Action Task Force which is expected in Q4 2016.

The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, as amended by the Criminal Justice Act 2013 (the “CJA”), requires “designated persons” to implement policies, procedures and controls to detect and prevent money laundering and terrorist financing.  Compliance with the CJA is a legally enforceable obligation, breaches of which are subject to criminal and / or administrative sanctions.  The importance, therefore, of fully and effectively implementing the requirements in the CJA cannot be emphasised enough.

Since the introduction of the CJA up to May 2015, there had been a total of three settlement agreements that related to breaches of the CJA with settlement figures of €21,000, €65,000 and €50,000. Whilst previous settlements were not that large in monetary terms, the latest settlement published by the Central Bank on 19 May was €1.75 million.  This evidences a significant increase from the previous settlement amounts.   One of the factors considered by the Central Bank in deciding on the settlement amount was the need for the settlement to have an appropriate deterrent impact for other regulated firms.  The Central Bank also took into account the extensive and proactive remediation implemented by the firm in question.

In terms of supervisory engagement, the Central Bank undertook a number of inspections in the funds industry and in the banking sector in 2014.  We have summarised the key findings and recommendations from the banking report published by the Central Bank and although the formal feedback from the funds inspections is expected to be published shortly, we have reviewed a number of feedback letters and included some of the common themes which we would expect will be included in the official feedback, when published.

The Fourth Money Laundering Directive

The directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (“MLD4”) came into effect on 25 June 2015.  MLD4 must be transposed by member states of the European Union into their national laws by 26 June 2017.  Key changes introduced by MLD4 include an increased focus on the risk based approach; greater transparency requirements with respect to beneficial ownership; an extension to the scope of politically exposed persons; simplified due diligence to be based on risk; and the strengthening of sanctions.

Read our full update on recent domestic and European developments regarding Anti-Money Laundering here.

Should you require further information in relation to the material referred to in this briefing, please get in touch with Joe Beashel or your usual Asset Management Group contact.

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