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FATF - Guidance on Anti-Money Laundering and Terrorist Financing Measures and Financial Inclusion

On Thursday, 7 September 2017, the Financial Action Task Force (“FATF”) released a Mutual Valuation Report on anti-money laundering (“AML”) and counter-terrorist financing (“CTF”) measures in Ireland (the “Report”). 

The Report notes that Ireland has a “generally sound legislative and institutional AML / CTF framework” and praised Ireland for putting measure in place to improve its understanding of risk and national coordination and cooperation.  However, it notes that further measures and resources are required for a fully effective AML / CTF system.

The report recognised Ireland’s importance as a regional and international financial centre, as it is amongst the IMF’s 29 systematically important financial centres.  In particular, FATF have noted that Ireland’s funds and insurance sectors are well developed with strong international links.  However, the report also notes that Ireland faces money-laundering and terrorist financing threats from organised crime groups and former local paramilitary organisations.

The Report outlines ten “priority actions” for Ireland to perform, noting that it should:

  • expand its understanding of risks to include a more comprehensive range of quantitative data, such as those in relation to international cooperation, and better illustrate the links between threat and vulnerabilities assessment;
  • more actively pursue terrorist financing prosecutions in line with its risk profile, with a view to securing convictions, as FATF noted that no prosecutions of terrorist financing offences have taken place;
  • seek to prosecute a wide range of money-laundering cases, both domestic cases and those with international components and ensure that adequate resources are allocated to investigations, as FATF is concerned that there have been no convictions for money-laundering after a trial;
  • enhance efforts to pursue the proceeds of crime offshore, review and strengthen its asset confiscation legislation and ensure that an expanding remit does not lead to cause a loss of focus on high-level organised crime;
  • apply focused and proportionate measures to non-profit organisations vulnerable to being used for terrorist financing;
  • ensure that there are adequate procedures in place to safeguard the role of the Financial Intelligence Unit and ensure its independence;
  • further ensure competent authorities can have timely and accurate access to beneficial ownership information and take proactive steps to facilitate the operation of the central register;
  • continue the expansion of the remit of the Department of Justice and Equality and increase its resources accordingly;
  • direct the focus of supervisors to ensuring compliance with PEPs and TFS obligations, in particular requiring the law society and designated accounting bodies to apply effective, proportionate and dissuasive sanctions for non-compliance with AML / CFT requirements; and
  • amend its legislative framework to address technical deficiencies, inter alia relating to PEPs and high-risk countries.

These “priority actions” are largely to improve areas where the Report noted a deficiency and to ensure the place of those elements of the Irish system that are operating well.  Of the 40 technical compliance areas considered, Ireland was fully compliant in ten areas and non-compliant in one area, Higher-risk countries.

Ireland was considered non-compliant in respect of High-risk countries as a result of a lack of measures which require the application of enhanced due diligence measures where a transaction or business relationship involves or is linked to a country for which FATF has called for its members to apply enhanced due diligence.  FATF also considered Ireland deficient due to a lack of ability to impose countermeasures.

Should you require further information in relation to the material referred to in this update, please contact Joe Beashel, Partner, or your usual Matheson contact.