The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 was most recently updated in November last year by the Criminal Justice (Money, Laundering and Terrorist Financing) (Amendment) Act 2018. The 2018 Act transposed in large part the Fourth EU Anti Money Laundering Directive and also brought Irish law into line with the recommendations of the Financial Action Task Force, an international standard-setting body.
The main change brought about by the 2018 Act was the introduction of new requirements around a risk-based approach. This means, first of all, that the businesses concerned (which the legislation calls designated persons), must assess the risks of money laundering and terrorist financing involved in carrying out their business. They must have policies and procedures in place to mitigate these risks. They must determine the risk attaching to each customer or transaction, on a case-by-case basis, taking into account relevant factors. And they must then carry out whatever due diligence measures are warranted by that level of risk. This represents a more targeted and therefore more effective application of measures by the designated person.
The 2018 Act also recognises the reality that many businesses today operate in group structures across borders. It made a number of amendments to the 2010 Act in this regard. The Act expanded the requirements on Irish companies to ensure that their subsidiaries overseas apply high anti-money laundering standards. If a group implements policies and procedures properly, its subsidiaries are not subject to some restrictions that normally apply in respect of high-risk third countries.
The 2018 Act also extended the scope of existing obligations in other ways. For example, some measures which previously only applied to banks, now apply to other financial institutions. There are extra measures that must be applied to the beneficiaries of life assurance policies. Measures applying to politically exposed persons will now apply to those resident in Ireland as well as those resident abroad.
As the Deputy will be aware, of great importance in the global fight against money laundering and terrorist financing is the role of the Financial Intelligence Unit (FIU). The FIU in Ireland is part of An Garda Síochána. It is responsible for receiving suspicious transaction reports from designated persons and analysing them, so that it can be used to combat crime. The 2018 Act expands the remit of the FIU. It requires them to have access to all of the information they need to carry out their functions and allows for cooperation and information sharing between the FIU in Ireland and the FIUs of other Member States.
The 2018 Act also introduced a fitness and probity regime for the owners of private members’ gaming clubs. This change, which transposes a provision of the Fourth Directive, requires both those who hold a directorial function, as well as the beneficial owners of such clubs, to apply to An Garda Síochána or the Minister for Justice for a certificate of fitness. It is now a criminal offence to carry on such activities without that certificate.
In addition to the changes above, the Government also approved the drafting of a further Bill to amend the 2010 Act in January of this year, provisionally titled the Criminal Justice (Money, Laundering and Terrorist Financing) (Amendment) Bill 2019. The General Scheme for this Bill was published on my Department’s website in January and its aim is to give effect to the criminal justice elements of the Fifth EU Anti Money Laundering Directive.
While drafting work is ongoing, the General Scheme, as published, will amend some provisions of the 2010 Act, and insert others, concerned with:
- the use of virtual currencies for terrorist financing and limiting the use of pre-paid cards;
- safeguards for financial transactions to and from high-risk third countries;
- the scope of designated bodies under the existing legislation;
- enhanced customer due diligence (CDD) requirements;
- the prevention of credit and financial institutions from creating anonymous safe-deposit boxes;
- a Regulation-making power for the Minister which will set out what is considered to be a “prominent public function”.
- a number of technical amendments.
In addition to the ‘money laundering legislation’ above, the Deputy may also wish to note that my colleague, the Minister for Finance, has introduced, and will introduce further, legislation to deal with those elements of the Money Laundering Directives that fall within his policy remit. This includes the establishment of beneficial ownership registers and centralised bank account registers, etc.