Dáil Éireann Debate, Tuesday - 1 May 2018
95. Deputy Michael McGrath asked the Minister for Finance the requirements imposed on financial institutions in respect of maintaining a record of politically exposed persons; the reason customers opening accounts are asked a question regarding the issue; and if he will make a statement on the matter. [19016/18]
Amharc ar fhreagraAs the Deputy will be aware financial institutions are designated persons under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (“the Act”) and are obliged to comply with the regulatory obligations contained under Part 4.
Section 37 of the Act obliges designated persons to take steps to determine whether a customer, or a beneficial owner connected with the customer or service concerned, residing outside the State, is a politically exposed person or an immediate family member, or a close associate of, a politically exposed person.
A “politically exposed person” (“PEP”) is defined as an individual who is entrusted with a prominent public function, including a specified official and a member of the administrative, management or supervisory body of a state-owned enterprise and includes a “close associate” and an “immediate family member” under the Act.
Under AML legislation, a designated person is obliged to take steps prior to establishing a business relationship with the customer or when carrying out an occasional transaction with, for or on behalf of the customer or assisting the customer to carry out an occasional transaction. The steps to be taken are such steps as are reasonably warranted by the risk that the customer or beneficial owner is involved in money laundering or terrorist financing.
Where a designated person has knowledge of or reasonable grounds to believe that a customer is a PEP, or is an immediate family member or a close associate of the PEP, a designated person is obliged to apply the following measures:
(1) obtain approval from senior management prior to the establishment of a business relationship with the customer; and
(2) determine the source of wealth and the source of funds related to transactions and services provided.
A designated person that cannot fulfil its obligations in respect of its obligations should not carry on a business relationship or provide services to a customer or beneficial owner as provided for in the Act.
It is a criminal offence for a designated person to not comply with its obligations pursuant to section 37.
It is also worth noting that the categories of individuals regarded as Politically Exposed Persons (PEPs) has been broadened under the EU’s Fourth Anti-Money Laundering Directive (4AMLD) to include domestic PEPs. Those elements of 4AMLD will be transposed into domestic legislation in due course by my colleague the Minister for Justice and Equality. This will mean that domestic PEPs will be in scope for enhanced due diligence measures. This will be a significant departure from the Act where currently only foreign PEPs are subject to enhanced due diligence measures from designated persons.
