Financial Crime World

Ireland’s Banking Regulations: A Comprehensive Guide to Anti-Money Laundering and Countering Terrorism Financing

Introduction

In Ireland, the primary legislation governing anti-money laundering (AML) and countering the financing of terrorism (CFT) is the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, as amended by Part 2 of the Criminal Justice Act 2013 and the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2018.

Legislation

The legislation transposes European Union directives on AML/CFT into domestic Irish law, reflecting recommendations made by the Financial Action Task Force (FATF), an international organization that focuses on combating money laundering and terrorist financing. The Central Bank of Ireland is responsible for monitoring and supervising financial institutions’ compliance with their AML/CFT obligations.

Designated Persons

The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 applies to “designated persons,” which includes a wide range of entities and individuals, such as banks, credit unions, and other financial institutions. Schedule 2 sets out specific activities that are subject to AML/CFT obligations.

Central Bank’s Role

The Central Bank plays a crucial role in ensuring that designated persons comply with their AML/CFT obligations. The bank is empowered to take measures deemed necessary to ensure compliance and can impose penalties for non-compliance.

Key Features of the Legislation

  • Defining Money Laundering Offenses: The legislation defines money laundering offenses, including the laundering of proceeds from criminal activities.
  • Identifying Designated Persons and Beneficial Owners: The legislation identifies designated persons and beneficial owners, and obliges them to maintain records of their ownership structure.
  • Setting Out Customer Due Diligence Requirements: The legislation sets out customer due diligence requirements for designated persons, including the identification of customers’ identities and the verification of their information.
  • Establishing Risk-Based Approaches to AML/CFT: The legislation establishes risk-based approaches to AML/CFT, requiring designated persons to assess and mitigate risks associated with their business activities.
  • Obliging Designated Persons to Identify Beneficial Owners, PEPs, and Maintain Records: The legislation obliges designated persons to identify beneficial owners, Politically Exposed Persons (PEPs), and maintain records of their ownership structure.

Other Relevant Legislation

Other relevant legislation includes:

  • Criminal Justice (Terrorist Offences) Act 2005: This act created an offense of financing terrorism.
  • European Union Regulations: Several European Union regulations are also applicable, including:
    • European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019: These regulations require companies to maintain records of their beneficial ownership.
    • European Union (Information Accompanying Transfers of Funds) Regulations 2017: These regulations require financial institutions to obtain and verify information about the originator and beneficiary of funds transfers.

Conclusion

The legislation is designed to ensure effective implementation of international standards relating to AML/CFT. The Central Bank’s role in monitoring compliance with these regulations helps maintain a secure and stable financial system in Ireland.