Regulation

Anti-Money Laundering and Countering the Financing of Terrorism Legislation in Ireland

The primary piece of legislation in Ireland on 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 by the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2018 ("the CJA 2010").

The CJA 2010 transposed the European Union's Third Anti-Money Laundering Directive (2005/60/EC), its Implementing Directive (2006/70/EC) and the Fourth Anti-Money Laundering Directive ((EU) 2015/840) into domestic Irish Law.

The CJA 2010 reflects, both at a European and Irish level, the recommendations made by the Financial Action Task Force ("FATF"), which is a specialist international organisation that concentrates on the international fight against money laundering and terrorist financing.

Under the CJA 2010 the Central Bank of Ireland (the "Central Bank") is the competent authority in Ireland for the monitoring and supervision of financial and credit institutions' compliance with their AML/CFT obligations. The Central Bank is empowered to take measures that are reasonably necessary to ensure that credit and financial institutions comply with the provisions of the CJA 2010.

Who does the CJA 2010 apply to?

Section 25 lists the types of persons classified as a "designated person" and subject to AML / CFT obligations under the CJA 2010.

Schedule 2 also sets out a list of activities which are subject to AML / CFT obligations under the CJA 2010 irrespective of the regulatory status of the entity.

Role of the Central Bank under the CJA 2010

The CJA 2010 is divided up into 5 separate parts. Part 2 addresses the various Money Laundering offences which can be committed under the CJA 2010 and Part 3 deals with Directions, Orders and Authorisations relating to Investigations under the CJA 2010. The Central Banks plays no role in the operability of Parts 2 & 3, as this is the remit of law enforcement and other statutory bodies.

Part 4 of the CJA 2010 sets out the role of the Central Bank as the State competent authority in Ireland responsible for effectively monitoring credit and financial institutions' compliance with their Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) obligations. The Central Bank is empowered to take measures that are reasonably necessary to ensure that designated persons comply with their obligations under the CJA 2010.

Key features of the CJA 2010

The CJA 2010 sets out legal provisions to ensure effective implementation of and technical compliance with international standards relating to AML and CFT. The CJA 2010:

  • Defines broadly the offence of money laundering;
  • Defines "designated persons" and "beneficial owners" that come under the provisions of the CJA 2010;
  • Sets out the "customer due diligence" (CDD) requirements which designated persons are required to apply, and the instances when they must be applied;
  • Establishes the requirements for designated persons to embed a risk based approach to AML/CFT, including the requirement for designated persons to complete both a business level risk assessment and customer / transaction level risk assessments;
  • Obliges designated persons to identify the "beneficial owner" behind a customer who is not a natural person, requiring the designated person to take measures to understand the ownership and control structure of the customer;
  • Requires the identification of politically exposed persons (PEPs) i.e. persons holding a prominent public position and their families or close associates;
  • Sets out the reporting, internal policies and procedures, training and record keeping requirements of designated persons;
  • Provides for the monitoring and supervision of designated persons.

Other Relevant Legislation

  • The Criminal Justice (Terrorist Offences) Act 2005. The Criminal Justice (Terrorist Offences) Act, 2005 (the "CJA 2005") gave effect to the 1999 United Nations Convention for the Suppression of the Financing of Terrorism. The CJA 2005 created a new offence of financing terrorism and inserted a scheme through which An Garda Síochána can freeze and/or confiscate funds used or allocated for use in connection with an offence of financing terrorism or funds that are the proceeds of such an offence.
  • S.I. No. 110 of 2019 – European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019. The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019 were introduced on the 26th of March 2019, replacing SI 560/2016. The Regulations place an obligation on companies and other legal entities incorporated in Ireland to retain adequate, accurate and up-to-date information on their beneficial owners within an internally maintained register.
  • S.I. No. 16 of 2019 - European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2019. Similar to the above item, S.I. No. 16 of 2019 introduced on 1st February 2019 requires trustees to identify beneficiaries under the trust and maintain a beneficial ownership register.
  • S.I. No. 608 of 2017 - European Union (Information Accompanying Transfers of Funds) Regulations 2017. The European Union (Information Accompanying Transfer of Funds) Regulations 2017 ("the Regulations") were introduced on the 2 of January 2018 to supplement Regulation (EU) 2015/847 of the European Parliament and of the Council of 20 May 2015 ("the Funds Transfer Regulation").

The Regulations amend and replace the previous regime (The European Communities (Information on the Payer Accompanying Transfer of Funds) Regulations 2007 (S.I. No. 799 of 2007).

European Legislation

  • Directive 2005/60/EC - The Third Money Laundering Directive on the prevention of the use of the financial system for the purposes of money laundering and terrorist financing.
  • Directive (EU) 2015/849 - The Fourth Money Laundering Directive on the prevention of the use of the financial system for the purposes of money laundering and terrorist financing.
  • Directive (EU) 2018/843 - The Fifth Money Laundering Directive on the prevention of the use of the financial system for the purposes of money laundering and terrorist financing.
  • Regulation (EU) 2015/847 - information accompanying transfers of funds and repealing Regulation (EC) No 1781/2006.