Anti-Money Laundering and Countering the Financing of Terrorism

The Irish Government has an important role in combating Money Laundering and Terrorist Financing. A robust framework for Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) is vital for ensuring the security and stability of Ireland’s financial system and economy. It helps to ensure that the economy is protected from corruption by illicit funds and allows Irish businesses avoid the burden of extra obligations which arise for those operating in a country identified as having deficiencies in their AML/CFT frameworks. Our trade partners and investors are assured that Ireland is a safe place to do business.

The Government leads in the development of policies to prevent, detect and investigate Money Laundering and Terrorist Financing. Much of our input on this is at a collective EU and international level.

General information on Money Laundering and Terrorist Financing may be found at: https://www.amlcompliance.ie/money-laundering-terrorist-financing-are-you-aware/

To ensure that Ireland’s policies remain compliant with EU and international standards, the Department of Finance chairs the multi-departmental and multi-agency Anti-Money Laundering Steering Committee. The purpose of the Steering Committee is to provide a national, cross-sectoral forum for the oversight and active review of Ireland’s AML/CFT framework. This committee was formed in 2003; however, the Terms of Reference were extensively reviewed in 2021 and revised in 2022. The Terms of Reference of the committee can be found here:

Terms of Reference Ireland's Anti-Money Laundering Steering Committee - May 2022

The AMLSC has Standing and Associate Members.

The following authorities participate in the AMLSC as Standing Members:

• The Department of Finance
• The Department of Justice
• FIU Ireland (structured as an operationally independent part of An Garda Síochána)
• The Anti-Money Laundering Compliance Unit (structured as an operationally independent part of the Department of Justice)
• The Criminal Assets Bureau
• The Central Bank of Ireland
• The Defence Forces
• The Office of the Director of Corporate Enforcement (to be re-established as the Corporate Enforcement Authority)

Furthermore, the following organisations participate in the AMLSC as Associate Members:

• The Department of Enterprise, Trade and Employment
• The Office of the Revenue Commissioners
• The Office of the Director of Public Prosecutions
• The Department of Foreign Affairs
• The Department of Further and Higher Education, Research, Innovation and Science
• The Department of Rural and Community Development
• The Law Society of Ireland
• The Legal Services Regulatory Authority
• The Designated Accountancy Bodies
• The Charities Regulator
• The Property Services Regulatory Authority
• The Private Sector Consultative Forum

Irish anti-money laundering legislation is largely contained within the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, as amended. This Act and the legislation which has amended it, gives effect to the European Union’s Anti-Money Laundering Directives, the latest of which is Directive (EU) 2018/843, commonly referred to as the “Fifth Anti-Money Laundering Directive” or “5AMLD”.

Elements of the Directive dealing with beneficial ownership of companies and trusts have been transposed by the Department of Finance by way of Statutory Instrument. The establishment of a central register of payment and banks accounts and safe-deposit boxes is also being progressed by the Department of Finance.

In July 2021, the European Commission published a four-part package of draft legislative proposals:

• A sixth AML Directive;
• A new AML Regulation, which will collectively replace the current Fifth AML Directive;
• A revised Funds Transfer Regulation to replace Regulation (EU) 2015/847, which entered into force with the Fourth AML Directive in 2015. The existing Regulation requires payment service providers to collect and retain information on the sender and receiver of wire transfers. The revised version will extend those obligations to certain crypto asset service providers;
• A Regulation establishing a new central supervisor for AML matters at EU level, currently referred to as the AML Authority or “AMLA”.

The legislative process for the package is expected to be completed in 2023 and it is proposed that the Directive and Regulations will take effect, or require transposition, three years later.

Articles 30, 31 and 32a of the Fifth Anti-Money Laundering Directive require Member States to establish central registers of beneficial ownership information in relation to:

(i) corporate and other legal entities;

(ii) express trusts; and

(iii) payment and bank accounts and safe-deposit boxes.

‘Beneficial owner’ is defined as any natural person(s) who ultimately owns or controls the customer and/or the natural person(s) on whose behalf a transaction or activity is being conducted. Transparency of beneficial ownership is increasingly seen as a key measure in the fight against money laundering and terrorist financing, especially in regard to large-scale and organised criminal groups. One method of increasing transparency is to establish Registers of Beneficial Ownership of various entities. If an entity came under suspicion of being misused to launder funds, for instance, law enforcement can use the Register to identify the ultimate beneficial owner of the entity.

Registers of beneficial ownership for corporate and other legal entities have been established by two Statutory Instruments. The European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019 (S.I. 110/2019) requires corporate entities (including industrial and provident societies) to take all reasonable steps to hold adequate, accurate and current information on their beneficial ownership. This information is to be kept in their own beneficial ownership register. Furthermore, they must deliver the collected information to the Central Register of Beneficial Ownership (https://rbo.gov.ie/). The information is then stored centrally and may be accessed by competent authorities.

The European Union (Modifications of Statutory Instrument No. 110 of 2019) (Registration of Beneficial Ownership of Certain Financial Vehicles) Regulations 2020 (S.I. 233/2020) applies the obligations outlined above to certain financial vehicles, specifically:

• Irish Collective Asset-Management Vehicles (ICAVs)
• Unit Trusts;
• Some credit unions.

Again, the purpose of this is to ensure that information on the beneficial owners of these financial vehicles is held in a central register. The Central Bank of Ireland operates this register and is the Registrar.

A central register of beneficial ownership information for express trusts was established by the European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2021 (S.I. 194/2021). These regulations also impose obligations on trustees to take reasonable steps to hold adequate, accurate and current information on the beneficial ownership of trusts for which they act as trustee and to then file this with the central register. This register is operated by the Office of the Revenue Commissioners.

Article 32(a) requires Member States to put in place centralised automated mechanisms at national level to allow for the identification, within a timely manner, of any individual or legal person holding or controlling a payment account and bank account (identified by IBAN), or safe-deposit box held by a credit institution within a Member State’s jurisdiction. The mechanism will assist with the detection and investigation of money laundering and terrorist financing. Work is underway to develop the necessary legislation to establish the mechanism, in addition to the technical development of the mechanism by the Central Bank of Ireland.

The Financial Action Task Force (FATF) is an inter-governmental body founded in 1989, which sets standards to assist its 37 member countries in preventing, detecting and investigating money laundering and the financing of terrorism. FATF’s 40 Recommendations are widely considered the global standard for AML/CFT. Ireland has been a member of FATF since 1991.

In a seven to ten year cycle, the FATF organises mutual evaluations of its member countries’ AML/CFT systems and publishes reports on its findings. These peer reviews involve an in-depth examination of the legal, regulatory and operational measures in place and the effectiveness of the country's AML/CFT framework.

Ireland’s most recent Mutual Evaluation Report (MER) was published in 2017. The MER found that “Ireland has a sound and substantially effective regime to tackle money laundering and terrorist financing”. The MER noted that Irish competent authorities follow a risk-based approach in the supervision of their respective sectors and have established good cooperation with financial institutions and designated non-financial businesses and professions. The MER deemed coordination, cooperation and the use of financial intelligence to be strong elements of the Irish AML/CFT framework. The MER also noted areas where further improvements could be made. The AMLSC prepared and has been implementing an action plan to address these recommendations.

In accordance with FATF procedures, Ireland undergoes regular follow-up assessments on the progress made in enhancing its AML/CFT framework since the 2017 MER. In a mark of the progress achieved within just two years, Ireland was upgraded on its compliance with eleven of the FATF Recommendations in its Second Follow-Up Report in 2019. Among the Recommendations upgraded were those in relation to new technologies, jurisdictions identified as ‘higher risk’ and the regulation and supervision of financial institutions. Ireland was further upgraded on another FATF Recommendation related to Customer Due Diligence in its Fourth Follow-Up Report in 2021. Moreover, a Recommendation on New Technologies was reassessed due to new requirements being added in relation to the regulation of Virtual Asset Service Providers. In a mark of our continued progress, our previous rating of Largely Compliant on the Recommendation was upheld following an assessment of the new requirements.

Ireland will submit its next follow-up report to FATF in 2024.

Following the transposition of the Fourth Anti-Money Laundering Directive, the Central Bank of Ireland developed guidelines in order to assist credit and financial institutions in understanding their AML/CFT obligations. The guidelines were subsequently updated in 2021, to reflect requirements following transposition of the Fifth Anti-Money Laundering Directive, including the extension of AML/CFT obligations to Virtual Asset Service Providers.

The Guidelines are publicly available at: https://www.centralbank.ie/regulation/anti-money-laundering-and-countering-the-financing-of-terrorism/guidance-on-risk

Ireland produced its first AML/CFT National Risk Assessment (NRA) in 2016, then updated it fully, in 2019. The NRA aims to provide a broad assessment of Ireland’s Money Laundering/Terrorist Financing (ML/TF) risks, to enhance the understanding of them and to develop effective strategies to address them.

A number of sector-specific ML/TF risk assessments have also been conducted. These examine an emerging risk, or facilitate greater understanding of a specific sector of the economy. Three sector-specific risk assessments have been produced to date:

• the gambling sector, in 2018
• new technologies, in 2019
• legal persons and legal arrangements, in 2020.

All risk assessments are publicly available at: National Risk Assessment - Money laundering and Terrorist Financing

The Private Sector Consultative Forum is an AML/CFT information-sharing network of designated persons, competent authorities and public agencies, established to foster discussion and information-sharing on AML/CFT issues, such as financial crime prevention practices, processes, sanctions and evolving threats and vulnerabilities.

The PSCF meets on a monthly basis and strives to include members that represent all categories of person whose activities oblige them to take preventative measures as set out in the Criminal Justice Act 2010, as amended. This includes the banking and insurance industries, professional (legal and accounting) bodies and the non-profit sector.

The Forum generates dialogue that aims to inform the public sector of AML/CFT developments in the private sector, while supporting its members to raise standards and achieve best practice in the prevention and detection of financial crime. It also provides an opportunity for the public sector to keep other stakeholders abreast of new policy developments at EU and international levels and to deliver clarity on developing or emerging regulatory issues. In doing so, it supports governmental, regulatory and law enforcement initiatives aimed at achieving a better understanding of the risks and vulnerabilities of financial crime within both the financial and non-financial sectors and to the Irish economy as a whole.

The goals of the PSCF are to:

• support the development of an appropriate operational environment to assist Ireland in the achievement of an effective AML/CFT framework, in line with international standards;
• discuss and provide input into the implementation of AML/CFT measures, to ensure compliance with EU law and international standards;
• develop an understanding of and continue to improve the identification of money laundering, terrorist financing threats and vulnerabilities within the represented sectors and their risks to the Irish economy;
• provide feedback to the AMLSC and the Cross-Departmental International Sanctions Committee (C-DISC) on AML/CFT on issues that arise, concerning the implementation of AML/CFT measures.

Designated persons are people or entities required, under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, as amended, to apply measures to prevent their businesses from being misused for the purposes of money laundering or terrorist financing. The Act also establishes a number of competent authorities that supervise designated persons and work to ensure compliance with the requirements of the Act:

• the Central Bank of Ireland for credit or financial institutions, including Virtual Asset Service Providers and Trust and Company Service Providers that are subsidiaries of a credit or financial institution.
• the Designated Accountancy Bodies for auditors, external accountants, tax advisers, and some Trust and Company Service Providers. In the case of trust or company service providers, they are only supervised by a Prescribed Accountancy Body if all Principals (Partners, etc.) are members of that Body and 75+% of a firm’s shares or voting rights are controlled by members of the Body.
• the Law Society of Ireland for solicitors.
• the Bar Council and the Legal Services Regulatory Authority for barristers.
• the Property Services Regulatory Authority for property service providers.
• the Minister for Justice for any other designated person under the Act, these duties being administered by the Anti-Money Laundering Compliance Unit of the Department of Justice.

Sanctions – also known and referred to as “restrictive measures” – are legally binding measures that can be taken against individuals, entities or countries. Sanctions are adopted by the United Nations Security Council under Chapter VII of the UN Charter and through decisions taken at European Union level.

Ireland

EU and UN sanctions are implemented in Ireland through EU Council Decisions and Regulations. The Regulations are directly applicable in Irish law. In addition, Statutory Instruments (SIs) are frequently made in order to provide for a domestic offence for breach of the sanctions and for related penalties. A comprehensive list of SIs may be found in the searchable Irish Statute Book http://www.irishstatutebook.ie/.

It might be noted that while a “whole of government” approach is taken to the implementation of sanctions, the relevant SIs are made by either the Minister for Finance or the Minister for Enterprise, Trade and Employment. Operational responsibility for implementation, however, lies with the relevant Competent Authorities as outlined below. Other departments and agencies also have a role in implementing sanctions regimes within their functional areas of responsibility.

Who are the Competent Authorities for sanctions in Ireland and what is their role?

For the purpose of EU sanctions regulations, the following have been designated as Ireland’s “Competent Authorities”:

Department of Foreign Affairs and Trade

The Department of Foreign Affairs is responsible for foreign policy and representing Ireland internationally. In the context of sanctions, this involves engagement with the relevant bodies at the United Nations and the EU and ensuring information is shared with the appropriate government departments and agencies in Ireland. The department’s officials represent Ireland at EU working groups where sanctions measures are negotiated and this participation is supported by input, when appropriate, from other departments. The department is also responsible for considering any requests for humanitarian exemptions pursuant to a sanctions regime.

Department of Enterprise, Trade and Employment

The Department of Enterprise, Trade and Employment is responsible for enforcing trade-related sanctions. Such sanctions may include restrictions or complete embargos on certain exports, for example, Dual-use items and Military equipment, to designated entities or regions. Sanctions may also apply to associated support services, such as maintenance and repair. In some instances, exporters may be required to obtain prior authorisation from the department for exports of certain items.

Central Bank of Ireland

The Central Bank of Ireland is responsible for the administration, supervision and enforcement of relevant aspects of financial sanctions in Ireland. Financial sanctions are primarily concerned with curtailing the movement of payments and capital.

Contacts

If a query relates to a particular element of a sanctions regime (for example financial sanctions; trade sanctions; arms embargo; humanitarian exemptions) it is advisable to contact that relevant Competent Authority in accordance with the information outlined above.

We recommend that designated persons refer to the EU and UN Consolidated Lists of Sanctions in the first instance, to ensure the most up-to-date notification of sanctioned individuals.

Link to the UN Sanctions List: www.un.org/securitycouncil/content/un-sc-consolidated-list.

Link to the EU Sanctions list: eeas.europa.eu/cfsp/sanctions/consol-list/index_en.htm.