The draft Heads of a new Bill in the area of anti money laundering – the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2012 were published in June 2012.

The changes aim to refine Ireland’s existing anti-money laundering (AML) regime in light of the last two years’ experience and to reflect the Financial Action Task Force’s recommendations. 

The proposals are at the early stages of the legislative process and relevant industry sectors will be consulted before more detailed amendments are drafted. Given the AML regime’s significant impact on the financial-services industry, companies that are designated persons should monitor the proposals’ progress and, where possible, engage in the process.

The Government’s key proposed amendments include the following:

• Designated persons will not be able to rely on designations by the Minister of Justice naming non-EU countries as being AML equivalent unless the designated person has also carried out its own assessment of the risk of money laundering or terrorist financing in that jurisdiction
• Senior management approval will be necessary where an existing customer residing outside of Ireland becomes: (a) a politically exposed person (PEP) or; (b) a close family member or associate of a PEP. Where approval cannot be given due to a failure on the part of the customer to provide information then the designated person must discontinue the business relationship and not provide any services for so long as the failure continues
• Existing customer due diligence (CDD) requirements will be expanded by:
  • Requiring CDD to be conducted if the designated person has reasonable grounds to ‘suspect’ (as opposed to ‘believe’) that the customer is involved in, or the service sought by the customer is for the purpose of, money laundering/terrorist financing
  • Placing an obligation on designated persons to monitor dealings with customers, including by scrutinising the source of wealth and of funds for transactions
  • Specifically detailing certain transactions to which monitoring applies
  • Imposing a duty on a designated person to apply additional measures where the designated person believes a customer/transaction presents a heightened risk of money laundering/terrorist financing (previously there was discretion in this respect)
• Simplified CDD (SCDD) obligations, with a designated person now being required to take steps to determine whether or not a customer or product is a “specified customer” or “specified product” before SCDD can be applied
• Providing false or misleading information for the purposes of customer due diligence will be an offence which may be tried summarily or on indictment
• Proposals to require designated persons to keep CDD records up to date and regularly update their internal systems and practices
• Proposals that CDD records no longer be required to be retained in the State

The IFIA responded to the Department of Justice on 30 July 2012 in relation a number of the more onerous proposals set out in the draft Bill. No clarification has been given on when the formal Bill will be finalised.

For further information, please contact one of the key contacts listed above or your usual contact in our Asset Management and Investment Funds Team.