Following on from a previous report, the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (the “Act”) became effective on 15 July 2010.  The Act amends and strengthens the anti-money laundering (“AML”) and terrorist financing regime in Ireland. It also serves to bring Ireland’s AML regime into line with the Third Anti-Money Laundering Directive. The AML regime was previously governed by the Criminal Justice Act 1994, as amended.

The Act applies to every “designated person”, as defined in section 25 of the Act. In an insurance context, the Act applies to companies that write life assurance products. The sale of reinsurance and non-life insurance products, on the other hand, fall outside the scope of the Act. There are also a number of exemptions whereby designated bodies could fall outside the Act, e.g., if a company’s total annual turnover attributable to life assurance business is under €70,000.
 
The Act incorporates a number of new concepts into the Irish AML regime and enhances some previously existing requirements. New concepts include:

• a risk-based approach to identification requirements;
• identification of beneficial owners;
• “politically exposed persons”; and
• directions by Gardaí (i.e. the Irish police) and judges relating to investigations.

Enhanced obligations relate to:

• training;
• record keeping; and
• customer due diligence (“CDD”).

The main CDD requirements include:

• identification and verification of a customer’s identity;
• verification and understanding of the ownership and control structure of beneficial owners;
• information on the purposes and intended nature of business relationships; and
• ongoing monitoring.

There are also provisions for simplified and enhanced CDD in certain circumstances. In addition, there are provisions around the reliance on third parties that are worth careful consideration, with the most notable practical implication of these provisions being that the designated person remains primarily responsible under the Act even where they have made such a reliance. 
 

In seeking to implement the requirements of the Act, designated persons should have regard to the draft ‘Core Guidance Notes’, and to the relevant draft ‘Sectoral Guidance Notes’.  Companies selling life assurance products, for example, should study the draft ‘Sectoral Guidance Notes on the Prevention of the Use of the Financial System for the Purpose of Money Laundering and Terrorist Financing for Life Assurance’.  Draft guidance notes are currently available on the website of the Central Bank of Ireland.  Final versions of the guidance notes are expected by the end of October 2010. 
 
The Minister for Justice and Law Reform has also published an Order designating countries and territories outside the EU that are deemed to have equivalent AML requirements as those under the Directive. The United States, Japan, Brazil and South Africa are some of the countries included.

For further information please contact John Larkin or Grant Murtagh.