On 6 September 2019, the Central Bank of Ireland (the "CBI") published the final version of its Anti-Money Laundering ("AML") and Countering the Financing of Terrorism ("CFT") Guidelines for the Financial Sector (the "Guidelines").
The Guidelines are designed to assist credit and financial institutions in understanding their obligations in relation to AML and CFT, following the implementation in Ireland of the 4th EU AML Directive.
The Guidelines are largely consistent with the draft guidelines issued in December 2018 as part of the CBI's Consultation Paper CP128, with the majority of changes being for the purposes of clarification. The purpose of this note is to set out some of the more material changes from the draft guidelines.
Timing of Customer Due Diligence ("CDD")
The Guidelines include a new paragraph acknowledging that the legislation allows a firm to identify and verify the identity of a customer during the establishment of a business relationship in circumstances where the firm believes there is no real risk of money laundering or terrorist financing. However, the Guidelines go on to emphasise that while an account may be opened prior to CDD being completed, transactions may not be carried out by or on behalf of the customer or beneficial owner until CDD is complete.
Unfortunately no guidance in given as to what constitutes a "transaction" for these purposes. For example, does the funding of the account itself constitute a transaction or does the transaction only arise upon the onward transmission of those funds or upon a subscription for a financial instrument? The most prudent course of action will be to conduct all CDD prior to accepting any funds from the customer. In the context of subscriptions for securities or shares/units in investment funds, it is clear that such securities, shares and units should not be issued until CDD is complete.
Documents used to satisfy CDD requirements
The Guidelines do not include examples of documentation that the CBI considers would satisfy the CDD requirements. Instead they state that, in applying a risk-based approach, firms should maintain their own lists of acceptable documents and such lists should be reviewed on an ongoing basis to ensure that they remain current and appropriate.
Obligation to identify and verify beneficial owners
Firms are required to identify beneficial owners, if any, without exception. The Guidelines clarify that the extent to which a beneficial owner's...