Following a relatively settled period, the Irish anti-money laundering and counter terrorist-financing ("AML/CFT") regime will shortly undergo significant reform in the shape of new domestic legislation with a heavy emphasis on risk, revised industry guidance and the establishment of central beneficial ownership registers.
A significant aspect of these reforms is that certain industry sectors will find themselves within the scope of AML/CFT legislation for the first time and will be subject to direct supervision for AML/CFT purposes by competent authorities. Affected firms should start preparing for these changes now to ensure they do not find themselves hurriedly introducing new systems, policies and procedures without properly thinking through their overall approach.
Implementation of the Fourth Anti-Money Laundering Directive ("4MLD")
4MLD was due to be transposed across Europe by June 2017. While Ireland implemented certain elements of 4MLD in November 2016 by introducing an obligation on incorporated entities to maintain details of beneficial ownership, the bulk of 4MLD has still not been implemented, and Ireland (along with Greece and Romania) has been referred to the European Court of Justice as a result of its inaction.
The Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2018 (the "AML Bill") which will amend existing AML/CFT legislation and ultimately give effect to 4MLD was introduced to the Dail in April 2018. The AML Bill passed all stages in the Dáil prior to its summer recess and it is expected that it will be enacted in October / November 2018.
Key Features of the Bill
Certain "unregulated" financial institutions will be required to register with Central Bank of Ireland
Under existing AML/CFT legislation, certain financial institutions are deemed to be designated as within scope of the legislation (i.e. a "designated person") by virtue of the activities they engage in and regardless of their authorisation status. Such entities have been colloquially known as "Annex 1" or "Schedule 2" financial institutions, and examples include SPV's involved in lending or financial leasing. In the UK, equivalent entities have for a number of years been subject to a registration and supervision regime administered by the Financial Conduct Authority.
To date, Annex 1 / Schedule 2 financial institutions in Ireland have not been required to register with the Central Bank of Ireland ("CBI"), but the Bill imposes a registration requirement and provides that the CBI will establish and maintain a...