On 26 November 2018, the Criminal Justice (Money Laundering and Terrorist Financing) Act 2018 (the "AML Act 2018") was commenced, transposing the majority of the Fourth Anti-Money Laundering Directive ("4MLD") into Irish law.
The AML Act 2018 significantly alters and expands the scope of Irish anti-money laundering and counter-terrorist financing ("AML/CFT") legislation, increasing the focus on risk assessment, requiring certain "unregulated" financial institutions to register with the Central Bank of Ireland ("CBI") and bringing certain providers of gambling services within scope of AML/CFT requirements for the first time.
Main changes under the AML Act 2018
Registration of Designated Persons ("Schedule 2" entities)
Certain financial institutions are deemed to be with scope of AML/CFT legislation by virtue of the activities they engage in and regardless of their authorisation status (e.g. SPVs involved in lending or financial leasing). Such entities have been colloquially known as "Schedule 2" financial institutions. Previously, Schedule 2 financial institutions in Ireland were not required to register with the CBI. The AML Act 2018 imposes a registration requirement and provides that the CBI will now establish and maintain a register of such entities. Failure to register is a criminal offence.
In registering, a Schedule 2 financial institution is required to complete a form specifying the activities which qualify it as a designated person and providing a profile of its business in terms of number and type of customers, geographic location of customers and business activities, number of staff and distribution channels. Financial details must also be provided including total assets and total turnover attributable to in- scope activities. The form contains a specific section for completion by Special Purpose Entities ("SPEs") which are defined as a "legal entity, with little or no physical presence and narrow, specific, and/or ring-fenced, objectives, such as the segregation of risks, assets and/or liabilities, or as a cash conduit." In submitting the completed form, a Schedule 2 financial institution will need to confirm that it has an appropriate AML/ CFT control framework in place and will also need to confirm that it has taken and will continue to take reasonable steps to ensure the fitness and probity of its people, including members of the Board, management team and its beneficial owners.
While Schedule 2 financial institutions were...