On 18 November 2015, the Central Bank of Ireland ("Central Bank") published its report on Anti-Money Laundering/Countering the Financing of Terrorism and Financial Sanctions Compliance in the Irish Funds Sector (the "Report"). The Report is based on on-site inspections carried out by the Central Bank on a sample of Funds and Fund Service Providers ("Firms") operating in Ireland in 2014 and supplemented by off-site assessments.
The findings of the Report focus on Compliance and Governance, Customer Due Diligence ("CDD"), Identification and Escalation of Suspicious Transactions, Terrorist financing and Financial Sanctions.
Key points identified in the Report include:-
- insufficient evidence that the requirements of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 ("CJA 2010") were implemented and that adequate risk assessments were performed in a timely manner;
- a lack of oversight of service providers carrying out AML/CTF functions on behalf of the relevant fund;
- reliance on third parties where the legislative requirements of section 40(5) (i.e. that there is a written agreement in place between the relevant firm and the relevant third party whereby the relevant third party agrees to forward any CDD to the firm upon request) of CJA 2010 are not satisfied;
- insufficient evidence of effective on-going monitoring of investor transactions;
- insufficient documentation being retained to support the application of simplified customer due diligence ("SCDD");
- a lack of procedures and controls for ceasing the provision of services to, or discontinuing business relationships with, investors who have failed to provide the required or updated CDD documentation or information requested by Firms;
- weaknesses in the suspicious transaction reporting processes and procedures and the record keeping associated with these reports;
- deficiencies in the on-boarding process of PEPs, including the failure to sufficiently identify, verify and document Source of Funds ("SOF") and Source of Wealth ("SOW");
- insufficient evidence that new PEPs (and existing investors re-categorised as PEPs) are subject to senior management approval and the completion of enhanced due diligence (EDD);
- insufficient evidence that all members of the Firm's board and/or staff at the Firm had received instruction in the law relating to AML/CFT issues; and
- documented policies and procedures not being adhered to in all cases.
The Central Bank expects that funds and their respective service providers should work closely together to review their systems and controls in light of the findings contained in the Report and take appropriate steps to ensure compliance with the Central Bank's recommendations. The Report concludes that more work is required by Firms to manage AML risks.
The Regulatory and Compliance team in Dillon Eustace are available to assist in reviewing and updating firm's AML Policy and Procedures as necessary. In addition, we deliver AML/CTF training to firms on a very regular basis.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.