(i) Central Bank Inspections
The Central Bank is currently in the process of carrying out on-site inspections to confirm that certain companies (including funds) are in compliance with the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, (the "CJA 2010"), particularly with respect to the customer due diligence obligations and internal policies and procedures including training.
In advance of the inspection, companies are required to provide (among other matters) the following:
- details in relation to the list of new customers since 15 July 2010;
- confirm those customers who have not been fully identified and verified in accordance with the CJA 2010;
- confirm those who have been verified by a relevant third party;
- provide copies of policies and procedures to prevent and detect money laundering and terrorist financing; and
- provide copies of board minutes for the last two years.
(ii) Central Bank Instructions on EU Financial Sanctions
On 24 August 2011 the Central Bank, as the Competent Authority responsible for the administration and enforcement of EU Financial Sanctions, issued Instructions to institutions, requiring them, for example, to:
- examine their records and confirm to it on or before 1 November 2011 whether they have any funds or economic resources in the name of any person, group or entity currently the subject of EU restrictive measures;
- provide the Central Bank with details of any funds and economic resources, belonging to, owned or held by such persons which the institutions have frozen;
- bring any name(s), so discovered, to the attention of the Garda Bureau of Fraud Investigation; and
- have adequate systems and controls in place to ensure compliance with their obligations under financial sanctions legislation including (a) screening new clients against current restrictive measures and (b) screening customer databases on an ongoing basis for compliance with prevailing restrictive measures.
Persons who fail to comply with an Instruction issued by the Central Bank are liable on conviction to imprisonment and/or a fine.
All correspondence with the Central Bank in relation to the information requested above should be addressed to:
Financial Sanctions Unit,
Central Bank of Ireland,
Harcourt Road, Dublin 2. Email: email@example.com
The Central Bank's Financial Sanctions Notification August 2011, which includes information on outstanding financial sanctions-related Statutory Instruments and EU Regulations, is available on its website: www.centralbank.ie.
(iii) EU Financial Sanctions
In July and August further Council Implementing Regulations No. 611/2011, 755/2011 and 804/2011 were introduced, extending the scope of Council Implementing Regulations No. 442/2011 and 204/2011 in terms of the persons and entities upon whom those Regulations impose restrictive measures and financial sanctions in Syria and Libya respectively.
However, in view of the developments in Libya, Council Implementing Regulations Nos. 572/2011, 573/2011 and in September No. 204/2011, eased the restrictions imposed, for instance by permitting Member States to authorise the release of frozen funds or economic resources of specified persons/entities in Libya for humanitarian purposes and by deleting specified entities to whom Regulation (EU) No 204/2011 apply.
These Regulations may be accessed by visiting the Financial Regulation section of the Central Bank's website: www.centralbank.ie.
(iv) EU Commission Presents Options for Establishing an EU System for Tracking Terrorist Financing
Following the conclusion in June 2010 of the agreement on the processing and transfer of financial messaging data for the purpose of the EU-US Terrorist Financing Tracking Programme ("EU-US TFTP Agreement"), the European Parliament and Council of the European Union requested that the European Commission ("Commission") propose, by 1 August 2011, "a legal and technical framework for the extraction of data on EU territory".
The Commission took an initial step in this regard on 13 July 2011 by adopting a Communication outlining the main options for establishing an EU Terrorist Financing Tracking System ("EU TFTS").
It is considered that a European TFTS should have two main objectives, namely it must contribute to limiting the amount of personal data transferred to the US and it should contribute significantly to efforts to cut off terrorists' access to funding and materials and follow their transactions.
The Communication gives clear indications about the key issues which need to be decided upon before such a system can be established. These include the need to fully respect the fundamental rights of European citizens, data protection and data security issues, the operational scope of the system, as well as costs.
The Communication presents the different options under consideration at this stage, without indicating any preferred one, which the Commission will now discuss with the Council and the Parliament before deciding on further steps on the basis of a thorough impact assessment.
The Communication is available on the Commission's website: http://ec.europa.eu/index_en.htm.
(v) AML/CTF Equivalent Jurisdictions List
The EU Commission has published an updated list of third countries considered as having equivalent AML/CTF systems to the EU. This common agreed list is not binding on Member States and does not override the need to continue to operate a risk-based approach. Indeed, the fact that a financial institution is based in a 3rd country featuring on the list only constitutes a refutable presumption of the application of simplified customer due diligence ("CDD"). Moreover, the list does not override the obligation under article 13 of the AML Directive to apply enhanced CDD measures in all situations which by their nature can present a higher risk of money laundering or terrorist financing, when dealing with credit and financial institutions, as customers, based in an equivalent jurisdiction.
In Ireland, S.I. 343 of 2010 is the current legislative provision which specifies the countries deemed to have AML/CFT equivalence ("white list countries") and only institutions in such white list countries can qualify as a "specified customer" (for simplified CDD), a "relevant third party" (for letters of assurance) or an "acceptable institution" (for source of funds as an enhanced due diligence measure).
The current Irish white list now differs in some respects from the agreed EU common list. For instance, on the current Irish list but not the EU list are Argentina and New Zealand, while India and South Korea appear on the EU but not the Irish list. This may result in revisions to the Irish list.
The Commission's updated list is available on its website: www.europa.eu.
(vi) Financial Action Task Force ("FATF") – Review of the Standards
The FATF is currently conducting a review of the 40+9 Recommendations, recognised as the international AML/CFT standards to combat the misuse of financial systems and which also form the basis of the EU's AML Directives. To ensure these standards remain relevant and to learn lessons from their implementation, the FATF has prepared a second public consultation paper, the first consultation having been undertaken between October 2010 and January 2011, outlining a set of policy proposals concerning issues such as: beneficial ownership; data protection and group-wide compliance programmes; wire transfers; targeted financial sanctions; and politically exposed persons.
Interested parties were invited to submit their views on the proposals no later than 16 September 2011. Substantive feedback on the FATF responses to the consultations will be provided when the revised standards are adopted in February 2012. The FATF expects to commence a new round of assessments towards the end of 2013.
The Consultation Paper may be viewed on the FATF website: www.fatf-gafi.org.
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