On 16 July 2020, the Court of Justice of the EU (the "ECJ")ordered Ireland to pay a fine of €2 million to the European Commission, due to Ireland's failure to fully transpose the Fourth Anti-Money Laundering Directive (EU) 2015/849 ("MLD4") on time.
Under the EU treaties, the European Commission may take
infringement proceedings against an EU country that fails to
implement EU law. It can ultimately refer to the matter to the ECJ
with a request for financial penalties to be imposed on the
infringing Member State.
MLD4 was published in the EU's Official Journal on 5 June 2015 and Member States were required to transpose the Directive into national law by 26 June 2017. While Ireland implemented part of MLD4 in advance of the transposition deadline with the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities)Regulations 20161, the ECJ found that MLD4 was not finally fully transposed into Irish law until 3 December 2019.
In deciding to impose a financial penalty of €2m on Ireland
the ECJ took into account the seriousness of Ireland's failure
to fulfil its obligations, the length of time which the failure
persisted (almost 2.5 years), and the ability of Ireland to pay a
financial penalty, by reference to its GNP.
These Regulations have been revoked by the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019.
Ireland is not the only country to have been fined by the ECJ for failure to implement MLD4 by the relevant deadline. The ECJ also published a decision last week, requiring Romania to pay the Commission €3m for delays in implementing the Directive.
It seems likely that more fines will be issued arising from a failure to properly transpose MLD4, or a failure to transpose it on time, as the European Commission has also recently referred cases concerning Austria, Belgium and the Netherlands to the ECJ, asking the ECJ to impose financial sanctions on those countries, for failing to fully implement MLD4 into their national law.
Ireland - along with several other EU Member States - has also recently been put under pressure by the European Commission to fully implement the Fifth Anti-Money Laundering Directive (EU) 2018/843 ("MLD5"). MLD5 was due to be transposed into national law by 10 January 2020, however to date Ireland has only partially transposed it into domestic legislation. In May of this year, the European Commission sent Ireland a formal notice for having only partially transposed MLD5. Ireland has four months to respond to this letter. It remains to be seen whether Ireland's failure to fully implement MLD5 on time could result in another referral to the ECJ.
Originally published by Dillon Eustace, July 2020
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