Last updated: 16 Sep 2020 10:20 Posted in: Anti-money laundering

Member States of the European Union were required to introduce legislation by 10 January 2020 to transpose the Fifth Anti-Money Laundering Directive (5AMLD) into national law.

The Irish Government has now published the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2020, which proposes to amend the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010-2018.

The new Bill reflects the legislative outline set out previously in the 2019 General Scheme with some changes (for example, the Scheme proposed legislative provisions to support the Criminal Assets Bureau and An Garda Síochána in the administration of their AML/CTF functions by improving their access to bank records in electronic form).

Although the Bill transposes the majority of 5AMLD’s requirements, significant provisions remain outstanding. In August the Government announced that the Department of Finance would legislate for the establishment of a central register of beneficial ownership for express trusts and the establishment of centralised national bank and payment account registers. It is now likely that these will be legislated for separately, along with provisions in respect of Virtual Asset Service Providers regulation.

The new Bill introduces amendments to high and low risk factors, customer due diligence requirements, extending the scope of regulation and clarifying PEPs and beneficial ownership information. The new Bill includes the following key provisions:


Designated Persons

The Bill creates new categories of ‘designated person’, which will be required to apply anti-money laundering measures in the course of their business, including:

  • letting agents (in respect of transactions for which the monthly rent is at least €10,000)
  • virtual currency providers (providers engaged in exchange services between virtual and fiat currencies)
  • high-value art dealers (in respect of transactions of at least €10,000 in value)
  • tax advisors (the scope of persons who fall within the definition of tax advisor will be extended)


Beneficial Ownership information

Prior to the establishment of a business relationship with a customer to which beneficial ownership regulations apply, a designated person will be required to ascertain that information concerning the beneficial ownership of a customer is entered in the relevant beneficial ownership register (an entity's express trust register, the Central Register of Beneficial Ownership of Companies and Industrial Provident Societies, or the Central Register of Beneficial Ownership of Irish Collective Asset-management Vehicles, Credit Unions and Unit Trusts).

This provision builds upon that outlined in the European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2019 (as amended), which requires a relevant entity to provide beneficial ownership information to a designated person when entering into an occasional transaction, or forming a business relationship, with that designated person.

Accountants must not engage in a business relationship until the beneficial ownership information is obtained and this principle is further explained within AMLGAS-Ireland in relation to the timing of customer due diligence procedures.


Verification of Senior Managers as Beneficial Owners

Where the beneficial owner is a senior managing official, accountants will be required to verify the identity of that person, keep records of the steps taken and record any difficulties encountered in the verification process.


Politically Exposed Persons (PEPs)

The definition of PEP will be widened to include ‘any individual performing a prescribed function’ and the Minister for Justice and Equality will be empowered to issue guidelines to competent authorities in respect of the functions in the State considered to be ‘prominent public functions’.

The Bill also allows accountants to continue monitoring someone who was previously a PEP for as long as is reasonably required to take into account the continuing risk posed by that person and until such time as that person is deemed to pose no further risk specific to politically exposed persons.

AIA will be providing more guidance to members when received.


Examination of Background and Purpose of Certain Transactions

Designated persons must, as far as possible, examine the background and purpose of transactions which are complex or unusually large.


Conducting Customer Due Diligence

Accountants must conduct CDD at any time that they are required by virtue of any enactment or rule of law to contact a client for the purpose of reviewing information relating to the client’s beneficial owners.


Enhanced Due Diligence

The Bill provides a detailed list of enhanced due diligence measures that accountants are required to apply when dealing with a customer established or residing in a high-risk third country. These measures involve obtaining ‘additional information’ on the customer, beneficial owner(s), their sources of wealth, the intended nature of the business relationship, and completed or intended transactions.

Where appropriate senior management approval for establishing or continuing such a business relationship must be obtained, as well as approval to conduct enhanced monitoring ‘by increasing the number and timing of controls applied and selecting patterns of transaction that need further examination.’


‘Tipping off’

There are additional defences to proceedings in relation to ‘tipping-off’ provided within the Bill where:

  • the designated person making a disclosure is (or is making a disclosure on behalf of) a credit institution, financial institution, majority-owned subsidiary, or a branch of a credit or financial institution, and
  • the disclosure was made to an entity within the same group structure.

This amendment is designed to make provision for the sharing of information relating to suspicious transactions in group situations.


Feedback to designated persons

The Bill requires the Financial Intelligence Unit to ‘provide timely feedback’ to a designated person, ‘where practicable’ in respect of suspicious transaction reports made to them.


Updates for AIA members

Although the Bill has not yet been scheduled for passage through the Houses of the Oireachtas, it is expected to be introduced in the coming weeks.

In the meantime AIA members in practice operating within the Republic of Ireland can access AML advice and guidance in the members area.