CPD Accreditation Reference 2013-0599
The Legal & Practitioners Guide to the
Criminal Justice (Money Laundering and
Terrorist Financing) (Amendment) Bill 2013
20th March 2013
Paula Reid
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Anti-Money Laundering Compliance
Overview of New Developments
ACOI Seminar, 20 March 2013
Paula Reid, Partner, A&L Goodbody, Ireland - 15397943
2
Anti-Money Laundering – What’s New
Criminal Justice (Money Laundering and Terrorist Financing)
(Amendment) Bill, 2013
Commission Proposal for a Fourth Anti-Money Laundering Directive
Emerging themes in domestic AML Regulation
Impact on Compliance/Senior Management
15397943
3
CRIMINAL JUSTICE (MONEY LAUNDERING AND TERRORIST
FINANCING) AMENDMENT, BILL 2013
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Criminal Justice (Money Laundering and
Terrorist Financing) Amendment, Bill 2013
 Bill published 1 February – (Heads of this Bill were published in
June 2012)
 Minor amendments to the Criminal Justice (Money Laundering
and Terrorist Financing) 2010 Act proposed to align Irish law with
FATF Recommendations
5
Criminal Justice (Money Laundering and
Terrorist Financing) Amendment, Bill 2013
 Amendment to the definition of “occasional transaction” which is
one of the triggers for CDD
» for customers of private members’ gaming clubs the financial
threshold is set at not less than €2,000
» for certain wire fund transfers at not less than €1,000
» confirmation that the definition applies when an amount of
€15,000 is reached, rather than exceeds €15,000
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Criminal Justice (Money Laundering and
Terrorist Financing) Amendment, Bill 2013
 Simplified Due Diligence
» SCDD cannot be applied unless
checks are done to confirm the
customer is a “specified customer” or
“specified product”
 PEPs
» enhanced CDD must be applied to an
existing customer who subsequently
becomes a PEP and enhanced ongoing monitoring to business
relationships with a customer who is
or becomes a PEP
7
Criminal Justice (Money Laundering and
Terrorist Financing) Amendment, Bill 2013
 Enhanced CDD
» mandatory enhanced CDD where there is a higher risk of
money laundering/terrorist financing (ML/TF)
 Internal policies and procedures
» measures to keep documents and information about
customers up to date
» additional measures to give effect to enhanced CDD where
there is a heightened risk of ML/TF
» measures to manage the risks of ML/TF which may arise from
technological developments including the use of new products
and new practices and the manner in which services relating to
such developments are delivered.
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Criminal Justice (Money Laundering and
Terrorist Financing) Amendment, Bill 2013
 Enforcement
» extension of enforcement powers of
State competent authorities so as to
allow such authorities to issue
directions to designated persons to
take specific actions/processes that
are reasonably necessary for
purposes of compliance
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Criminal Justice (Money Laundering and
Terrorist Financing) Amendment, Bill 2013
HEADS
BILL
Amendment to Section 31 – prescribed countries
Not in Bill
HEADS
Amendment to Section 54 - requirement for
“records to be kept in the State” abolished
Not in Bill
Central Bank to be regulator of subsidiaries of
credit and financial institutions
Not in Bill
New offence of false/misleading information
Not in Bill
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Criminal Justice (Money Laundering and
Terrorist Financing) Amendment, Bill 2013
 Bill is not in line with proposed Fourth
Anti-Money Laundering Directive
 Does not address issues which are
subject to regulatory scrutiny or
industry concern and focus
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PROPOSAL FOR A FOURTH ANTI-MONEY LAUNDERING
DIRECTIVE
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Proposal for a Fourth Anti-Money
Laundering Directive
Background
 Under the 3 MLD the Commission is required to report on the
implementation of the Directive
 Commission Report was published in April 2012 – concluded that
the 3 MLD framework appears to work well and no fundamental
changes required. Key changes flagged:
» incorporating more risk-based elements in the framework
» measures to assist with the transparency of legal persons and
arrangements
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Proposal for a Fourth Anti-Money
Laundering Directive
» new provisions to deal with domestic PEPs and those working
for international organisations
» greater focus on sanctions for non-compliance
» greater alignment of AML rules with principles of data
protection
» enhancing supervisory powers in cross-border situations
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Proposal for a Fourth Anti-Money
Laundering Directive
 Scope
» financial threshold which is CDD
trigger for traders in goods for
cash reduced from €15,000 to
€7,500
» inclusion of providers of “gambling
services” – currently ‘casinos’
» inclusion of tax crimes within
definition of “serious crimes” – no
impact in Irish law
» minimum standards directive
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Proposal for a Fourth Anti-Money
Laundering Directive
 Risk-based approach
»
EBA, ESMA, EIOPA to produce joint opinion on
ML/TF union risks
»
national risk assessments to be conducted
»
Member States shall ensure that regulated
businesses apply a risk-based approach having
regard to these risk assessments.
»
independent audit to test robustness of AML
procedures may be appropriate
»
greater focus on engagement by senior
management in formulating and updating risk
profiles
»
supervisors should apply a risk-based approach
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Proposal for a Fourth Anti-Money
Laundering Directive
 Definition of senior management
» “an officer or employee with sufficient knowledge of the
institution’s ML/TF risk exposure and sufficient seniority to
make decisions affecting its risk exposure. It need not involve a
member of the Board of Directors”
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Proposal for a Fourth Anti-Money
Laundering Directive
 Simplified Due Diligence
»
new approach to SCDD
»
no exemption for certain categories of “regulated” customer. Decisions on
how and when to apply SCDD will have to be justified on the basis of lower
risk and by reference to factors set out in Annex II
 Beneficial Ownership
»
companies required to hold adequate, accurate and current information on
their beneficial ownership
»
such information to be assessed in a timely manner by regulators/regulated
businesses
»
trustees must disclose their status to designated persons when forming
business relationships/occasional transactions
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Proposal for a Fourth Anti-Money
Laundering Directive
 PEPs
» PEPs regime extended to domestic PEPs and persons holding
prominent positions in international organisations
» PEP checks should continue for not less than 18 months after a
person has ceased to hold office as a PEP
» checks to determine whether the beneficiaries of a life or investment
related insurance policy, and/or where required, the beneficial owner
of the beneficiary are PEPs. Such measures to be taken at the time
of pay-out/assignment
 Enhanced CDD
» When assessing ML/TF risks Member States must consider the
potential high risk factors in Annex II
» EBA, EIOPA, ESMA guidelines envisaged
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Proposal for a Fourth Anti-Money
Laundering Directive
 Record-Keeping – alignment with data
protection policies
» CDD and transactional records should
be maintained for a period of 5 years
after the business has ended. After this
time, records should be deleted unless
otherwise directed by national law.
Member States may allow retention
after this time only if required for
purposes of ML/TF investigations
» the maximum retention period shall not
exceed ten years
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Proposal for a Fourth Anti-Money
Laundering Directive
 Internal Policies and Procedures
»
greater alignment with data protection
»
entities that are part of a group should implement group-wide policies and
procedures, including data protection policies and procedures, for sharing of
information within the group for AML/TF purposes
»
branches or majority owned subsidiaries in third countries should apply EU,
AML and data protection rules to the extent permitted by that country, and
»
where there is a difficulty with such compliance additional steps will be
required to handle the risk of ML/TF. This may include additional supervisory
actions
»
EBA, EIOPA and ESMA technical standards envisaged specifying the type of
additional measures required
»
internal training should address data protection
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Supervision
 Member States to maintain statistical reports on the size of different AML
regulated sectors and on the level and nature of STRs
 Regulators should apply a risk-based approach to supervision and;
»
have a clear understanding of the ML/TF risks present in their country
»
have on-site and off-site access to all relevant domestic/international risks
»
base frequency/intensity of supervision on the risk profile of the regulated
business and ML/TF risk in the country
»
take into account the degree of discretion allowed to the regulated entity
and review the assessments underlying this discretion and the adequacy
of AML controls
»
EBA, EIOPA, ESMA guidelines envisaged on factors to be considered
when conducting supervision on a risk-sensitive basis
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Proposal for a Fourth Anti-Money
Laundering Directive
 Enforcement
»
sharper focus on enforcement generally and on the application of
administrative sanctions for systems failures similar to administrative sanction
regime in Ireland, and
»
on potential liability of senior management
»
EBA, EIPOA, ESMA guidelines envisaged.
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EMERGING THEMES IN AML REGULATOIN
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Emerging Themes in AML Regulation
 CBI inspections focussed on:
» Risk-based approach – doing it, documenting it and updating it
and senior management engagement around it
» Gaps in CDD – rigour and systems to close gaps
» Enhanced CDD for PEPs is mandatory
» Simplified due diligence – focus on the Act
» Training – informed, intelligent and effective
» Senior management – engagement, effectiveness and
accountability
» Alignment of compliance with governance
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What Does The Future of AML
Regulation Look Like?
 Greater emphasis on the risk-based approach – preparing,
documenting and updating
 Increased judgment for compliance functions
 Effective training
 Real engagement by senior management – “the effective board”
 Need for board policy/mission statement
 Enforcement – administrative sanctions for systems failures
 Bespoke compliance – not one-size-fits all
 Sectoral guidance is appropriate
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