On 8 September 2020, the Irish Government approved the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2020 (the “Bill”). The Bill will transpose the Fifth EU Money Laundering Directive (the “Directive”). This will bring Ireland in line with the current European anti-money laundering and countering the financing of terrorism (“AML/CFT”) framework. The deadline for transposition into national law was 10 January 2020, the State was fined €2 million for delays in implementing the new rules. A summary of the key changes is detailed below.
The Bill introduces new categories of Designated Persons. These new categories will be obliged to comply with the provisions of the legislation once enacted. The new categories include the following;
- Persons whose professional activity is to provide assistance or advice on tax matters
- Property service providers (estate agents) who deal with the letting of property for which the monthly rent amounts to at least €10,000
- Virtual currency providers
- Persons involved in the trade of works of art but only in respect of transactions with a total value of at least €10,000
Politically Exposed Persons (“PEP”)
There is no change to the definition of PEP. However, there is now a requirement for a list of what are considered ‘prominent public functions’ to be drawn up and maintained by the Minister for Finance. Any individual executing one of these functions will be considered a PEP.
High Risk Third Country
The Bill introduces more specific requirements for customers established or residing in high risk third countries. The specific enhanced due diligence (“EDD”) measures that must be applied to such customers are as follows:
- Obtaining additional information on the customer and the beneficial owners
- Obtaining additional information on the nature and intended purpose of the business relationship
- Obtaining information on the source of funds and source of wealth of the customer and the beneficial owner
- Obtaining information on the reasons for the intended or performed transactions
- Obtaining senior management approval for establishing or continuing the business relationship
- Enhanced ongoing monitoring which should include an increase in the frequency and number of controls applied and selection of patterns of transactions that require further examination
Beneficial Ownership CDD Requirements
When carrying out CDD on a customer subject to beneficial ownership registration requirements, a Designated Person must ensure that the beneficial ownership information concerning the customer is held on a central register of beneficial owners. Where a Designated Person is a financial or credit institution, no transaction may be undertaken for that customer until the beneficial ownership information has been confirmed.
The aim of this is to strengthen transparency and ensure that any discrepancies between ownership information provided for CDD purposes and ownership details as contained on a central register of beneficial owners are reported.
- Under current legislation, prepaid cards with a maximum monthly transaction limit of €250 are out of scope. The Bill reduces that maximum monthly amount to €150.
- Identification and verification of customers must be based on documents or information from a reliable source. This has now been expanded to include electronic identification, where applicable.
- The keeping of anonymous safety deposit boxes will no longer be permitted.
- Schedule 4 (non-exhaustive list of factors suggesting potentially higher risk) has been amended to include a customer who applies for residence rights or citizenship in the State in exchange for capital transfers or purchase of property.
- Schedule 4 now also lists transactions related to sectors that should be considered potentially higher risk such as oil, arms, precious metal and tobacco.
While the Bill transposes some elements of the Directive, the Department of Finance is also engaged in giving effect to other provisions of the Directive, including those relating to:
- Facilitating increased transparency on ultimate owners of corporate entities, financial vehicles and trusts;
- The creation of, and access to, centralised national bank and payment account registers.
Download your copy of our summary of the Transposition of the Fifth EU Money Laundering Directive in Ireland
KB Associates Services
KB Associates provides a range of services to investment funds including:
- The provision of MLRO services
- The provision of beneficial owner register services
- The provision of UCITS management company/AIFM services
- The provision of designated persons to perform UCITS business plan/AIFMD programme of activity functions.
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