On 18 November 2019 the Minister for Justice and Equality signed into law the European Union (Money Laundering and Terrorist Financing) Regulations 2019 (Statutory Instrument No. 578 of 2019) (the ‘Regulations’). The Regulations amend the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2018 (the ‘Acts’), and they include a section which has the effect of transposing into Irish law Article 61(3) of the Fourth EU Anti-Money Laundering Directive (Directive 2015/849).
Further to this enactment Irish funds now have an obligation to ensure that they “have in place appropriate procedures for their employees, or persons in a comparable position, to report a contravention of [the Acts] internally through a specific, independent and anonymous channel, proportionate to the nature and size of the designated person concerned.”
Irish funds are already in scope of a number of enactments which require reporting of contraventions and provide protections for persons making disclosures to authorities, including the Central Bank (Supervision and Enforcement) Act 2013 and the Criminal Justice Act 2011. Where information in relation to a contravention is reported internally, it is necessary to determine whether external reporting is required under one or more of these enactments.
It is recommended that any existing whistle-blowing framework is assessed as to whether it satisfies the obligations in the Regulations. AML policies and procedures may also be reviewed and updated to incorporate the new requirements as necessary. Most funds will have a whistle-blowing policy in place which should be broad enough to provide for reporting of contraventions of AML requirements, for example, by reporting these directly to the designated person responsible for regulatory compliance or to a member of the board. It may be considered efficient to adapt existing whistle-blowing procedures if necessary to incorporate any missing elements of these AML requirements, rather than having duplicate whistle-blowing processes.
The Regulations also include provisions which are not directly relevant to Irish funds: these provisions place reporting obligations and restrictions in relation to managers and/or beneficial owners of other types of entities which are subject to provisions of the Acts. They also require regulators to co-operate with other EU Member State regulators, implement risk-based AML supervision, ensure that their employees and officers have access to ‘relevant information’ on money laundering and terrorist financing risk, and outline certain ‘duties’ of regulators relating to functional independence, resourcing and professional standards.
You can download your copy of our ‘Whistle-blowing’ Obligations Incorporated into Anti-Money Laundering legislation here
KB Associates’ Services
KB Associates offers a range of services to investment funds and management companies including:
- The provision of MLRO services
- The provision of beneficial ownership register services
- The provision of UCITS/AIF management company services
- The provision of designated persons to perform UCITS business plan and AIFMD programme of activity managerial functions.
If you would like to discuss any issues raised in this article, please feel free to contact Frank Connolly (+353 1 667 1987) or Cliff Burke (+353 1 667 1985).