The Bill largely 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).
While the Bill transposes many of the elements of 5AMLD, a few notable provisions remain outstanding. For example, it was indicated in the Government's Press Release back in August that the Department of Finance had been tasked with legislating 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 likely that these will be legislated for separately, along with promised provisions in respect of the regulation of Virtual Asset Service Providers.
As many of you will have been following this area with interest and awaiting the publication of this Bill, we have prepared quite a detailed analysis of the Bill's key features.
1. New 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. These new persons are:
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)
2. 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 complements a provision 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.
A designated person must not engage in a business relationship until the beneficial ownership information is obtained, unless the designated person is a financial institution. In that case, the financial institution may open an account ahead of obtaining the information, but cannot allow any transactions to occur. These principles already apply to designated persons in relation to the timing of Customer Due Diligence (CDD) measures.
3. Verification of Senior Managing Officials as Beneficial Owners
Where the beneficial owner is a senior managing official, a designated person 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.
4. Politically Exposed Persons (PEPs)
The definition of PEP is to be broadened to include "any individual performing a prescribed function". The Minister for Justice and Equality, with the consent of the Minister for Finance, 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 proposes to allow a designated person to continue monitoring someone who was previously a PEP "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".
5. Examination of Background and Purpose of Certain Transactions
The Bill proposes a slight relaxation of the requirement for designated persons to examine the background and purpose of transactions which are complex or unusually large by providing that a designated person shall do this "as far as possible".
6. Triggers for conducting CDD Extended
The Bill extends the trigger for conducting CDD to include any time that a designated person is required "by virtue of any enactment or rule of law" to contact a customer for the purposes of reviewing information relating to the customer's beneficial owners.
7. Enhanced CDD
The Bill provides a detailed list of enhanced CDD measures that a designated person is required to apply when dealing with a customer established or residing in a high-risk third country. Such 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.
A designated person will also be required to obtain senior management approval for establishing or continuing such a business relationship; as well as to conduct enhanced monitoring "by increasing the number and timing of controls applied and selecting patterns of transaction that need further examination".
8. Amendment of the 'tipping off' defence
The Bill provides for an additional defence to proceedings in relation to ‘tipping-off’ 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.
9. 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. This places an existing administrative practice on a legislative footing.
10. Breaches within competent authorities
It is proposed to insert a new section into the 2010 Act requiring each competent authority to establish "effective and reliable mechanisms" to encourage the reporting of potential and actual breaches of the 2010 Act. Such mechanisms must include the provision of "one or more secure communication channels" for such reporting, which can also be used by persons "to report any threats or retaliatory or hostile actions they are subjected to for reporting suspected breaches".
11. Co-operation with Member State competent authorities
To dispel any doubt in the extent of the existing provision, the Bill provides that co-operation by a competent authority with other Member State competent authorities shall not be refused on the basis that the information involves tax matters, requires the competent authority to maintain secrecy or confidentiality, or that there is an inquiry, investigation or proceeding underway.
12. Schedules of Low and High Risk Factors
There are some changes to the risk factors set out in these Schedules.
13. CDD on e-money instruments
The Bill proposes lowering the value limits for carrying out customer due diligence on e-money instruments (such as pre-paid cards) from the existing threshold of €250 to €150.
14. Anonymous safe-deposit boxes
The existing prohibition on credit or financial institutions setting up anonymous accounts or passbooks will be extended to safe-deposit boxes.
The Bill has yet to be scheduled for passage through the Houses of the Oireachtas, but it is anticipated that this will occur in the coming weeks. We will continue to monitor its progress and any other developments in this area.
For more information please contact Paula Reid, Partner or a member of the A&L Goodbody Knowledge team.