Anti-Money Laundering & Terrorist Financing

ANNUAL CRIMINAL JUSTICE (ANTI-

MONEY LAUNDERING & TERRORIST

FINANCING) ACT 2010 TRAINING

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What is Anti-Money Laundering & Terrorist financing?

It is the process by which criminals conceal the true origin and ownership

of the proceeds of drug trafficking or other criminal activity.

A common misconception in relation to Money Laundering is that it only

relates to theft, drug or similar offences.

It might also be:



Tax evasion



Financial fraud and deception



Theft

To be guilty of money laundering a person must know or believe the

property involved is or probably is the proceeds of criminal conduct or be

reckless as to whether the property is the proceeds of criminal conduct.

Terrorist Financing



Funds intended to finance an act of terrorism.



Links between terrorist groups and organised criminal gangs.



Includes converting, transferring, handling, acquiring, possessing or

using the property that is the proceeds of criminal conduct.

There must be intention or knowledge in providing or collecting funds for

the purposes of financing terrorism, in order for there to be an offence.

3

Stages of Money Laundering

There are three stages in the money laundering process:



Placement – this is the physical disposal of cash;



Layering – the creation of complex layers which make tracking

transactions difficult;



Integration – absorbing the money back into the economy as legitimate

money.

4

Designated Persons

Mortgage Intermediaries and intermediaries by virtue of their registration

as Insurance Intermediaries who provide Life Assurance or other

investment related services are deemed to be “Designated Persons”.

Note: 

Intermediaries only operating in the General Insurance market do

not fall under the CDD requirements.

5

Designated Persons must have internal policies and procedures to reflect

the requirements of the legislation in relation to the following areas

:



Customer due diligence



Reporting



Record keeping



Internal procedures & training

(All staff including executive & 

non-executive 

directors are required to

receive training in relation to AML & combating terrorist financing.)

6

What does Customer Due Diligence mean?

•

Identify & verify the customer.

•

Identify & verify the beneficial owner (

An individual who ultimately

owns or controls the customer and/or on whose behalf a transaction

or activity is conducted).

•

Establish purpose & intended nature of business relationship (

a

business, professional or commercial relationship between the

designated person and the customer that the designated person

expects to be ongoing).

•

Monitor customer dealings on an on-going basis.

Beneficial Owner

•

Company

An Individual holding 25% or more of shares or voting rights.

•

Partnership

An Individual holding 25% or more of profits or capital or voting rights,

•

 Trusts

An individual with at least 25% of capital or has control over a trust.

•

Estate

Executor.

Purpose & intended nature of the business relationship

In most cases this will be self evident e.g.



 Investing in a life policy



 Opening bank account

Ongoing monitoring

Scrutinise transactions:



 Source of wealth or funds



 Consistent with knowledge of customer and the customer’s business

and pattern of transactions

Customer Due Diligence Requirements

Legislation allows designated persons to apply aspects of the customer

due diligence requirements on a risk-sensitive basis depending on:

a)

The nature of the product being sold;

b)

The delivery mechanism or distribution channel used to sell the

product;

c)

The profile of the customer; and

d)

The customer’s geographical location and source of funds.

Intermediaries are required to carry out Customer Due Diligence

•

 Prior to establishing a business relationship with the customer.

•

 Prior to carrying out for/with the customer any transaction which appears

linked to another transaction or prior to assisting the customer in carrying

out a single transaction if:

    (i) You do not have a business relationship with the customer; and

    (ii) The total amount of money paid by the customer in the single

transaction or series of transactions is greater than €15,000.

Intermediaries are required to carry out Customer Due Diligence

(contd.)

•

Prior to carrying out any service for the customer, if you have reasonable

grounds to believe that there is a real risk that the customer is involved in

money laundering/terrorist financing(ML/TF).

•

 If you have grounds to doubt the veracity of documents provided by the

client.

Three categories of Customer Due Diligence (CDD)

•

 Simplified Customer Due Diligence 

applies to low risk customers and

products.

•

 Enhanced Due Diligence 

applies to non-resident ‘Politically Exposed

Persons’ deemed to be high risk.

•

 Standard

Due Diligence 

must be applied to all remaining customers and

products

.

Simplified Customer Due Diligence

•

Simplified Customer Due Diligence (SCDD) means that a designated

person does not need to comply with the CDD obligations (as listed

previously). You must obtain sufficient information about the customer to

satisfy that the customer meets the criteria for Simplified Due Diligence.

Simplified Customer Due Diligence: Specified Customers

•

Banks and financial institutions in the State



As they are themselves Designated Persons?

•

 A Company whose shares are listed

•

 A public body

•

 EU agencies and bodies

Simplified Customer Due Diligence: Specified Products

•

 Life assurance policy having an annual premium of no more than €1,000

or a single premium of no more than €2,500.

•

 Pension, superannuation or similar schemes which provide retirement

benefits to employees; where contributions are made by an employer or

by way of deduction from an employee’s wages and the scheme rules do

not permit the assignment of a member’s interest under the scheme.

•

 Insurance policies for pension schemes if there is no surrender clause

and the policy cannot be used as collateral (e.g.) Pension Term Assurance.

Enhanced Due Diligence

•

 In practice for intermediaries, Enhanced Due Diligence applies in respect of a

business relationship or transaction with 

non resident 

Politically Exposed

Persons (PEP’s).

•

 A “PEP” is an individual who is not resident in Ireland and has been entrusted

with prominent public functions or an immediate family member or a known

close associate of such a person, who is not resident in Ireland.

•

 A person is a PEP if they held a relevant office at any time within the last 12

months

Enhanced Due Diligence contd.

•

Designated persons must have processes in place 

prior

 to establishing a

business relationship with a customer to determine whether the person

may be deemed to be a “PEP”.

•

 Intermediaries should establish whether the client is resident or non

resident.

•

 Where the client indicates that they are non resident, steps should be

taken by the intermediary to establish if the customer falls within the

definition of a “PEP”.

Enhanced Due Diligence contd.

•

Require senior management approval to establish a business

relationship with a “PEP”

•

Take measures to establish the source of wealth and funds for

transactions.

Standard Customer Due Diligence (SCDD)

Applied on a risk based approach



Profile of the customer



Nature of product or service



Distribution channel



Geographical area of operation

There are 3 overall levels of risk for insurance products:

•

 Low Risk

•

 Intermediate Risk

•

 Increased Risk

Standard Customer Due Diligence (Low Risk)

There are products due to their inherent features which are unlikely to be

used as a vehicle for money laundering purposes. These are classified as

“Low Risk”.

The following features would indicate low risk:

•

Only pays out on death or diagnosis of terminal illness of policy holder.

•

Only pays out on medical evidence and proof is required as to loss of

income.

•

No surrender value.

•

Small, regular premiums: additional payments by customer not possible.

•

Large premiums will normally require medical evidence.

•

No investment element.

•

Once term of policy is finished no payout and policy ceases.

Standard Customer Due Diligence (Low Risk)

Examples of Products which fall into the low risk category are:



Mortgage Protection, Term Life Assurance, Income protection products,

Critical illness products (relating to diagnosis of a specific critical illness)

and Whole of Life policies.



For reduced risk level products, designated persons may accept

personal cheques and other payment instruments drawn on a customer’s

account (i.e. Direct Debits/Standing Orders) to satisfy the standard

evidence requirement.



If payment is made by bankdraft for the products above, Brokers

Ireland would recommend that you get confirmation from the client,

from the bank, confirming where the money is coming from. 

Standard Customer Due Diligence (Medium Risk)

The medium risk level is given to products whose inherent features pose

some risk for the purposes of money laundering or terrorist financing.

These may be products which have a facility for “top up” payments.

The following features would indicate medium risk:

•

 Long term savings plan often for retirement.

•

 Requires at least 5 years to gain positive return on investment.

•

 Often unable to be surrendered in first or second year, with penalties in

years three to five.

•

 Additional ’top up’ payments may be permitted.

Standard Customer Due Diligence (Medium Risk)

Examples of Medium risk products are :

•

 Life Assurance Savings plan (unless premium is less than €1,000 or

€2,500, then Simplified Customer Due Diligence applies.)

•

 Endowments

Standard Customer Due Diligence (Medium Risk)

The recommended standard for intermediate risk is as follows (subject to

exemptions):

•

Due diligence requirements are satisfied by the information collected on

the application form, in conjunction with the fact that the payment is

made from an account in the customer’s name (i.e. personal cheques and

other payment instruments drawn on a customer’s account such as Direct

Debits/Standing Orders).

•

If payment is made by bank draft for the products referenced Brokers

Ireland would recommend that you get confirmation from the client,

from the bank, confirming where the money is coming from. 

Standard Customer Due Diligence (High Risk)

This level of risk has been given to products whose inherent features

allow for the possibility of them being used for money laundering

purposes.

•

 These products have the facility for third party and/or “top up”

payments and therefore an enhanced level of due diligence, by asking for

more information, is appropriate.

•

 This is the risk level that the majority of a designated person’s AML

resources will normally be directed. The majority of products in this range

are found in the investment category which reflects the higher value

premium that can be paid into them. 

Standard Customer Due Diligence (High Risk)

The following features would indicate High Risk:

•

 Open ended investment.

•

 Usually a 5 year recommended minimum investment term but can be

surrendered earlier.

•

 Additional ‘top up’ payments permitted by policy holder and by third

parties.

•

 May be segmented and individual segments may be assignable.

Standard Customer Due Diligence (High Risk)

Examples of High Risk products are:

•

 Single premium investment bonds including:



 With profits



 Guaranteed



 Income



 Investment



 Offshore international bonds

The recommended CDD industry standard for High Risk products

is as follows:

1. Personal customers:

Identification of a personal customer is the process whereby a

designated person obtains from a customer the information necessary

for it to identify who the customer is. The identity of an individual has a

number of aspects at any point in time, all of which must 

be obtained

by the designated person:

1)

name (which may change due to particular events);

2)

address (which is likely to change from time to time); and

3)

date of birth (which is a constant).

One plus One approach

Obtain one item from the list of photographic IDs (to verify name and

date of birth) and one item from the list of non-photographic IDs (to

verify address) at the outset of the business relationship.

Sources which can be used to 

verify identity 

are

:

•

 Current valid Passport.

•

 Current valid driving licence.

•

 Current valid National Identity Card.

•

 In the absence of the above documents, written or otherwise

documented, assurances from persons or organisations that have dealt

with the customer for some time may suffice.

•

 A designated person might consider it appropriate to adopt an

alternative approach of identification such as seeking a social welfare

card, National Immigration Bureau Card off an individual who has

recently immigrated into the State.

Verify address

•

 Current official documentation/cards issued by the Revenue

Commissioners.

•

 Current official documentation/cards issued by the Department of

Social and Family Affairs.

•

 Instrument of a court appointment (such as liquidator or grant of

probate).

•

 Current local authority document e.g. refuse collection bill.

•

 Current statement of account from a credit or financial institution.

•

 Current utility bills (including those printed from the internet).

•

 Current household/motor insurance certificate and renewal notice

Legal persons and arrangements

Directors or the equivalent, for example: Partnerships and unincorporated

businesses, Clubs, Societies, Public Sector bodies.

Identification can generally be satisfied by either:

•

obtaining a copy of the annual audited accounts listing directors (where

the necessary information is publicly accessible and considered by the firm

to be current and reliable); or

•

Obtaining relevant and up-to-date legal opinion from a reliable source

documenting due diligence conducted, in relation to information on

directors:



obtaining information from relevant company or other registry such

as the CRO or known foreign equivalent; or



as warranted by the risk, verify one or more directors in line with

requirements for personal customers.

Legal persons and arrangements contd.

To identify the legal arrangement:

•

 A search of the relevant company or other registry (where the necessary

information is publicly accessible and considered by the firm to be current

and reliable); or

•

 A copy, as appropriate to the nature of the entity, of the certificate of

incorporation; a certificate of good standing; a partnership agreement; a

deed of trust or other official documentation proving the name, form and

current existence of the customer.

•

 In cases regarded by the firm as higher risk, use of more than one source

of information may be warranted.

Legal persons and arrangements contd.

2. 

Acquire prescribed information at the outset of the business

    relationship to satisfy the additional information requirements:

a) 

S

ource of funds for the transaction e.g. an Irish bank account in own

name

.

b) 

E

mployment and salary details - this information could be captured in

the Factfind

.

c) 

S

ource of wealth (e.g. inheritance, divorce settlement, property sale)

.

This information should be captured on 

the 

source of wealth form. 

Risk Assessment

•

The firm must undertake and document a comprehensive risk assessment

of the business, it should demonstrate that all potential Money

Laundering/Terrorist Financing risks pertinent to their business have been

fully considered and challenged such as :



The nature of the products being sold in the firm



The delivery mechanism or distribution channel used to sell the product



The profile of the customer



The customer’s geographical location and source of funds

•

The outcome of the risk assessment should inform the firm’s risk-based

approach and the design of AML/CTF controls.

•

The firm’s risk assessment should be subject to regular and scheduled

reviews, senior management must at least on an annual basis review and

approve this risk assessment.

Risk Assessment

•

The firm must undertake and document a comprehensive risk assessment

of the business, it should demonstrate that all potential Money

Laundering/Terrorist Financing risks pertinent to their business have been

fully considered and challenged such as :



The nature of the products being sold in the firm



The delivery mechanism or distribution channel used to sell the product



The profile of the customer



The customer’s geographical location and source of funds

•

The outcome of the risk assessment should inform the firm’s risk-based

approach and the design of AML/CTF controls.

•

The firm’s risk assessment should be subject to regular and scheduled

reviews, senior management must at least on an annual basis review and

approve this risk assessment.

Monitoring 

•

 Ensure effective on-going monitoring policies and procedures are in place

including full review and consideration of all trigger events.



undertake monitoring

 on an ongoing basis

 for patterns of unusual or

suspicious activity to ensure that higher risk activity 

is

 scrutinised.



in practice

,

 for intermediaries this might 

occur

 where there is an early

surrender of a policy, encashment

or where the payer of the policy

changes.

Monitoring contd. 

•

 Employees should be adequately trained to identify such unusual

business and report to the designated person’s Money Laundering

Reporting Officer (MLRO) 

(insert firms MLRO name).

•

 For example, employee training should cover encashment fraud attempts

with the recent increase in encashment requests being made from client

emails to transfer funds to a particular account, where it transpired the

client had no knowledge of the encashment request

.

•

 Where an encashment request is received, it is recommended to take

additional measures to ensure the request is genuine, for example:



Phone the client to confirm the details/instruction



Cross reference proof of ID and residency with existing proof of identity

and residency on file

Distribution Risk – may alter risk

“Face to Face” contact with no facility to take copies of ID

•

 Where the interaction with the customer is on a face to face basis, you

should have sight of the original document(s) and appropriate details

should be recorded. Where you visit the customer at his/her home

address, you should make a detailed record of the visit. This would include,

for example, taking details of passport or driving license numbers.

•

 Brokers Ireland recommends that in such scenarios, you request the

customer to forward you a copy of the relevant ID and cross reference it

with the details which were recorded at the point of sale.

Distribution Risk – may alter risk

“Non face-to-face

”

•

 The extent of the Customer Due Diligence in respect of non face-to-face

customers will depend on the type of the product or service requested and

the assessed money laundering risk presented by the customer.

•

 Where the customer is not physically present (e.g. 

by post, telephone or

over the internet) 

for identification purposes additional measures should

be undertaken to establish the customer’s identity.

Distribution Risk – may alter risk

Examples:

•

 Telephone the customer on a home or business number which has been

verified (electronically or otherwise).

•

 Communicate at a verified address with account opening docs for

example, which might have to be returned or acknowledged .

•

 First payment by the customer through a bank in the State or other EU

Member State or certain specified acceptable countries.

•

 Internet sign on with details sent by mail to a verified address.

Third Party Reliance

•

 Third Party Reliance – A designated person is permitted to rely on

another designated person to identify and verify its customers for AML

purposes. 

Designated persons who rely on third parties will remain liable

for any failure to comply not withstanding their reliance on the third party.

•

 The primary responsibility for supervising intermediaries lies with the

Central Bank of Ireland, however Product Providers as a third party retains

responsibility for ensuring that customer due diligence obligations have

been met by the Intermediary.

Note

: Product Providers are legally obliged where an intermediary fails to

meet the customer due diligence requirements to report this to the

Central Bank of Ireland

.

Third Party Reliance contd.

•

 In order to comply with the Third Party Reliance requirements, Product Providers

depending on their internal processes may require either:



 Copies of all underlying documentary evidence from the Intermediary for

applicable products.

Or



 Confirmation of Verification of Identity, where the Product Provider has the

right of audit to ensure that the intermediary has the necessary documentary

evidence. 

Failure to establish a customer and/or beneficial owner’s identity

Where an intermediary can not establish the identity of a customer and/or

beneficial owner, as a result of the failure of the customer to provide the

designated person with documents of information required, then an

intermediary must:



 Not provide a service to the customer, and



 If an existing customer, must discontinue relationship with the customer.

Procedures and Policies

•

Senior Management are obliged to ensure that the firm has procedures

and controls in place to demonstrate compliance with all aspects of the Act

and approve them.

•

 Senior Management must have a clearly defined process in place for the

formal review and approval, at least annually, of the policies and

procedures at appropriate levels.

•

 Management must clearly set out all approved policies and procedures to

enable staff to apply them in practice and ensure that all staff adhere to

them.

•

 All procedures should be complian

t

 with the Central Bank’s core and

sectoral guidance notes.

Procedures and Policies

•

These internal policies and procedures should include:



measures to be taken to keep documents and information relating to

customers up to date.



additional measures to be taken where there are reasonable grounds to

believe that the circumstances relating to a customer, beneficial owner,

service, product or transaction may present a heightened risk of money

laundering or terrorist financing. The intermediary shall, in respect of that

customer or beneficial owner, apply additional measures.



measures to be taken to prevent the use of money laundering or

terrorist financing of products/transactions that could favour or facilitate

anonymity.



monitor customers and transactions against both the EU and UN

Sanctions Committee lists relating to terrorism.

Procedures and Policies

•

This slide(s) should be personalised to outline the firms procedures

and policies

Record Keeping

•

Intermediaries are required to keep records evidencing the procedures

applied and the information obtained, when carrying out CDD on

customers for a period of at least 5 yrs after the business relationship with

their customer has ended.

(However, the Consumer Protection Code requires records to be kept for 6

yrs from date of last transaction with client.)

•

 Record keeping is an essential part of the evidence trail and sufficient

processes must be put in place to ensure that records are adequately kept.    

Record Keeping

•

Customer information collected to comply with the requirements

of  Legislation; and

•

 Information regarding transactions undertaken by customers

.

Possible formats in which records can be retained include one or

more of the following:

•

 Original documents

•

 Photocopies of original documents

•

 On microfiche

•

 In scanned form

•

 In computerised or electronic form

Record Keeping

Intermediaries may keep such records wholly or partly in electronic form

only if they are capable of being reproduced in a written form.   All records

should be capable of being reproduced in the State 

as 

per legislation for a

period not less than 6 years.

Outline the firms internal procedures in respect of record keeping here..

Staff Training

•

Intermediaries must ensure that all staff receive on-going training in

relation to their AML and combating of terrorist financing obligations.

•

Staff should receive tailored training to reflect their role within the firm.

•

Training should be consistent with firms policies & procedures.

•

Failure by the employer to provide training is an offence under the

requirements.  

•

A formal training schedule should be developed and maintained to

ensure all relevant staff are adequately trained at least annually.

•

Adequate records in relation to staff training should be retained for all

internal & external courses attended for a period of 5 years

Reporting

•

Requirement to have a documented internal reporting process for staff

to report a suspicious transaction - it should provide guidance on how to

complete and submit such reports.

•

 There should be documented timelines set by the brokerage in relation to

the filing of the Suspicious Transaction Reports (STR).

•

 Staff reports must be made to the Money Laundering Reporting Officer

(MLRO) when the staff member knows, suspects or has reasonable

grounds to suspect that money laundering or terrorist financing is being or

has been committed or attempted

Reporting

•

 Staff reports should include appropriate details of the customer who is

the subject of concern and a statement 

containing 

as

 much

 of the

information, giving rise to the knowledge or suspicion

, as possible

.

•

 All reports 

submitted 

via the internal reporting process should be

recorded.

•

 The MLRO will then decide whether to make the firm’s report to the

Garda Bureau of Fraud Investigation and the Revenue Commissioners.

Reporting

•

If the MLRO decides not to make an external report the outcome and

reasons for not doing so should be recorded and retained.

•

Presenter should provide practical examples of situations which staff

might encounter which would warrant a report.

•

 Have written policies and procedures in relation to reporting suspicions

that may arise as a result of a failure on the part of the customer to

provide the required or updated CDD documentation/information.

Reporting

If the MLRO decides an external report needs to be made to the Garda

Bureau of Fraud Investigation and the Revenue Commissioners. The

following information should be contained in the report

:

a)

The information on which the designated person’s knowledge,

suspicion or reasonable grounds are based

;

b)

The identity of the suspected person

;

c)

The whereabouts of the property 

that is 

the subject of the money

laundering or the funds 

that are 

the subject of the terrorist financing

;

d)

Any other relevant information

.

Reporting

•

A designated person may be directed in writing by a member of the

Gardaí, not below the rank 

superintendent, not to carry out a specified

service or transaction for a period not exceeding seven days.

•

A District Court judge may order a designated person not to carry out a

specified service or transaction for a period not exceeding 28 days.

Reporting

•

 A designated person may only proceed with a suspicious transaction or

service prior to the sending of the report to the Gardaí and the Revenue

Commissioners where:



 it is not practicable to delay or stop the transaction/service from

proceeding; or



the designated person is of the opinion that failure to proceed with the

transaction or service may result in the other person suspecting that a

report may be made or that an investigation may be commenced or is in

the course of being commenced.

Reporting

You must not disclose to the customer concerned or other third persons

that a report has been made to the Gardai in relation to suspicions of

money laundering or terrorist financing.

Designated persons, employees and directors are legally prohibited from

tipping off.

Designated persons, employees and director are legally indemnified, in

respect of any report made to Gardaí or Revenue Commissioners in good

faith, in relation to a suspicion of money laundering of terrorist financing.

Role of Money Laundering Reporting Officer (MLRO)

•

 Holds a pre-approval controlled function (PCF) in the context of the

Central Bank Reform Act 2010

•

 Has a significant degree of responsibility and should be familiar with

relevant aspects of the Act and these guidelines.

•

 He/she is required to determine whether the information or other

matters contained in the suspicious transaction he/she has received, via

any internal reporting procedure, merit the making of a report to the FIU

(Fraud Investigation Unit) and the Revenue Commissioners.

Role of Money Laundering Reporting Officer (MLRO)

•

Maintenance of a log of any suspicious transactions, including details

where it was decided not to make a report to FIU & Revenue

Commissioners.  The reasons for not doing so should be recorded.

Powers of the Central Bank of Ireland

•

 The Central Bank of Ireland is deemed to be the competent authority

responsible for monitoring compliance of designated persons with the

Criminal Justice (Money Laundering and Terrorist Financing) Act 2010.

•

 The Central Bank has the power under the Administrative Sanctions

Regime to sanction for failure to comply with the necessary obligations.

Powers of the Central Bank of Ireland

October 2016 - Settlement with Ulster Bank Ireland DAC

The Central Bank identified significant failings in Ulster Bank Ireland’s

AML/CTF framework and procedures in respect of:

•

governance and control of AML/CTF outsourcing

•

assessment of AML/CTF risk specific to its business and the relevant

mitigating systems and controls

•

identification and verification of existing customers (CDD) who predated

the Irish AML/CTF laws effected in May 1995 (pre-95 customers)

The Central Bank also identified areas of non-compliance in respect of

trade finance procedure manuals, adherence to internal procedures,

AML/CTF training of non-executive directors and reliance on third parties

in respect of CDD

Powers of the Central Bank of Ireland

April 2017 - Settlement with Allied Irish Bank

The Central Bank identified 6 breach's of the CJA 2010 as a result of

significant failings in Bank of Ireland’s AML/CTF framework controls,

policies and procedures in respect of:

The breaches occurred after the enactment of the CJA 2010 in July

2010 and persisted on average for over three years.

They included AIB’s failure to:



Report suspicious transactions without delay to An Garda Síochána

and the Revenue Commissioners.



Conduct customer due diligence (‘CDD’) on existing customers who

had accounts prior to May 1995 (‘Pre-95 customers’)

Powers of the Central Bank of Ireland



The Central Bank also identified breaches in respect of AIB’s

AML/CFT policies and procedures in a number of areas, including

the above, and its trade finance business.

Powers of the Central Bank of Ireland

May 2017 - Settlement with Bank of Ireland

The Central Bank identified significant failings in Bank of Ireland’s

AML/CTF framework controls, policies and procedures in respect of:

•

Risk assessment: assessment of money laundering/terrorist

financing (‘ML/TF’) risks specific to its business and the relevant

mitigating systems and controls.

•

Suspicious transaction reports: reporting of six suspicious

transactions to An Garda Síochána and the Revenue Commissioners

without delay.

Powers of the Central Bank of Ireland

May 2017 - Settlement with Bank of Ireland contd.

•

Correspondent banking: conduct of enhanced customer due

diligence (‘CDD’) on one correspondent bank situated outside of the

EU.

•

The Central Bank also identified areas of non-compliance with the

CJA 2010 in relation to BOI’s trade finance business, CDD measures

and its reliance on third parties to conduct CDD.

Feedback from Central Bank AML/CTF inspections

From the sample testing undertaken by the Central Bank of both new and

existing customers, a number of issues were identified, including:

- Photo ID and/or address verification documents were not always available

on the customer file.



For corporate customers, no constitutional documentation and/or other

information (e.g. audited accounts, information from Companies

Registration Office, etc.) were obtained for some of the customer files

reviewed.



 Documented evidence to demonstrate that on-going monitoring takes

place was not always maintained.

Feedback from Central Bank AML/CTF inspections

The Central Bank expects that:



All required identification and verification is obtained and retained. Where

Standard or Enhanced CDD is carried out, sufficient detail must be

evidenced on the customer file.



 Records are maintained of the on-going monitoring conducted, including

the type of and frequency of the monitoring undertaken.

Feedback from Central Bank AML/CTF inspections

A number of issues were identified in relation to training, including:



Insufficient evidence that all staff, including those in key roles relating to

AML/CTF, had received appropriate training.



Training records were not always maintained to demonstrate who had

received the training, when the training took place and the nature of the

training received.



In some of the larger retail intermediaries, staff members were provided

with generic, high level AML/CTF training, but limited or no specific

training related to the AML/CTF procedures and processes relating to the

firm’s specific operations.

Feedback from Central Bank AML/CTF inspections

 In assessing the policies and procedures in place, the Central Bank identified

a number of issues, including:



Policies and procedures that are not aligned to, and reflective of, the

Money Laundering/Terrorist Financing risk assessment of the retail

intermediary’s specific product/service offering and its operations.



Policies and procedures were not always adhered to in practice.



Policies and procedures did not provide sufficient detail in relation to

suspicious transaction reporting e.g. no timelines set in relation to the

filing of suspicious transaction reports and insufficient information

provided on what might be deemed a suspicious transaction.

Feedback from Central Bank AML/CTF inspections

The Central Bank also expects that retail intermediaries undertake and document

a Money Laundering/Terrorist Financing risk assessment of their business, to

include all risk categories e.g. distribution channel, customer type, etc.

Such an assessment should be updated regularly and reflect any changes in

products or services offered e.g. new offerings with increased risk may require

Standard or Enhanced Customer Due Diligence to be carried out.

See template assessment in Brokers Ireland Guidance notes

Fourth EU Anti-Money Laundering Directive

The Fourth Anti-Laundering Directive (2015/849) is still awaiting

transposition into national law In Ireland.

Key changes

to provide for a more targeted and focussed risk-based approach;

 to clarify and reinforce the rules on customer due diligence (CDD);

 to introduce new provisions to deal with PEPs;

Note:  Brokers Ireland will issue updated guidance and presentation

to members 

to reflect the new requirements of the Directive in due

course following its transposition.

Reference Material

•

 Life assurance sectoral guidelines issued by the Department of

Finance - October 2012.