Money laundering first became a criminal offence in Ireland with the enactment of the Criminal Justice Act 1994. Since then a much more comprehensive anti-money laundering (“AML”) regime has been established pursuant to the Criminal Justice (Money and Terrorist Financing) Act 2010 and the Criminal Justice Act 2013 (collectively referred to as “the Criminal Justice Acts”). AML law and policy in Ireland encompasses the recommendations made by the Financial Action Task Force (“FATF”), an international organisation specialising in the international fight against money laundering and terrorist financing (Ireland has been a member of FATF since 1991). The Criminal Justice Acts set out the procedures that must be followed to ensure technical compliance with, and effective implementation of, international standards relating to AML.
The Central Bank of Ireland is responsible for the monitoring and supervision of financial institutions’ compliance with their AML obligations under the Criminal Justice Acts. The Central Bank, over the last number of years, has designated AML as a top priority issue in their program for reform, and has articulated the policies and procedures that financial institutions operating in Ireland are required to follow to be AML Compliant. It has made it clear that it intends to ensure compliance with these policies and procedures by making boards of directors and senior managers of financial institutions responsible for compliance and through invoking their enforcement powers.
In a report published in February of this year, the Central Bank emphasised the responsibility of boards of directors and senior managers of financial institutions to demonstrate active engagement in effectively mitigating AML risk. The Central Bank further stated that boards of directors of financial institutions are ultimately responsible for ensuring compliance with the Criminal Justice Acts, and that they must put in place appropriate AML structures that effectively manage the nature and complexities of the organisation over which they govern.
In its press releases and publications over the past number of years, the Central Bank has repeatedly committed to using enforcement as a mechanism for effecting deterrence and promoting expected behaviour. In 2014 the Central Bank imposed administrative fines totalling €5.42 million. In the area of AML specifically, the Central Bank in 2014 responded to 188 complaints relating to alleged unauthorised activity and published warning notices in relation to unauthorised activity by 31 financial institutions. Between 2012 and 2013 three financial institutions were fined a total of €136,000.00 for AML offences.
A clear message is being sent to financial institutions that want to do business in Ireland that AML is taken seriously here and that expected procedures must be in place and be complied with. The Central Bank has repeatedly stressed that the responsibility for ensuring compliance with AML requirements rests with boards of directors and senior managers of financial institutions. It is therefore incumbent upon them to be aware of AML requirements and to be informed in relation to the business’ strategy in warranting compliance. In recent years the Central Bank has demonstrated its commitment to enforcing compliance with the Criminal Justice Acts by implementing a system of risk based supervision backed up with the real threat of enforcement.