On 16 October 2012, a revised draft of the sectoral guidance (version 8) for life-assurance companies was published by the Central Bank of Ireland (‘CBI’). The clarifications in this version of the lifeassurance guidance include the following:
- EEA-situate branches are generally subject to the anti-money laundering (‘AML’) laws of the country that the branch is established in and, are not therefore subject to the Irish regime (though the company’s board will still remain responsible for overseeing the local branch)
- Certain distribution risks which should be addressed in contracts are identified
- The due-diligence requirements for life-assurance protection-products are clarified
Aside from the revised guidance, the CBI issued a “Dear CEO” in October 2012 and gave a series of presentations on AML. Both the letter and the presentations gave helpful insights into the CBI’s perspective on certain aspects of AML. The following are some of the key weaknesses that the CBI identified in companies’ AML procedures:
- Companies’ boards and senior management were unable to demonstrate that they had fully considered what was required by the risk-based approach to AML
- Companies had not fully considered the risks to their particular business when implementing the risk-based approach to compliance
- Not all relevant staff received adequate AML training, and in some cases directors and senior management had not been adequately trained
During the presentations, the CBI gave the following examples of scenarios where enforcement action is likely to occur:
- Significant non-compliance, particularly where key governance controls are absent
- Failure to address issues raised during previous inspections
- Repeated breaches of policies and procedures
- Non-compliance over a prolonged period
Given that the CBI has now published details of two settlement agreements that directly relate to AML, it is clear that this is an area on which the CBI is focussing.
Companies should also note that new Regulations (SI 347/12) were issued in September 2012. These Regulations changed the countries which are designated as having AML requirements that are equivalent to the Third Anti-Money Laundering Directive. Depending on the markets that a lifeassurance company sells into, some of the changes could be significant. Argentina, New Zealand and Russia have been removed from the list of “equivalent countries”, while India and South Korea were added to that list. Likewise, some Dutch overseas territories were added to the list, while others were removed.