The Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill, 2013 (the Bill) was published on 1 February. Heads of this legislation had been published in June of last year. The Bill, broadly, reflects the provisions in the earlier Heads. However, some changes which had been put forward in the Heads do not appear in this version of the Bill.
The Bill proposes a number of minor amendments to the Criminal Justice (Money Laundering and Terrorist Financing) Act, 2010 (the Act). Most of these changes concern tightening and tweaking of the anti-money laundering requirements set out in the Act. A brief summary of the key proposals is set out below.
Amendment to the Definition of "Occasional Transaction"
There is a proposed change to the definition of "occasional transaction" in the Act with the result that for customers of private members' gaming clubs, the financial thresholds prescribed for an "occasional transaction" (which is one of the triggers for CDD) is set at not less than €2,000, and, in the case of certain wire fund transfers, at not less than €1,000. There is also a technical amendment to clarify that the definition of "occasional transaction" which applies in all cases (other than for private members' gaming clubs and wire transfers) is when an amount of €15,000 is reached, rather than over €15,000.
Simplified Due Diligence Rules Tightened
There is some tightening of the rules relating to simplified customer due diligence (SCDD) set out in Section 34 and Section 36 of the Act. SCDD applies to "specified customers" and "specified products". The Bill states that SCDD should only apply under Section 34 of the Act where the designated person has taken steps to satisfy itself that the customer or product is actually a 'specified customer' or "specified product". The change simply places on a statutory basis what would, under the current requirements, be perceived as good practice.
Similarly, the Bill proposes that the exemption in Section 36 of the Act from the requirement to obtain information on the purpose and intended nature of a business relationship, should only apply where the designated person is satisfied as to the customer's status as a "specified customer" or "specified product".
Amendment of Rules Relating to PEP's
There is a change to the rules relating to the CDD measures which apply to Politically Exposed Persons (PEP's) to provide that enhanced CDD measures must also be applied to an existing customer who subsequently becomes a PEP. The Bill also provides that enhanced on-going monitoring must be applied to business relationships with a customer who is a PEP.
Mandatory Enhanced CDD for High Risk Customers
There is a tightening of the requirement in Section 39 of the Act to apply enhanced due diligence in circumstances where there is a heightened risk of money laundering or terrorist financing so that it is a mandatory requirement to apply additional CDD measures where the designated person has reasonable grounds to believe that there is a higher risk of money laundering or terrorist financing.
Internal Policies and Procedures
The requirements that designated persons keep policies and procedures to prevent and detect money laundering and terrorist financing are extended by requiring these procedures to address the following:
- measures taken to keep documents and information relating to the customers of that designated person up to date;
- additional measures taken to give effect to enhanced CDD rules, and
- steps to manage the risk of money laundering or terrorist financing which may arise in technological developments, including the use of new products and new practices, and the manner in which services relating to such developments are delivered.
There is a proposed extension of the enforcement powers of the state competent authorities established by the Act, (for example, the Central Bank), so as to allow such authorities to issue directions to designated persons falling within their charge to take specific actions or to establish specific processes or procedures that, in the opinion of the authority, are reasonably necessary for the purposes of compliance with the Act. The timescales for complying with such directions must be clearly set out in the direction.
Provisions which appeared in Heads of the Bill in June 2012 which do not appear in the formal published Bill
It is interesting to note that some provisions that had appeared in the Heads do not appear in the Bill as initiated. For example:
- proposed amendment to Section 31 of the Act relating to the power of the Minister to designate certain countries as prescribed countries - this does not appear in the Bill.
- proposed amendment to Section 54 of the Act that records be retained in the State. The Heads of the Bill had proposed that the requirement to retain records in the State be dropped – this amendment does not appear in the Bill.
- proposal for the Central Bank to become the competent authority for subsidiaries of credit and financial institutions – this proposal does not appear in the Bill.
- a new offence of providing false or misleading information – this proposal does not appear in the Bill.