The Criminal Justice Bill, 2013 was signed into law on 12 June last. This Bill first appeared in February last as the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill, 2013. At Seanad Stage the Bill changed its title to the Criminal Justice, Bill 2013 in recognition of some late changes (in Part 3) concerned with new enforcement powers to close down certain mobile communications services in response to a threat of terrorist activity. The new legislation is mainly about some minor changes to the anti-money laundering rules in the Criminal Justice (Money Laundering and Terrorist Financing) Act, 2010 (the 2010 Act). Part 2, other than Sections 5, 15 and 16 came into force on 14 June 2013. This means that the changes to the AML compliance rules noted below are operative.
Changes to the Anti-Money Laundering Requirements in the 2010 Act
Amendment to the Definition of "Occasional Transaction"
There is a proposed change to the definition of "occasional transaction" in the 2010 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 exceeds €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 changes means 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 has confirmed 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. 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 enhanced 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 requirement 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.
The new legislation provides no colour as to what steps might be taken to meet the requirements at (1) above. Some guidance on this would be useful for compliance functions.
Maintenance of Records Outside the State
The Act amends the record-keeping rules of Section 55 of the Act. Under the 2010 Act there was a requirement that CDD and transaction records should be retained by the designated person at an office or other premises in the State. The Act now facilitates the maintenance of such records outside the State. However, where such records are kept outside the State the designated person must ensure that those records are produced in the State to:
a member of the Gardaí Siochana,
- an authorised officer,
a person to whom the designated person is required to produce such records in relation to his or her business, trade or profession as soon as practicable after the records concerned are requested, and where the obligation to produce the records arises under an order of court, within such period specified by the court order.
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.
Part 3 of the Criminal Justice, Act 2013
Part 3 was inserted just prior to the enactment of the legislation. It makes provision for mobile phone networks to be shut down for a limited period in a limited area to prevent their use in remotely detonating a bomb.