On 22 & 23 April 2021, Ireland published legislation to transpose, and commence already transposed, provisions of the EU 5th Anti-Money Laundering Directive (AMLD5). Having been warned by the EU to progress its transposition of AMLD5 (the final deadline for which passed on 10 March 2020) in May 2020, Ireland has now commenced legislation which transpose, amongst others, the following elements of AMLD5:
Central Register of Beneficial Ownership of Express Trusts
- the EU (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2021 (2021 AML Regulations) came into effect on 24 April 2021 and provide for the establishment of the central register of beneficial ownership of so-called relevant trusts to be maintained by the Irish Revenue Commissioners. The relevant trusts in scope of the 2021 AML Regulations do not include UCITS established as unit trusts under the UCITS regime or AIFs established under the Unit Trusts Act 1990 (since December 2020, investment funds established as unit trusts have been required to submit beneficial ownership details to the Central Beneficial Ownership Register for Certain Financial Vehicles maintained by the Central Bank of Ireland) ;
Enhanced CDD or High-Risk Third Countries
- the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 (2021 AML Act) came into effect on 23/24 April 2021 and includes measures required of obliged entities when performing enhanced customer due diligence (ECDD) relating to business relationships or transactions involving countries identified by the EU Commission as ‘high-risk’. Specific ECDD that obliged entities must execute when dealing with customers or transactions involving high-risk third countries include:
- obtaining additional information on the customer and on the beneficial owner;
- obtaining additional information on the intended nature of the business relationship;
- obtaining information on the source of funds and source of wealth of the customer and of the beneficial owner;
- obtaining information on the reasons for the intended or performed transactions;
- obtaining the approval of senior management for establishing or continuing the business relationship;
- conducting enhanced monitoring of the business relationship by increasing the number and timing of controls applied and selecting patterns of transaction that need further examination;
New 'designated persons'
- the 2021 AML Act expands the definition of 'designated person' under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (CJA 2010) which now includes virtual asset service providers. This change results in service providers such as virtual currency exchange platforms and custodian wallet providers being in-scope of the AML rules under the CJA 2010, including rules for the performance of various CDD checks and other requirements when onboarding new customers. Such entities must adopt controls and procedures to counter money laundering or terrorist financing (ML/TF) risks, report suspicious transactions and become registered with the relevant competent authority.
CDD and beneficial ownership
- the 2021 AML Act and 2021 AML Regulations require designated persons' CDD to include checking the customer's beneficial ownership information has been submitted to the relevant central beneficial ownership register i.e. in the case of corporate customers, beneficial ownership information has been entered on, as applicable, the Central Register of Beneficial Ownership of Companies and Industrial Provident Societies maintained by the Companies Registration Office or the Central Register of Beneficial Ownership of Irish Collective Asset-management Vehicles, Credit Unions and Unit Trusts maintained by the Central Bank of Ireland and in the case of customers established as express trusts, the Central Register of Beneficial Ownership of Trusts maintained by the Revenue.
As both the 2021 AML Act and the 2021 AML Regulations are in force and applicable since 24 April 2021 in-scope entities should ensure that AML policies and procedures, including those in respect of CDD measures applied, are updated to take account of the new ECDD measures and those relating to beneficial owner checks as set out above.