General climate and recent developments
State of legal development
In general terms, how developed are the laws on money laundering, terrorism financing and fraud in your jurisdiction?
Ireland has an established legislative framework of fraud, anti-money laundering and counter-terrorist financing laws, based on both domestic and EU laws.
Ireland has been a member of the Financial Action Task Force (FATF), an intergovernmental body established in 1989, since 1991. In the most recent Mutual Evaluation Report of Ireland conducted in November 2016 and published on 7 September 2017, it is stated:
Ireland has a generally sound legislative and institutional AML/CFT [Anti-money Laundering/Combating the Financing of Terrorism] framework. In recent years, Ireland has put in place measures to improve its understanding of risks and national coordination and cooperation is a strong point of the Irish AML/CFT system. While a substantial level of effectiveness has been demonstrated in a number of areas, further measures and resources are required for a fully effective AML/CFT system that is commensurate with the risks faced in Ireland.
During the onsite evaluation the Law Society of Ireland team meeting with the FATF evaluators was led by James MacGuill.
Have there been any notable recent developments in relation to anti-money laundering, terrorism financing or fraud law and enforcement, including any regulatory changes, case law and convictions?
Ireland’s anti-money laundering and counter-terrorist financing laws will soon be updated to reflect the Fourth EU Anti-money Laundering Directive (2015/849/EU) of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. The implementing legislation – the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2018 – is expected to be signed into law by the end of 2018. This bill, when enacted, will further enhance the laws in this area. The Fourth EU Anti-money Laundering Directive emphasises a risk-based approach to the area of money-laundering. This in turn will impact businesses which are now required to develop and implement risk-based anti-money laundering and counter-terrorist financing policies.
Further obligations arising from Ireland's membership of the European Union will require, in due course, the transposition of the Directive of the European Parliament and of the Council on Combating Money Laundering by Criminal Law and the Directive of the European Parliament and of the Council on the Prevention of the Use of the Financial System for the Purpose of Money-laundering or Terrorist-financing.
Legal and enforcement framework
What primary and secondary legislation applies to money laundering, terrorism financing and fraud in your jurisdiction?
The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 as amended by the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2013 is the primary piece of legislation governing the laws on money laundering and terrorist financing. The Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2018 will likely be enacted by the end of 2018. The 2018 act aims to transpose the Fourth EU Anti-money Laundering Directive.
The primary piece of legislation governing fraud offences or offences of dishonesty is the Criminal Justice (Theft and Fraud Offences) Act 2001 (as amended). Other offences of dishonesty occur in numerous domestic and EU legislative measures.
To whom does the legislation apply? May both individuals and organisations be held liable under the legislation? Does the legislation have extraterritorial effect?
As required by the Fourth EU Anti-money Laundering Directive, anti-money laundering and counter-terrorist financing legislation applies to designated bodies such as banks, accountants, lawyers and dealers in high-value goods.
Both individuals and organisations are liable under the legislation. The 2001 act specifically states that where an offence has been committed by a body corporate, a director, manager, secretary or other officer of that entity may be liable to prosecution for the same offence.
The legislation has extraterritorial effect in certain circumstances. For example, Section 45 of the 2001 act provides that it is an offence for a person to commit fraud or money laundering outside of Ireland if certain criteria are met (eg, the benefit of the fraud or offence is obtained by a person within the state).
Is your jurisdiction a party to any international cooperation agreements to combat money laundering, terrorism financing and fraud?
As a member of the European Union, Ireland transposes all EU money laundering directives. Through the European Union there are also bilateral agreements with third countries.
In addition, Ireland has a full suite of international cooperation measures, although the efficacy of some measures has been questioned in the Mutual Evaluation Report:
Irish authorities were able to demonstrate that they cooperate internationally on ML [Money Laundering] and TF [Terrorist Financing] issues. There is a significant upward trend in the number of requests for assistance received and made by Ireland, and the presence of significant ISP [internet service provider] companies in the jurisdiction will impact on international cooperation and resourcing for Ireland significantly in the next decade.
A particular challenge will be the continued cooperation in the field of criminal justice, especially in the field of money laundering and terrorist financing with the United Kingdom post 29 March 2019 (Brexit). It is unclear at present whether the United Kingdom will maintain its current laws on money laundering, terrorist financing or fraud.
Which government authorities enforce the law on anti-money laundering, terrorism financing and fraud, and what is the extent of their powers?
As in other EU member states, Ireland’s police force has a financial intelligence unit which deals with money laundering, terrorist financing and fraud.
In addition, anti-money laundering due diligence is monitored by the various regulators including the Central Bank of Ireland for the financial sector and the Anti-money Laundering Compliance Unit within the Department of Justice and Equality for designated non-financial businesses and professions. Solicitor anti-money laundering customer due diligence is monitored by the Law Society of Ireland.
Statute of limitations
What is the limitation period for bringing actions in relation to money laundering, terrorism financing and fraud offences?
As a general rule, offences of dishonesty are always capable of being prosecuted on indictment (ie, trial by jury). There is no statute of limitations in Ireland for indictable crime.
Minor cases may be tried summarily (ie, before a single judge only) but typically only with the consent of the accused.
Where there is significant delay on the part of the prosecuting authority in bringing the prosecution, the accused may seek to prevent the proceedings on grounds of delay. In these circumstances, an accused may bring an action against the prosecuting authority to stop the proceedings.
How are ‘money laundering’, ‘terrorism financing’ and ‘fraud’ legally defined in your jurisdiction?
‘Money laundering’ is defined by Section 7(1) of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 as follows:
A person commits an offence if –
a) the person engages in any of the following acts in relation to property that is the proceeds of criminal conduct:
(i) concealing or disguising the true nature, source, location, disposition, movement or ownership of the property, or any rights relating to the property; (ii) converting, transferring, handling, acquiring, possessing or using the property; (iii) removing the property from, or bringing the property into, the State,
(b) the person knows or believes (or is reckless as to whether or not) the property is the proceeds of criminal conduct.
‘Terrorist financing’ means an offence under Section 13 of the Criminal Justice (Terrorist Offences) Act 2005, and is summarised as follows:
A person is guilty of an offence if, in or outside the State, the person by any means, directly or indirectly, unlawfully and wilfully provides, collects or receives funds intending that they be used or knowing that they will be used, in whole or in part in order to carry out—
a) An act constitutes an offence under the law of the State and within the scope of, and as defined in, any treaty that it is listed in the annex to the Terrorist Financing Convention, or
b) An act (other than one referred to in paragraph (a) —
i. That is intended to cause death or serious bodily injury to a civilian or to any other person not taking an active part in the hostilities in a situation of armed conflict, and ii. The purpose of which is, by its nature or context, to intimidate a population or to compel a government or an international organisation to do, or abstain from doing, any act.
General fraud offences or offences of dishonesty are created by the Criminal Justice (Theft and Fraud Offences) Act 2001. Other offences, involving dishonesty, occur in a myriad of discrete legislative measures, both domestic and EU derivatives.
Principal and secondary offences
What are the principal and secondary offences in relation to money laundering, terrorism financing and fraud?
Money laundering offences are set out in Part 2 of the 2010 act. They include concealing the true nature or source of the proceeds of criminal conduct and converting, transferring, handling, acquiring, possessing or using those proceeds. A person who attempts the commission of such an offence is also guilty of an offence. Failing to carry out customer due diligence under the 2010 act is an offence.
Terrorist financing offences are set out in Part 4 of the 2005 act. They include providing, collecting or receiving funds knowing that they will be used to carry out an act that is intended to cause death or serious bodily injury to a civilian, or the purpose of which is to intimidate the public or compel a government to do or abstain from doing a particular act.
Fraudulent transactions are often also dealt with on the basis that the false accounting involved contravenes other statutory obligations, notably under the Companies Acts and/or Central Bank Acts.
How are predicate offences defined?
A predicate offence is understood as having the meaning set out in Council Framework Decision 2006/783/JHA of 6 October 2006 on the application of the principle of mutual recognition to confiscation orders: “(h) where the criminal proceedings leading to a confiscation order involve a predicate offence as well as money laundering, a ‘criminal offence’ mentioned in Article 8(2) (f) shall mean a predicate offence.”
In transposing the anti-money laundering directives of the European Union, Ireland has engaged in the practice of ‘gold plating’. This means that, in addition to the offences mandated to be created, Ireland has gone further, particularly in the field of tax law. As such, the range of predicate offences is exceptionally broad in Ireland and would not be possible in an article of this length to define each potential predicate offence.
Predicate crimes in Ireland include drug offences, tax evasion and fuel laundering.
De minimis rules
What de minimis rules apply to money laundering, terrorism financing and fraud offences?
There is no de minimis amount in Ireland below which money laundering or terrorist financing prosecution is not possible nor is there an amount below which anti-money laundering or counter-terrorist financing due diligence does not arise where there is a business relationship.
Legislation envisages occasional transactions (where there is no business relationship) triggering customer due diligence when the occasional transactions reach €15,000.
Penalties and plea agreements
What penalties may be issued for money laundering, terrorism financing and fraud offences?
A conviction for money laundering or terrorist financing offences can carry up to 14 years’ imprisonment. Failure on the part of a designated person to comply with its obligations under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, for example failing to carry out the appropriate customer due diligence or tipping off a customer who is suspected of carrying out money laundering or terrorist financing, may result in a custodial sentence of up to five years or a fine.
Convictions for fraud offences under the Criminal Justice (Theft and Fraud Offences) Act 2001 carry sentences of up to 10 years imprisonment.
Are plea agreements available? If so, how often are they used and what rules, standards and procedures apply?
Plea agreements or deferred prosecution agreements are not part of the legal landscape in Ireland. It is a requirement of the 1937 Constitution of Ireland (Bunreacht na hÉireann, Article 34.1) that justice be administered in public. As such it is not possible to enter into binding agreements with the prosecution which in any way tie the hands of the court in respect of sentence. However, it is commonplace to agree the precise ambit of evidence that is to be laid before a court and experienced professionals are generally in a position to assess to a high level of accuracy what the appropriate tariff would be in given circumstances. There is an appeal as of right against severity of sentence for all accused and it is open to the director of public prosecutions to seek a review by the Court of Appeal of any sentence perceived to be unduly lenient.
What defences are available in your jurisdiction to parties accused of money laundering, terrorism financing or fraud?
For offences relating to money laundering and failure to comply with anti-money laundering or counter-terrorist financing duties, a defence is available if the accused can prove that they took all reasonable steps to avoid the commission of the offence.
The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 sets out a number of specific defences applicable to persons who are charged under the act. In particular, the 2010 act sets out a number of defences to a charge of ‘tipping off’. For example, it is a defence to a charge of tipping off to prove that the disclosure was made to a customer of the designated person, that the designated person was ordered not to carry out the transaction and that the disclosure was to the effect that the designated person was directed by An Garda Siochana (the Irish Police) or a district court judge not to carry out the transaction. It may also be a defence where the disclosure was made within the same undertaking or group, or where the person making the disclosure did not know that the disclosure was likely to prejudice the investigation into whether an offence of money laundering or terrorist financing had been committed.
In circumstances where a person is charged with failing to report a suspicious transaction, it is a defence for such a person to prove that they made a report to another person in accordance with their employer’s internal reporting procedure.
Notwithstanding the defences available to an accused, a view has been expressed, in the Mutual Evaluation Report, that the prosecution of money-laundering and terrorist financing offences in this jurisdiction is difficult:
A number of domestic terrorism charges were brought against persons, which resulted in successful prosecutions and convictions. However, no prosecutions of [terrorist financing] offences have occurred either as a stand-alone prosecution or as part of a counter-terrorism prosecution…In instances where [terrorist financing] activities have been identified however, the authorities pursued offences such as forgery and membership of the IRA [Irish Republican Army] (under the general counter-terrorism legislation) rather than [terrorist financing] charges. It would appear that the evidential requirements of some elements of the [terrorist financing] offence (such as knowledge and the destination/use of the funds) are difficult to prove beyond a reasonable doubt.
In reality these are merely the ordinary precepts of the criminal law, but it must be acknowledged that the prosecution may find it easier to secure conviction on a predicate offence such as possession of drugs with intent to supply rather than complicate proceedings by an additional money laundering charge. Therefore, the sentences imposed would not vary appreciably by the additional ingredient of money laundering as courts acknowledge that this is an implicit part of a criminal enterprise.
Concern has been expressed however that there are fewer prosecutions for money laundering offences on a standalone basis in our jurisdiction:
Ireland has a strong legislative framework for pursuing ML [money laundering]; however, this has not translated to results at the trial stage. This may reflect reluctance on behalf of prosecutors to test the AML [anti-money laundering] laws or a conservative approach by the judiciary which in turn acts as a disincentive to investigate complex ML cases. Ireland has not fully demonstrated an ability to identify, investigate and prosecute a wide range of ML activity including, in relation to foreign predicate offences and third-party ML. Considering Ireland’s position as a regional and international financial centre, more analysis and action by authorities of complex, professionally-enabled ML schemes was expected. While Ireland has had some success in guilty pleas for ML, assessors were concerned that there have been no convictions for ML after a trial. (Mutual Evaluation Report of Ireland, 2017.)
Record keeping, disclosure and compliance
Record-keeping and disclosure requirements
What record-keeping and disclosure requirements apply to companies and relevant individuals under the anti-money laundering, terrorism financing and fraud legislation?
The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 sets out record-keeping and disclosure requirements.
Designated persons under the legislation are obliged to keep records which evidence the procedures applied, and information obtained, in performing customer due diligence. Records which evidence the history of services and transactions carried out in relation to each of the designated person’s customers must also be kept. Under the 2010 act, designated persons are subject to a five-year record retention obligation.
In terms of disclosure requirements, there is a legislative duty placed on designated persons by the 2010 act to report suspicious transactions. A designated person who knows, suspects or has reasonable grounds to suspect that a person is engaged in money laundering or terrorist financing must make a report to the Garda Síochána and the revenue commissioners (a Suspicious Transaction Report).
The Suspicious Transaction Report must include:
- the information on which the designated person’s knowledge, suspicion or reasonable grounds are based;
- the identity, if the designated person knows it, of the relevant person suspected to be involved in the money laundering or terrorist financing; and
- the whereabouts, if known, of the property the subject of the money laundering, or the funds the subject of the terrorist financing, as the case may be.
The designated person is obliged to make the report as soon as possible.
What internal compliance measures are required and/or advised for companies in relation to the anti-money laundering, terrorism financing and fraud legislation?
The 2010 act requires a designated person to have policies and procedures in place aimed at preventing and detecting the commission of money laundering and terrorist financing. The policies and procedures should state how the designated person:
- assesses and manages the risks of money laundering or terrorist financing; and
- sets internal controls, including internal reporting procedures for the purposes of reporting suspicious transactions.
Furthermore, the designated person should adopt policies and procedures relating to the monitoring and management of compliance with the policies and procedures referred to above.
Staff should be made aware of the requirements under the 2010 act, and appropriate training in the above policies and procedures should be provided. In particular, anti-money laundering or counter-terrorist finance training should involve training on how staff report suspicious transactions, both internally and to the relevant authorities.
The Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2018, once enacted, will introduce further requirements to have in place anti-money laundering or counter-terrorist financing polices, controls and procedures and, importantly, to keep them up to date.
What customer and business partner due diligence is required and/or advised for companies in relation to the anti-money laundering, terrorism financing and fraud legislation?
Customer due diligence (Section 33, 2010 act) must be conducted to identify and verify customers or business partners and, if necessary, their beneficial owners. This may be done through the use of documents or information which the designated person has reasonable grounds to believe can be relied upon to confirm the identity of the customer or business partner.
In certain circumstances enhanced customer due diligence will be necessary (Section 37, 2010 act). Enhanced due diligence is required where a customer, or a beneficial owner who is connected with the customer, is a “politically exposed person”, an immediate family member or a close associate of a “politically exposed person”. Enhanced due diligence will involve, among other things, the approval from the designated person’s senior management before a business relationship is established or continued with the customer.
Can private actions be brought in your jurisdiction for damages arising from money laundering, terrorism financing or fraud? If so, who may file such actions and what filing procedures apply?
If an individual or entity suffers damage as a result the criminal act of another it is possible to seek civil redress through a private action. While the onus of proof is of the civil standard that is on a balance of probabilities, it is in a special category where criminality is alleged. The moving party should be the party that has suffered the loss.
Depending on the quantity of loss suffered, an action may be brought in the District, Circuit or High Court. Filing procedures are set out in the court rules which govern each particular court. The court rules set out the timelines applicable once proceedings have issued and provide template documentation. All private actions are subject to the Statute of Limitations 1957 which imposes time limits on the commencement of civil actions.
How are damages calculated?
A court may award compensatory damages, the purpose of which is to provide restitution to the party that has suffered damage. Damages may also be calculated to reflect disapproval of the behaviour itself or the conduct of the proceedings, and in that regard a court may award aggravated or exemplary damages.
What other remedies may be awarded to successful claimants?