Recently, there have been legislative developments in Ireland and at EU level to combat white collar crime.
Key developments include the:
- Publication of the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2018
- Approval of the text of the 5th Anti-Money Laundering Directive at EU level; and
- Approval by both Houses of the Oireachtas of the Criminal Justice (Corruption Offences) Bill 2017
Criminal Justice Bill 2018
In May 2018, the long-awaited Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2018 was published. The Bill proposes to enact into Irish law most of the provisions of the 4th Anti-Money Laundering Directive (4AMLD) and to amend the existing legislation in this area.
It is presently the law in Ireland that non-listed companies and any other legal entities incorporated in the State must take all reasonable steps to hold adequate, accurate and current information on their beneficial ownership. This information must be kept in their own companies’ beneficial ownership register. The information presently required to be held on beneficial owners includes name, date of birth, nationality, residential address and the nature and extent of the interest held.
While the Bill does not transpose all of the required provisions of 4AMLD, it transposes most of them. Therefore, once the Bill is law in Ireland, it will:
- Impose increased obligations on a range of bodies, including financial institutions, lawyers and accountants, in assessing the risks of money laundering and terrorist financing involved in carrying out their businesses
- Enhance the functions and powers of the Financial Intelligence Unit of Ireland’s police force, An Garda Síochána, the body which receives information about transactions where there is a suspicion of money laundering or terrorism financing. This will to expand its remit and provide for enhanced international cooperation.
Absent from the Bill, however, is one key aspect of 4AMLD. The missing element is the establishment by Ireland of central register of beneficial ownership. 4AMLD sets out that a central register should be created and made accessible by:
- Competent authorities
- Entities required to carry out customer due diligence
- Others with a legitimate interest in enforcing money laundering legislation
The press release issued by the Irish Government advises that the part of the 4AMLD dealing with central registers will be separately transposed. It is understood that, due to the 5th Anti-Money Laundering Directive (5AMLD) not being settled at the time of the press release, a decision relating to the levels of public access to the Irish central register would not be made until the approach had been finalised at EU level.
Approval of text of 5AMLD
In mid-May 2018, the European Council adopted 5AMLD strengthening EU rules to prevent money laundering and terrorist financing. The European Parliament had approved the text in April 2018 and the text was adopted without discussion by the Council.
The Directive will be sent for publication in the Official Journal of the European Union and will enter into force 20 days after publication of the final text in the Journal. Member States will then have up to 18 months to transpose the new 5AMLD requirements into legislation.
5AMLD broadens access to the central register of beneficial ownership of companies to any member of the general public in addition to competent authorities, Financial Intelligence Units (FIUs) and other obliged entities. Under the previous directive, a person other than a competent authority, FIU or obliged entity would have had to demonstrate a legitimate interest to allow it to access the register. This means that when the 5AMLD becomes law in Ireland, any member of the general public will have access to the information on the central registers of beneficial ownership.
Member States will be required to put mechanisms in place to ensure that the information held on the central register is adequate, accurate and current. This includes requiring obliged entities to report any discrepancies they find between the information that they hold, and the information on the register following any due diligence that has been carried out. If appropriate, the requirement to report discrepancies may be extended to competent authorities.
Approval of Criminal Justice (Corruption Offences) Bill 2017
At the end of May 2018, it was announced that both Houses of the Oireachtas, Ireland’s legislature, had passed the Criminal Justice (Corruption Offences) Bill 2017. The 2017 Bill is a major piece of reforming legislation as it repeals a raft of archaic laws currently in place in Ireland.
Once enacted, the 2017 Bill will introduce new offences. The main offences are:
- Giving or accepting a bribe for doing an act in relation to a person's office or position
- Giving of a bribe to a third party knowing that the third party is likely to carry out a corruption offence
- Giving or accepting a bribe to or by someone who can assert improper influence over an official in relation to their office
- Creating or using a false document which will be relied upon by a person in relation to their office
- Threatening or harming a person to entice them to carry out an act in relation to their office or position
The 2017 Bill also creates a strict liability offence for a body corporate if an offence is committed by an officer, director, employee or agent of a company which benefits the company. A company may only rely on the defence that they took "all reasonable steps and exercised all due diligence to avoid the commission of the offence". This is an onerous standard to meet.
It also places criminal liability on senior officers of a company for offences committed by a company with the consent of the individual or their wilful neglect.
Severe penalties are also introduced. An individual guilty of certain offences on indictment is liable for up to 10 years imprisonment and an unlimited fine. A company guilty of certain offences on indictment is liable to an unlimited fine. The Bill also provides for the forfeiture of any gift or advantage or in the alternative the forfeiture of any land or item of equivalent value.
The 2017 Bill covers corrupt acts committed by an Irish company which take place outside the State or by a non-Irish company within the State. In addition, Irish citizens and officials who commit acts of corruption outside of Ireland may be prosecuted in Ireland where their acts constitute an offence in the country in which they were committed.
The bar is being set high for Irish companies to combat anti-money laundering, corruption and terrorism. However, the introduction of this legislation and the compliance of Irish companies with it will serve to promote Ireland as an open and efficient place to do business.