The General Scheme (the Scheme) of the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2019 (the Bill) has been published by the Department of Justice. The full text of the Scheme is available here. The Scheme is quite high level and sets out the heads of the Bill which will give effect to many of the provisions of the Fifth EU Money Laundering Directive (5MLD). The current AML/CTF legislation is set out in the Criminal Justice (Money Laundering and Terrorist Financing) Acts, 2010 to 2018 (the CJA).

The following is a summary of the key themes of the Scheme and the amendments proposed to the CJA.

New Designated Persons

The Scheme proposes an extension to the category of "designated persons", including:

  • A letting agent, but only in respect of transactions for which the monthly rent amounts to €10,000 or more.
  • A provider engaged in exchange services between virtual currencies and fiat currencies and a custodian wallet provider. Such designated persons will be regulated by the Central Bank of Ireland.
  • A person trading, or acting as an intermediary in the trade of, works of art, but only in respect of transactions of at least €10,000 in value (whether in one transaction or in a series of linked transactions).
  • An extension of the scope of persons who fall within the definition of tax advisor.

Triggers for conducting CDD Measures Extended

The Scheme envisages that "designated persons will be required to conduct CDD in relation to a customer of the designated person at any time where the designated person is obliged under any enactment or rule of law, including Directive 2011/16/EU [on tax information], to contact the customer for the purpose of reviewing any relevant information relating to the beneficial owner".

Verification of Senior Managing Officials as Beneficial Owners

Where the beneficial owner is the senior managing official, a designated person shall take the necessary measures to verify the identity of that person and shall keep records of the steps taken to support verification and also record any difficulties encountered in the verification process.

Additional CDD Measures Prior to Establishing a Business Relationship

Some additional CDD measures are required for a customer that is a body corporate or a trust required to register its beneficial ownership information. Prior to the establishment of a business relationship with such a customer, a designated person shall obtain proof that the beneficial ownership information has been duly registered or an excerpt of the register demonstrating that the beneficial ownership information has been duly registered.

Examination of Background and Purpose of Certain Transactions

The Scheme proposes a softening of the requirement for designated persons to examine the background and purpose of transactions which are complex or unusually large by providing that a designated person shall do this "as far as reasonably possible".

Enhanced CDD

One of the objectives of 5MLD is to ensure a consistent approach to enhanced customer due diligence (ECDD) across Member States and so the Scheme sets out a number of steps which should be applied by designated persons in the context of ECDD. These include obtaining additional information on the customer and the beneficial owner, the intended nature of the business relationship, the source of funds and source of wealth of the customer and of the beneficial owner, and on the reasons for the intended or performed transactions. There is also provision for secondary legislation to be introduced imposing additional ECDD and reporting obligations on designated persons doing business with third countries which pose a high ML/TF risk.

Amendment of the 'tipping off' defence

The Scheme proposes some tweaks to the tipping off defence in section 51 of the 2010 Act, including a requirement that AML/CTF policies and procedures make provision for the sharing of information relating to suspicious transactions in group situations.

Sanctions Screening

The Minister for Finance may make regulations in respect of sanctions screening. Breach of those regulations will be a criminal offence.

Schedules of Low and High Risk Factors

There are some changes to the risk factors set out in these Schedules.

Additional Criminal Justice Measures

The Scheme also proposes legislative provisions which are not required by 5MLD, but which will support the Criminal Assets Bureau and An Garda Síochána in the administration of their AML/CTF functions by improving their access to bank records in electronic form.

While the Bill transposes certain elements of 5MLD, the Department of Finance is also engaged in giving effect to certain provisions of the Directive, including those relating to:

  • Establishing beneficial ownership registers.
  • Establishing centralised national bank and payment account registers or central data retrieval.

It remains to be seen whether the Bill will reflect the approach taken in the Scheme.