Guidance Notes Published but not Approved

Irish anti-money laundering legislation is set out in the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, (the "Act") which was enacted on 15 July 2010. It implements the EU's Third Anti-Money Laundering Directive (2005/60/EC).

In addition to the Act, a set of guidance notes was prepared by a Government body called the Money Laundering Steering Committee. These guidance notes are contained in a set of so called "Core" Guidance Notes which have been published by the Department of Finance.

Specific sets of industry specific guidance notes were also been drafted but have not been published in final form.

Section 107(3) of the Act provided for the guidance notes to be approved by the Minister for Justice in consultation with the Minister for Finance. Section 107(3) stated that a court could have regard to the and guidelines issued by the Minister for Justice in determining whether the a designated person took reasonable steps and due diligence to comply with the Act.

Neither the Guidance Notes which have been published nor the draft sectoral guidance notes have been approved by the Minister for Finance under s107(3) of the Act. MOP understands that there are no plans to approve the guidance notes at a future date, as provided under Section 107 of the Act. It is thought that the approval of the Guidance Notes could have potentially weakened prosecution cases which may be taken under the Act and for this reason they will not be approved.

Whilst the Guidance Notes published by the Department of Finance are a useful tool for the financial services industry it is regrettable that they have not been given the approval provided for in Section 107 of the Act and that a court will not necessarily have regard to them as it would have under Section 107(3) of the Act had they been approved.

Commission plans amendments to 3rd Anti-Money Laundering Directive

The European Commission is planning amendments to the 3rd Anti-Money Laundering Directive (2005/60/EC) (the "Directive") for the purpose of implementing the new standards adopted by the Financial Action Task Force (FATF). The Directive was implemented in Ireland by the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010.

The new FATF standards are aimed at strengthening global safeguards and protecting the integrity of the financial system against money laundering and terrorist financing. The main changes in the new standards are:

  • Combating the financing of the proliferation of weapons of mass destruction through the consistent implementation of targeted financial sanctions when these are called for by the UN Security Council;
  • Improved transparency to make it harder for criminals and terrorists to conceal their identities or hide their assets behind legal persons and arrangements;
  • Stronger requirements when dealing with politically exposed persons (PEPs);
  • Expanding the scope of money laundering predicate offences by including tax crimes;
  • An enhanced risk-based approach which enables countries and the private sector to apply their resources more efficiently by focusing on higher risk areas;
  • More effective international cooperation including exchange of information between relevant authorities, conduct of joint investigations, and tracing, freezing and confiscation of illegal assets; and
  • Better operational tools and a wider range of techniques and powers, both for the financial intelligence units, and for law enforcement to investigate and prosecute money laundering and terrorist financing.

The Commission is a full member of FATF and has been involved in the development of these new FATF standards. FATF has set the end of 2013 as the deadline within which it expects implementation of the new standards.

For the purpose of implementing the new standards the Commission has launched a review of the Directive. This includes the publication of an external application study and targeted consultations with private stakeholders and Member States. At the end of March 2012 the Commission aims to publish a report on the application of the Directive which will be followed by and impact assessment and accompanying amending legislation. The Commission intends to adopt a legislative proposal by the end of 2012 and it will not become law in Ireland until some time after that.

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