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Financial Regulation Update: Anti-Money Laundering Registration – Do You Need to Take Action?

30 November 2018

On 14 November 2018, the Criminal Justice (Money Laundering and Terrorist Financing (Amendment) Act, 2018 was enacted.  This will introduce a statutory requirement for certain firms to register with the Central Bank of Ireland (the Central Bank) for anti-money laundering purposes. It means that many unregulated entities will now find themselves subject to direct supervision by the Central Bank for the purposes of anti-money laundering. Unregulated entities that engage in any form of financial services activity such as lending or leasing will need to be aware of the potential impact on their businesses.

Background

The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, as amended by Part 2 of the Criminal Justice Act 2013 and the Criminal Justice (Money Laundering and Terrorist Financing (Amendment) Act 2018 (the 2018 Act), (together the Act), governs the law in Ireland on anti-money laundering and terrorist financing. The 2018 Act has not yet been commenced but it is expected to be shortly.

The Central Bank is the competent authority in Ireland for monitoring and supervising financial and credit institutions compliance with their obligations under the Act.

Even though they are not regulated financial services providers, certain firms currently fall within scope of having to apply anti-money laundering checks and procedures to their business on the basis that they are providing certain types of services or activities, outlined below. With the introduction of the 2018 Act, these firms will now have to register with the Central Bank for anti-money laundering purposes.

Registration Obligations

Firms who participate in the activities listed below, and who are not already regulated, must now register with the Central Bank. The Central Bank will in turn establish and maintain a register of these firms.

Activities for which you must register

  1. Lending including consumer credit, credit agreements relating to immovable property, factoring, with or without recourse, financing of commercial transactions (including forfeiting)
  2. Financial Leasing
  3. Payment services
  4. Issuing and administering other means of payment (e.g. travellers’ cheques and bankers’ drafts)
  5. Guarantees and commitments
  6. Trading for own account or for account of customers in any of the following:
    • Money market instruments including cheques, bills, certificates of deposit, etc.
    • Foreign exchange
    • Financial futures and options
    • Exchange and interest-rate instruments
    • Transferable securities
  7. Participation in securities issues and the provision of services relating to such issues
  8. Advice to undertakings on capital structure, industrial strategy and related questions and advice as well as services relating to mergers and the purchase of undertakings
  9. Money broking
  10. Portfolio management and advice
  11. Safekeeping and administration of securities
  12. Safe custody services
  13. Issuing electronic money, and
  14. Carry out the business of a cheque cashing office

Exemptions

If a firm carries out any of the above activities, but falls into either of the following two exemptions, then the obligation to register will not apply:

  1. If the firm only carries out trading on own account, in accordance with activity 6 above, and it’s customers are members of the same group as the firm; or
  2. If, accumulatively the firm has:
    • An annual turnover of less than €70,000, and
    • The total of any single transaction, or series of linked transactions in relation to the activities listed above does not exceed €1,000, and
    • The Activities do not exceed 5% of turnover, and
    • The Activities are directly related to and ancillary to the firm’s main business activities, and
    • The Activities are only provided to customers of the firm’s main business activities, rather than the public in general

Conclusion

Firms affected by the introduction of this new obligation must now consider registering with the Central Bank. They should also have in place clear policies and procedures to demonstrate an ability to comply with the various anti-money laundering obligations imposed on designated persons. These include the requirement to carry out customer due diligence, training for employees as well as the reporting of suspicious activity to the relevant authorities. Firms that need to register with the Central Bank for the first time must do so by completing a registration form. Failure to register will be a criminal offence.

For more information on how these developments may affect your firm and assistance with registering your firm with the Central Bank, contact a member of our Financial Regulation team.


The content of this article is provided for information purposes only and does not constitute legal or other advice.

Discuss your financial services regulation queries now with Rowena Fitzgerald.

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