Anti-Money laundering (law)

what is money laundering

money laundering is the process of disguising the proceeds of crime to make them appear legitimate or from a legal source

what are the three stages of money laundering?

placement, layering, integration

placement

Placing dirty money (often cash) into the financial system

layering

moving money through complex transactions to hide its origin

integration

Returning the claim money into the economy as legitimate assets

what’s the goal from money laundering

to make it difficult for authorities to trace the money to criminal activities

Main legislation

The criminal justice (money laundering and terrorist financing) act 2010 to 2021

what’s the purpose of the legal framework?

it implement EU anti money laundering directives in Ireland

Who are designated persons?

accountants, auditors, tax advisors

explain the risk based approach

Business risk assessment: firms must assess how money laundering could occur within their specific services

internal policies (risk based approach)

internal policies: firms must document AML policies, controls and procedures based on their assessment (higher risk activities or clients require stricter controls)

Customer due diligence (CDD)

CDD must be performed at on boarding clients and updated if circumstances change

key tasks (CDD)

Verify the identity of the client (ID, proof of address), identify beneficial owners, understand purpose of business relationship

risk levels (CDD)

do diligence measures can be simplified, standard, or enhance depending on the risk level of the client

enhanced due diligence (EDD)

For high risk clients or complex situations (e.g. clients from high risk countries)

obligations (EDD)

Apply enhance due diligence measures, identify beneficial owners of client entities, cross check owners against central beneficial ownership registers

Money laundering reporting officer (MRLO) responsibilities

overseeing AML compliance and policies, acting as the focal point for internal staff reports

staff training

Staff must be trained to identify red flags (unusual transactions), employees can be personal liable if they fail to report suspicions

suspicious transaction reporting (STR)

Internal reporting: staff report their situation to the MLRO

External report reporting: if validated MRLO must report to- An Guarda Siochana (financial intelligence unit)-revenue commissioner

tipping off

Informing a client that they are under suspicion or that STR has been filed, tipping off is treated as a serious breach of AML law

consequence for tipping off

Can prejudice an ongoing investigation by law-enforcement

Rule for tipping off

you must file a report without alerting client

what’s the retention period for record keeping?

Five years after client relationship ends

what are they required Records for recordkeeping?

CDD documents, transaction records, risk assessment and training logs

ongoing monitoring (recordkeeping)

Monitor client activity to ensure it remains consistent with risk profile

supervision (recordkeeping)

professional bodies-supervise members (chartered accountant Ireland)

Auntie money laundering compliance units- supervisors other accountants

penalties for non-compliance

criminal prosecutions, finds for firm or individual, disciplinary action by professional bodies

financial sanctions compliance

Screening: firms are required to screen clients against EU and UN sanctions list

Prohibitions: Firms mustn’t provide any funds/services to sanctioned parties

ongoing duty: staying updated on sanctions list is mandatory