Ireland

Last updated: 13/3/2008

CENTRAL AUTHORITY FOR REPORTING

“Lawyers will provide information about their suspicions of money laundering to the Garda Síochána and the Revenue Commissioners. Such reports may be made in accordance with an internal reporting procedure established by an employer for the purpose of facilitating the operation of the section.” 1

Relevant Irish bodies in this area include:

Garda Síochána (Police)
Revenue Commissioners
Central Bank
Departments of Justice and Finance
The Irish Financial Services Regulatory Authority (IFSRA)

HAS THE THIRD EU MONEY LAUNDERING DIRECTIVE BEEN IMPLEMENTED?

It is expected that the Criminal Justice (Money Laundering) Bill 2008, which will transpose the Third Directive into Irish law, will be passed by July 2008. It contains references to the risk-based approach, enhanced and simplified customer due diligence, beneficial ownership - defined broadly as owning 25 per cent of a company or more - and politically exposed persons.

The proposed money laundering legislation will also address recommendations arising from the Financial Action Task Force (FATF) mutual evaluation report on Ireland’s efforts to combat money laundering and terrorist financing, which was published in 2006, and on the Council of Europe Convention on Laundering Search Seizure on the Confiscation of the Proceeds of Crime and on the Financing of Terrorism.[5]

According to an European Union press release of 5 June 2008 (Ref: IP/08/860), the European Commission (EC) is pursuing infringement actions against 15 member states for failing to adopt and implement the Third EU Money Laundering Directive into national law by the deadline of 15 December 2007. Formal requests will be sent to Belgium, Czech Republic, Germany, Greece, Spain, Finland, France, Ireland, Luxembourg, Malta, the Netherlands, Poland, Portugal, Sweden and Slovakia. The infringing nations will have two months to provide an acceptable response, or the EC may refer the issue to the European Court of Justice.

LAWS REGARDING ANTI-MONEY LAUNDERING PROCEDURES

The Second EU Directive was implemented by the Criminal Justice Act 1994 (Section 32) (Amendment) Regulations 2003 S.I. No. 242 of 2003 (the "Regulations").

The Criminal Justice Act, 1994, was passed by both houses of the the Oireachtas (Parliament) and signed by the President on 30 June 1994. The Act makes provisions for the recovery of the proceeds of drug trafficking and other offences, including that of financing terrorism since 2005.

It makes money laundering an offence and makes the provisions for international cooperation in respect to certain criminal law enforcement procedures and for the forfeiture of property used in crime and provides for related matters, such as imposing an obligation on designated bodies (banks and a wide range of financial institutions), to take measures to combat money laundering in line with the provisions of the EU Money Laundering Directive.

The provisions of the Act came into effect by means of Ministerial Orders. Money Laundering was made an offence on 14 November 1994 and the remaining provisions in relation to money laundering became effective on 2 May 1995. Interestingly, the Irish Act defines money laundering more widely than the current EU Directive. The Irish law applies to banks, building societies, the Post Office, stockbrokers, credit unions, bureaux de change, life assurance companies, insurance brokers and included provisions to incorporate accountants, lawyers and estate agents which are all now "designated bodies" by virtue of the Regulations.

The Act has been supplemented by a series of detailed guidance notes for the various sectors of the financial services industry.

The Financial Services regulator, as part of its supervision process, assesses the adequacy of procedures adopted by the institutions, which it supervises to counter money laundering and the degree of compliance with such procedures. The Financial Services Regulator will, from time to time, conduct inspections of institutions to assess their compliance with the Guidance Notes.

The Central Bank/Financial Services Regulator is obliged by the Criminal Justice Act 1994 to report to the Garda Siochana where it suspects than an offence under Section 31 of the Act has been, or is being, committed by an institution under its supervision (Section 57(2) of the Act).

It is an offence punishable by imprisonment of up to five years or a fine, or both, for the failure of the Central Bank/Financial Services Regulator to comply with this requirement (Section 57 (5)).

In late 1996, Ireland ratified and fully implemented the 1988 Vienna Convention and the 1959 and 1990 Council of Europe Conventions, thus allowing it to provide a full range of mutual legal assistance to a wide range of countries.

In 1996 it also enacted the Criminal Assets Bureau Act, 1996 and the Proceeds of Crime Act, 1996. The former legislation created the Criminal Assets Bureau, an independent statutory body comprised of staff from a number of government agencies, and provided them with certain compulsory powers. The latter legislation provides for a process of civil forfeiture whereby property which is the proceeds of crime can be frozen and ultimately confiscated, without any need for criminal proceedings against any person. A number of technical changes were made to the Act by the Proceeds of Crime (Amendment) Act 2005. These include the removal of any doubts as to when a person may be said to be in possession or control of property for the purposes of the Act.

The enactment of the Disclosure of Certain Information for Taxation and Other Purposes Act, 1996 provides for more effective exchange of information between the Garda Siochana and the Revenue Commissioners and enables the Revenue Commissioners to provide information to a senior Garda officer where there are reasonable grounds for suspecting that the information relates to a person who has derived profits from an unlawful activity.

In relation to the financial sector, amendments were enacted in 1996 to complete the requirements for institutions subject to the Criminal Justice Act 1994 (the CJA), while the establishment in 1994 of a Money Laundering Steering Committee led to guidance notes being issued for credit institutions, financial institutions, credit unions, stockbrokers and life assurance companies and intermediaries. Consideration is being given to extending the money laundering provisions of the 1994 Act to company formation agents.

"In November 2006, Michael McDowell, Ireland's justice minister, introduced legislation into the country's parliament to enhance Europol's ability to pursue money laundering cases." 4

GUIDELINES

To assist law firms in applying the legislation, the Law Society has produced Guidance Notes, which include a letter from the Minister of Justice clarifying that ceasing to act for a client in the event of a suspicious transaction report being made does not constitute “tipping off” under the legislation. The guidelines cover issues like “what is a suspicious transaction”, identification procedures, record-keeping procedures, procedures for staff training and awareness, and reporting procedures and obligations.

Guidance Notes for Solicitors on Anti-Money Laundering Legislation Obligations Arising Under EU Directive 2001/97/EC, The Criminal Justice Act, 1994 and the Criminal Justice Act, 1994 (Section 32) Regulations 2003 on Prevention of the Use of the Financial System for the Purpose of Money Laundering

It is recommended that all solicitors familiarise themselves with the aforementioned Guidance Notes.

The Irish Financial Services Regulatory Authority (IFSRA) has issued a number of Guidelines in this area, including those for:
Credit Institutions
Financial Institutions (excluding credit institutions) supervised by the Financial Services Regulator
Stockbrokers
Insurance and Retail Investment Products (for use by life Assurance companies and intermediaries)

Before any obligation to report a suspicious transaction arises, a number of criteria must be met:

The solicitor must be participating in the act of assisting the client in relation to a transaction or must be acting on behalf of the client in relation to a transaction (Article 2a.5 of 1991 Directive, as inserted by Article 1.2 of the Second EU Directive of 2001)
The transaction must come within the categories of specified activities (see paragraph 1.12 of the Guidance Notes for Solictors referred to above).
There must be a suspicion that an offence of money-laundering has been or is being committed in relation to the business of the solicitor (section 57(1)). (See paragraph 2.1 of the Guidance Notes for Solicitors referred to above for a definition of "suspicion").
The information leading to the suspicion must arise in circumstances other than the exempted areas, i.e. NOT where the solicitor is either –

ascertaining the legal position for the client (see paragraph 6.2 of the Guidance Notes fir Solicitors referred to above),

performing the task of defending or representing the client in or concerning judicial proceedings (whether the information is received/obtained before, during or after such proceedings), or

advising that client in relation to instituting, avoiding or defending judicial proceedings (whether the information is received/obtained before, during or after such proceedings).

Details of the Irish reception points for reports are contained in the Guidance Notes for Solicitors referred to above.

IS TIPPING OFF PERMITTED?

Section 58 of the Criminal Act, 1994 (as amended) creates the offence of tipping off.

LAWYER RESPONSIBILITY

As and from 15 September, 2003, solicitors will be required to-

Take measures to identify new clients (not existing clients) and maintain records of their identity (see Section 3 of the Guidance Notes for Solicitors referred to above);
Maintain records of all relevant transactions (by both new and existing clients) and copies of all documents for at least five years following the transaction (see Section 4 of the Guidance Notes for Solicitors referred to above);
Introduce internal procedures for staff training and awareness (see Section 5 of the Guidance Notes for Solicitors referred to above);
Introduce internal reporting procedures (see Section 6 of the Guidance Notes for Solicitors referred to above);
Report suspicious transactions to the Garda Siochana and the Revenue Commissioners (see Section 6 of the Guidance Notes for Solicitors referred to above).

RESTRICTIONS TO ACT

No information available

EXISTING CLIENTS AFFECTED

A solicitor is not expected to retrospectively establish the identity of persons for whom he is already providing services on a continuing basis on or before 15 September 2003. Nevertheless, solicitors should be aware of the identity of all those persons to whom they are providing a service (whether existing or new), if they are to effectively carry out their anti-money laundering obligations. For instance, solicitors should be satisfied that transactions for all clients remain reasonable and are not significantly unusual in the context of their relationship with that person, regardless of when the relationship commenced.

Regardless of the amount of the transaction, a solicitor is required to establish the identity of a client who was an existing client on or before 15 September 2003 where there is a suspicion that the service being provided is connected with the commission of a money laundering offence.

If the client is a different company in a client group for whom services had not been provided before 15 September 2003, then the identification rules for new clients apply as it is a different legal person.

NEW MATTERS

No information available

NEW CLIENTS

From 15 September 2003, a solicitor is required to take "reasonable measures" to identify all new clients (section 32(3)) of the Criminal Justice Act 1994 (as amended) for whom he proposes to provide legal services either on a continuing basis, or in respect of a transaction/series of transactions amounting to at least €13,000.

DOCUMENTS TO BE COLLECTED

The name and address of the client should be obtained and should be independently verified. In the case of joint clients, identification evidence should be obtained and verified in relation to all of them. If a solicitor knows or believes that he is dealing with a person who is acting for a third party, the solicitor must take reasonable measures to establish the identity of the third party.

Solicitors must retain copies of all materials used to identify the person concerned. At the outset of the retainer, a solicitor should identify all relevant parties and clarify from whom instructions are being received.

Different identification criteria will apply for different types of clients and examples of suitable documentary evidence are set out in the Guidance Notes for Solicitors.

LAWYERS PROSECUTED FOR MONEY LAUNDERING SITUATIONS

No information available

Sources

CCBE Overview of the implementation of the 2001 Money Laundering Directive, November 2003 (copy available on file at the International Bar Association).
See Mc. Dowell extends money-laundering provisions to additional professions (Transposition of Council Directive 2001/07/EC on prevention of the use of the financial system for money laundering).
See Breslin, The Third Money Laundering Directive: Implications for the Legal Profession.
Marcus Simpson, “Irish justice minister introduces Europol laundering legislation”, 20 November 2006, www.complinet.com.
http://www.finance.gov.ie/documents/legi/3rdMLDIRanalysis.pdf.