The Government yesterday approved the Heads of the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2012. The Bill will refine the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 in light of the experience of its operation over the past two years.

The 2010 Act overhauled Anti Money-Laundering (AML) controls in place since the first legislation in this area was passed in 1994 and established a new framework of AML regulation for credit and financial institutions and other "designated persons" in line with the relevant EU law and the standards of the Financial Action Task Force (FATF). In addition to banks and similar institutions, the law requires accountants, trust or company service providers, estate agents, gaming clubs, dealers in high value goods (such as car dealers) and lawyers to apply customer due diligence measures such as obtaining evidence of identification from customers, monitoring transactions and services and reporting any suspicions of money laundering to the relevant authorities.

The Heads of the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill approved by Government yesterday are also aimed at enhancing Ireland’s compliance with FATF standards following its evaluation of the 2010 Act. The Heads of the Bill are being published to enable consultation with relevant sectors on the proposed changes prior to the detailed drafting of the Bill. (Details are available on the Department’s website )

Minister for Justice, Equality and Defence, Alan Shatter TD said, "We already have a robust framework of laws in place to tackle white collar crimes, to prevent and detect money laundering, and to ensure that the proceeds of crime can be seized from criminals. The 2010 Act has been in place for two years and in light of the experience of its operation, and taking on board FATF recommendations, the Act is being amended to ensure that it operates as effectively as possible. "

There are other issues which will be addressed in the amendment Bill as it is further developed. The Mahon Tribunal in its recent final report made recommendations concerning the extension of enhanced customer due diligence requirements to domestic Politically Exposed Persons (PEPs). This recommendation is being considered as part of the Government’s overall response to the Mahon Tribunal recommendations and in harmony with proposed changes to PEP requirements at EU level.

The Government also plans to address a concern raised by the financial services sector in regard to the system for relying on third parties in States outside the EU to carry out customer due diligence measures. Proposals for a new system are being developed and once this work is complete the necessary legislative amendments will be submitted to Government for inclusion in the Bill.

Key issues in the Amendment Bill

The definition of "occasional transaction" is to be amended so that:

· wire transfers of funds of €1000 or more are included in the Act and customer due diligence measures will also apply to beneficial owners of such funds.

· the monetary threshold is reduced from €15,000 to €2,000 for private members’ gaming clubs for the application of customer due diligence measures.

When a designated person is carrying out a service or transaction with a non EU Member State, it will no longer be able to merely rely on the list of countries currently designated under section 31 but must also carry out its own assessment of the risks of money laundering or terrorist financing.

The amendment Bill will make it clearer that senior management approval must be obtained when an existing customer becomes a Politically Exposed Person (PEP) residing outside the State. It also clarifies that enhanced monitoring must be undertaken in the case of PEPs.

The Bill will also require designated persons to apply enhanced customer due diligence measures where a customer, business relationship, etc presents a higher risk of money laundering or terrorist financing.

The list of specific policies and procedures designated persons are required to have in place will also be refined by the Bill so as to emphasise the importance of issues such as keeping customer due diligence documentation up to date. The Bill will also provide for the appointment of a compliance officer/money laundering reporting officer by designated persons.

The Bill will provide for a new offence of providing false or misleading information or documentation for the purposes of customer due diligence. It will also allow the Garda Síochána to seek search warrants under section 64 of the Criminal Justice Act 1994 for investigations into suspected money laundering.

Other amendments are mainly technical changes to make more explicit some requirements of the existing provisions.

The General Scheme of the Bill is available here