## _cr0778

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---

### Background Information
- Scope and purpose
  - Report on the Observance of Standards and Codes for the FATF 40 Recommendations for Anti-Money Laundering and 9 Special Recommendations Combating the Financing of Terrorism.
  - Prepared by the Financial Action Task Force (FATF).
  - Provides a summary of the AML/CFT measures in place in Ireland as at July 2005 (the date of the on-site visit).
  - Describes and analyses those measures and provides recommendations on how certain aspects of the system could be strengthened.
  - Views in the document have been agreed by the FATF and Ireland, but do not necessarily reflect the views of the Boards of the IMF or World Bank.
  - The Irish Government recognises the need for an effective AML/CFT regime and is in the process of updating its ML/TF framework and legislation to implement the revised FATF Recommendations.

- Major predicate offenses and laundering methods
  - Narcotics offences provide a substantial source of the proceeds of crime in Ireland.
  - Considerable illegal proceeds are also derived from: fraud-related offences, tax evasion, the evading of excise duties (taking advantage of price differentials from higher rates of excise duty in Northern Ireland), criminal activity associated with terrorism.
  - Criminals, including terrorists, have used a variety of techniques to launder money.
  - Increasing use of financial institutions, businesses or professions that are either not regulated or have a low compliance culture to launder money.
  - Investigations have indicated use of: credit institutions, money remittance companies, solicitors, accountants and second hand car dealerships in ML schemes.

- Financial sector and DNFBPs
  - Ireland has a modern, international financial services sector including: depository corporations; financial markets (exchanges); insurance corporations and pension funds; other financial corporations including financial intermediaries; financial auxiliaries; money remittance dealers and bureaux de change.
  - DNFBPs operating in Ireland include: Real estate agents/auctioneers, dealers in precious metals and stones, lawyers (solicitors and barristers), accountants, trust and company service providers.
  - A number of private clubs provide casino type gaming facilities.

- Legal framework and institutional responsibilities
  - Ireland: republic with a parliamentary system and a common law legal system with a Constitution.
  - Department of Justice, Equality and Law Reform: responsible for development and implementation of the criminal law.
  - Department of Finance: responsible for policy and legislative implementation in relation to the financial sector.
  - Money laundering criminalised under the Criminal Justice Act (CJA) (1994); since 2001 the ML offence applies to all indictable offences.
  - Penalties under the CJA 1994 apply to both natural and legal persons under s.59 of the Act.
  - Terrorist Financing (TF) offence established by the Criminal Justice (Terrorist Offences) Act (2005); TF offences are predicate offences for ML.
  - TF offence criminalised in accordance with the UN Convention for the Suppression of TF and UN S/RES/1373 (2001).
  - TF offence does not currently cover the funding of a single terrorist or two terrorists acting in concert.
  - Confiscation and freezing
    - CJA (1994) allows courts, on conviction on indictment, to require payment of a person’s benefits from crime.
    - Between 2001 to 2004 freezing and confiscation measures under the CJA (1994) were taken in 14 cases covering a total amount of €800,000.
    - Proceeds of Crime Act (1996) provides for civil forfeiture on balance of probabilities.
    - Between 2001 and 2004 property to the approximate value of €43 million was frozen.
    - Criminal Justice (Terrorist Offences) Act (2005) provides legislative basis for confiscation orders relating to TF.
  - Measures for freezing of terrorist funds implemented under EU Council Regulations (UN S/RES/1267 (1999) and 1373 (2001)); regulations under the Criminal Justice (Terrorist Offences) Act (2005) provide for penalties for non-compliance with freezing obligations.

- Law enforcement, FIU, prosecution and effectiveness
  - Garda Bureau of Fraud Investigation (GBFI) hosts the FIU (established in 1995).
  - FIU receives STRs and after assessment disseminates them to Garda financial investigation units; FIU shares receipt responsibility for STRs with the Revenue Commissioners (which investigates STRs relating to possible tax/customs offences).
  - STR numbers: 3,040 in 2001; 5,491 in 2004; 10,735 received during 2005.
  - Resources available to the FIU to effectively manage and conduct analysis on increasing STR numbers are limited.
  - Between 2001 and 2004 inclusive: 15 people were charged with ML; 8 people have been convicted.
  - Sentences on conviction generally appear appropriate (from 2 to 5 years imprisonment).
  - Relatively low number of convictions; lack of comprehensive statistics prevents full evaluation of effectiveness.
  - No prosecutions for TF as the TF offence was implemented in March 2005.
  - Adequate powers available to Garda, CAB and Revenue Commissioners to gather evidence and compel production of financial records and files from financial institutions and DNFBPs.
  - Structures, staffing and resources to investigate ML/TF also responsible for examining a range of white collar crimes; few cases lead to successful prosecution.

- Preventive measures for financial institutions
  - CJA (1994) (as amended) defines financial institutions subject to AML/CFT obligations, classifying them as designated bodies.
  - Designated bodies obliged under s.32(2) of CJA (1994) to: identify customers; retain records in relation to customers and transactions; adopt measures to prevent and detect ML and TF – including training employees and detecting and reporting suspicious transactions.
  - Legislative framework does not impose AML/CFT obligations on the basis of risk.
  - CDD requirements:
    - Designated bodies required to take reasonable measures to identify customers when establishing business relationships or when performing transactions over €13,000.
    - No explicit provision requires the identity of the beneficial owner to be established and verified.
    - s.32 application does not extend to customers with existing business relations prior to May 1995 except where service is suspected to be connected with commission of a ML offence.
    - More extended CDD measures are outlined in guidance notes, but guidance does not impose directly enforceable legal obligation with adequate sanctions.
  - Section 32(6) CJA (1994) provides exemptions from CDD where customer is another designated body, or corresponding body in an EU Member State or another prescribed state or country; all non-EU FATF countries, Liechtenstein, the Channel Islands and the Isle of Man have been prescribed.
  - No specific obligations regarding higher risk relationships for politically exposed persons (PEPs), correspondent banking, or policies to prevent misuse of technological developments in ML/TF.
  - Sectoral guidance notes (MLSC) complement CJA (1994) and provide detailed information but do not impose mandatory requirements with sanctions as required by FATF Recommendations.
  - Record-keeping requirements: customer identification records for five years after business relationship ended; transaction records for five years after date of transaction.
  - No provisions imposing specific information gathering, retention and onward transmission requirements with reference to wire transfers under Special Recommendation VII.
  - Section 57(1) CJA (1994) requires designated body to report to Garda and Revenue Commissioners where they suspect ML; Section 36 Criminal Justice (Terrorist Offences) Act (2005) amended s.57 to create obligation to report suspicions that an offence of TF has been or is being committed.
  - Overall STR numbers comparable to similarly sized jurisdictions and have risen over time as legislation extended STR obligations.
  - General requirement under CJA (1994) for designated bodies to adopt measures to prevent and detect ML; s.32 of Criminal Justice (Terrorist Offences) Act (2005) extends to TF.
  - Guidance notes outline compliance management arrangements such as appointment of a Money Laundering Reporting Officer (MLRO), MLRO access to relevant information, internal and onward reporting procedures, and testing these procedures.
  - Banking authorisation process effectively precludes establishment and operation of “shell banks” within Ireland; Ireland does not prohibit financial institutions from entering into correspondent banking relationships with shell banks, nor require satisfaction that respondent foreign institutions do not permit accounts to be used by shell banks.
  - In practice, financial institutions often adopt measures stricter than guidance.

- Supervision and regulatory resources
  - Irish Financial Services Regulatory Authority (the Financial Regulator) applies strict licensing and supervision requirements before authorising financial institutions.
  - Financial Regulator supervises and monitors compliance with Core Principles and AML/CFT legislation; on-site inspections are significant.
  - Principles-based regulation places responsibility on boards and management to implement risk management systems and effective AML/CFT internal controls.
  - Financial Regulator is adequately structured, funded, staffed, and provided with sufficient technical and other resources to fully and effectively perform functions; has sufficient operational independence and autonomy.
  - Central Bank Act (1997) gives authorised officers of the Financial Regulator power to enter premises, seize and review documents and require a regulated financial service provider to submit a compliance certificate.
  - Between May 2003 and 31 December 2004 there were a total of 497 inspections and review meetings with banks, insurance companies, investment/stock broking firms, funds service providers and credit unions.

### The Financial Regulator — role, powers and evaluation team findings
- Role and powers
  - The Financial Regulator is obliged to report suspicions of ML or TF offences, or a breach of Irish AML/CFT requirements, by a regulated financial service provider to the FIU and the Revenue Commissioners.
  - The Financial Regulator has very limited powers to directly apply administrative sanctions for failure to comply ML or TF obligations.
  - At present the Financial Regulator is unable to use its general powers of sanction for specific breaches of the CJA (1994), though such breaches are liable to criminal prosecutions under the Act.
  - Failure by a regulated financial service provider, or its management, to comply with a statutory demand of the Financial Regulator for information or to allow inspections, or the provision of false or misleading information, would make it liable to supervisory action.
  - Types of general supervisory actions range from inspection letters requiring remedial action to revocation of a licence/authorisation.
  - Financial Regulator has powers to impose a broad range of administrative sanctions, including fines, for breaches of designated supervisory enactments; however the range of sanctions available specifically for AML/CFT breaches is limited to: criminal prosecution; certain supervisory actions such as issuing letters requiring remedial action or revocation of a licence/authorisation.
  - Ireland is reviewing its administrative sanctions for AML/CFT breaches in the context of the implementation of the 3rd EU ML Directive.

- Money transmission businesses
  - Money transmission businesses or services that operate in Ireland will be supervised and monitored by the Financial Regulator in the same way as bureaux de change.
  - All AML/CFT obligations that are applicable to other institutions are also applicable to the money remitters.

- Evaluation team findings on AML/CFT preventive framework
  - The AML/CFT requirements in the CJA (1994), combined with guidance notes, go some way towards meeting FATF requirements but do not fully set out necessary legally enforceable and sanctionable obligations relating to CDD and related preventive measures.
  - Legislative and other changes will be needed to rectify these deficiencies.
  - Further consideration could be given to more fully incorporating a risk-based approach.
  - The creation of the Financial Regulator has assisted in providing a consistent approach to AML/CFT supervision and regulation of financial institutions, and it is operating effectively, though it needs increased powers to sanction.

### DNFBP regulation, supervision and key findings
- DNFBP coverage and effectiveness
  - Most DNFBPs categories operate in Ireland: real estate agents/auctioneers, dealers in precious metals and stones, solicitors and barristers, accountants and trust and company service providers.
  - Ireland extends the same AML/CFT obligations for financial institutions to accountants, dealers in high value goods, solicitors and auctioneers and estate agents who are subject to sections 31, 32, 57 and 59 of the CJA (1994).
  - Trust and Company service providers are not covered as a separate DNFBP category despite the presence of specialist providers in Ireland.
  - Casinos, including internet casinos, are illegal; however private gaming clubs operate casino like facilities that fall outside the scope of the CJA (1994).
  - Lack of AML/CFT requirements for the trust and company service and gaming sectors was a matter of concern for the evaluation team.
  - Results achieved are limited so far, with few STRs by the DNFBP sector (less than 1% of all disclosures received in 2004).
  - Regulatory authorities and/or SROs have not been designated and empowered to apply sanctions for DNFBP non-compliance and existing bodies are not resourced to provide adequate oversight.

- DNFBP oversight: key findings
  - Almost all DNFBPs are not subject to oversight for AML/CFT purposes.
  - Where an oversight role exists the SROs do not have sufficient resources to perform these functions.

- Guidelines & feedback
  - Sectoral guidance notes for financial institutions are generally comprehensive but should be enhanced to include ongoing CDD and attention to high risk business relationships as indicated in Recommendations 5 – 9, 11 and 21.
  - General feedback could be improved by co-operation between the FIU and the Revenue Commissioners to enhance provision of information on current methods, trends and techniques.
  - Guidance is given to some DNFBP’s, but others are not covered; guidance provided is not always sufficiently detailed.

- Institutional measures and capacity assessments
  - FIU (LC): FIU meets most individual FATF requirements but its effectiveness is limited by resources to encourage quality STRs, research and analyse STR information, and provide management information; FIU does not release periodic reports or conduct strategic analysis.
  - Law enforcement authorities: C Recommendation is fully met.
  - Powers of competent authorities: C Recommendation is fully met.
  - Supervisors (LC): Financial Regulator unable to directly apply a range of administrative sanctions for AML/CFT breaches.
  - Resources, integrity and training (LC): resources for sanction, supervision and issuing guidelines are good; resources for MLIU to perform comprehensive FIU role are limited.
  - National co-operation (LC): lack of formal AML/CFT framework outside guidance limits targeting of resources; room for more formal interagency co-operation particularly between MLIU and Financial Regulator.
  - Statistics (PC): limited statistics available to assess effectiveness; available statistics not used for systematic review; no overall proactive review of AML/CFT effectiveness.
  - Legal persons – beneficial owners (PC): competent authorities do not have access in a timely fashion to adequate, accurate and current information on beneficial ownership and control.
  - Legal arrangements – beneficial owners (PC): competent authorities have limited powers to timely access information on beneficial ownership and control of trusts.

- International co-operation
  - Vienna Convention and TF Convention signed, ratified and implemented; Palermo Convention signed but not yet ratified although majority of provisions already implemented for AML purposes.
  - Ireland party to multilateral conventions for MLA including Council of Europe Convention on Mutual Assistance in Criminal Matters 1957 and Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds of Crime 1990.
  - Bilateral MLA agreements with United Kingdom; Hong Kong, China; and the United States of America.
  - In 2004, 106 requests for MLA were received.
  - For enforcing foreign confiscation orders, provisions of the CJA (1994) apply as if the order were a domestic confiscation order.
  - Ireland can extradite for ML and TF under Extradition Acts 1965 to 2001 and has bilateral extradition treaties with Australia and the United States of America.
  - For EU states Ireland can utilise the European Arrest Warrant procedures.
  - Other cooperation channels: FIU, law enforcement to law enforcement, and regulator to regulator. In 2004, 209 inquiries were made through the Egmont group.

### FATF Forty Recommendations — selected ratings and factors (selected)
- 1. ML offence — LC (low prosecutions and convictions)
- 2. ML offence – mental element and corporate liability — LC (regime for sanctions appears comprehensive but prosecutions/convictions low)
- 3. Confiscation and provisional measures — C (fully met)
- 4. Secrecy laws consistent with the Recommendations — C (fully met)
- 5. Customer due diligence — PC (multiple CDD requirements implicit or only in guidance; no requirement to identify beneficial owner; thresholds and timing issues)
- 6. Politically exposed persons — NC (no obligations)
- 7. Correspondent banking — NC (no obligations)
- 8. New technologies & non face-to-face business — PC (limited measures in guidance)
- 9. Third parties and introducers — NC (no legally binding obligations)
- 10. Record keeping — C (fully met)
- 11. Unusual transactions — PC (no explicit requirement to pay attention to all unusual, complex large transactions)
- 12. DNFBP – R.5, 6, 8-11 — PC (not all DNFBPs obliged to undertake CDD and record keeping; same deficiencies as financial institutions)
- 13. Suspicious transaction reporting — C (fully met)
- 14. Protection & no tipping-off — C (fully met)
- 15. Internal controls, compliance & audit — LC (no enforceable obligations for compliance management arrangements)
- 16. DNFBP – R.13-15 & 21 — PC (not all DNFBPs subject to STR obligations; inadequate internal policy requirements)
- 17. Sanctions — PC (no range of sanctions proportionate to severity; administrative sanctions not directly available)
- 18. Shell banks — PC (correspondent relationships with shell banks not forbidden; no requirement to ensure respondent institutions do not permit accounts to be used by shell banks)
- 19. Other forms of reporting — C (fully met)
- 20. Other NFBP & secure transaction techniques — C (fully met)
- 21. Special attention for higher risk countries — PC (no mechanism to make designated bodies aware of weaknesses in other countries' AML/CFT systems)
- 22. Foreign branches & subsidiaries — LC (some guidance only; no enforceable obligations to require higher attention in weak jurisdictions)
- 23. Regulation, supervision and monitoring — LC (Financial Regulator has full range of supervisory powers; compliance regime for money transmission services not yet fully implemented)

### Nine Special Recommendations — summary findings (selected)
- SR.I Implement UN instruments — PC (S/RES/1267 implemented but S/RES/1373 not adequately implemented; no mechanisms for immediate freezing outside EU listing; poor communication to DNFBPs)
- SR.II Criminalise TF — LC (TF offence does not extend to provision/collection of funds for a group of less than three terrorists including a single terrorist)
- SR.III Freeze and confiscate terrorist assets — PC (limited ability to freeze funds in accordance with S/RES/1373 outside EU listing; inadequate communication and monitoring for DNFBPs)
- SR.IV Suspicious transaction reporting — C (fully met)
- SR.V International co-operation — C (fully met)
- SR.VI AML requirements for money/value transfer services — PC (implementation of multiple Recommendations inadequate; negatively impacts effectiveness)
- SR.VII Wire transfer rules — NC (originator information rules limited and only in guidance; no obligation to verify accuracy)
- SR.VIII Non-profit organisations — PC (review in progress; measures not yet implemented to ensure accountability and transparency)
- SR.IX Cross-border disclosure — PC (no powers to obtain truthful disclosure on physical cross-border transport of cash; no sanctions for false declarations)

### Recommended Action Plan — prioritized selected measures
- Legal System and Related Institutional Measures
  - Criminalisation of ML (R.1 & 2)
    - Criminalise the participation in an organised criminal group.
    - Improve implementation of ML offence and provide incentives to investigators and prosecutors.
    - Ascertain why number of ML cases remains low.
  - Criminalisation of TF (SR.II)
    - Criminalise the collection or provision of funds for an individual terrorist.
  - Confiscation, freezing and seizing (R.3)
    - Consider extending civil forfeiture for all instrumentalities of crime.
    - Collect statistics on number of cases and amount assets seized in relation to criminal confiscation.
  - Freezing of funds used for TF (SR.III)
    - Extend ability to freeze funds in accordance with S/RES/1373 and ensure freezing actions are communicated to relevant DNFBPs.
    - Adequately monitor DNFBPs for compliance with freezing actions.
  - FIU and functions (R.26, 30 & 32)
    - Allocate more resources (staff and technical) to the FIU; implement electronic reporting.
    - Establish a team of financial analysts.
    - Seek regular feedback from partner agencies; improve FIU statistics and case management.
    - Proactively negotiate MOUs with foreign FIUs.
  - Law enforcement and prosecution (R.27, 28, 30 & 32)
    - Focus more on investigating and prosecuting ML offences.
    - Keep clearer statistics on investigations and prosecutions.
    - Consider establishing an AML working group.
    - Collect statistics on types of criminal sanctions imposed for ML.

- Preventive Measures – Financial Institutions
  - Customer due diligence (R.5 to 8)
    - Require CDD for existing customers on basis of materiality and risk.
    - Require identification of occasional customers as in SR VII for domestic transfers and where TF is suspected.
    - Require ongoing due diligence and up-to-date CDD data.
    - Require consideration of filing an STR where adequate CDD data not obtained.
    - Adopt enhanced due diligence for higher risk categories and PEP measures; require enquiries for beneficial owner(s) of corporate customers.
  - Third parties and introducers (R.9)
    - Ensure legally enforceable obligations so financial institutions can obtain identification and verification information timely.
  - Record keeping and wire transfer rules (R.10 & SR.VII)
    - Implement provisions of SR VII as soon as possible.
  - Monitoring of transactions (R.11 & 21)
    - Adopt regulations/guidelines subject to sanctions; explicit obligation for all financial institutions to perform Recommendation 11.
  - STRs and reporting (R.13-14, 19, 25 & SR.IV)
    - Expand TF definition to include provision/collection of funds for an individual terrorist to ensure reportability.
  - Internal controls and foreign branches (R.15 & 22)
    - Introduce enforceable obligations to ensure compliance staff has timely access to CDD and transaction information and require screening procedures for hiring employees.
    - Require application of principles to branches and subsidiaries in countries that insufficiently apply FATF Recommendations.
  - Shell banks (R.18)
    - Prohibit financial institutions from entering into or continuing correspondent relationships with shell banks and require satisfaction that respondent institutions do not permit accounts to be used by shell banks.
  - Supervisory and oversight system (R.23, 30, 29, 17, 32, & 25)
    - Consider introducing an administrative penalties regime for non-compliance under section 32 and 57 of the CJA (1994) (as amended).
    - Maintain statistics on number and type of sanctions applied.
    - Enhance existing sectoral AML guidance to include ongoing CDD and attention to high risk business relationships.
  - Money value transfer services (SR.VI)
    - Continue intended supervision and implement an effective licensing regime.

- Preventive Measures – DNFBPs
  - Customer due diligence and record-keeping (R.12)
    - Implement Recommendations 5 and 6 fully; bring legislative changes to ensure all DNFBPs have adequate CDD and record keeping.
    - Address ML risks relating to illicit operation of casinos; require DNFBPs to establish internal procedures, independent audit and ongoing employee training.
  - Monitoring of transactions and relationships (R.12 & 16)
    - Compel DNFBPs to pay special attention to transactions involving certain countries, make findings available in writing, and apply countermeasures.
  - Suspicious transaction reporting (R.16)
    - Ensure all DNFBPs are covered by the reporting obligation.
  - Internal controls, compliance & audit (R.16)
    - Ensure DNFBPs develop internal policies, procedures, controls and ongoing training and that sanctions can be applied.
  - Regulation, supervision and monitoring (R.17, 24-25)
    - Extend scope of the CJA (1994) to bring all DNFBPs under AML/CFT regime.
    - Introduce administrative sanctions for breaches and designate supervisors or enable Financial Regulator/SROs to regulate and supervise all categories.

- Legal Persons and Arrangements & NPOs
  - Legal Persons – Access to beneficial ownership and control information (R.33)
    - Take additional measures to ensure information on beneficial ownership is available on a timelier basis.
  - Legal Arrangements – Trusts (R.34)
    - Take additional measures to ensure timelier access to beneficial ownership and control of trusts.
  - Non-profit organisations (SR.VIII)
    - Continue review of laws/regulations; consider implementing specific measures from the Best Practices Paper for SR VIII.

- National and International Co-operation
  - National co-operation and coordination (R.31)
    - Ensure existing co-operation mechanisms function effectively; improve co-operation between the FIU and the Financial Regulator; consider a formal national coordination mechanism.
  - The Conventions and UN Special Resolutions (R.35 & SR.I)
    - Ratify the Palermo convention and ensure S/RES/1373 (2001) is fully implemented.
    - Ensure DNFBPs are advised of obligations under S/RES/1267 (1999) and S/RES/1373 (2001).
  - Mutual Legal Assistance (R.32, 36-38, SR.V)
    - Specifically criminalise provision/collection of funds involving a single terrorist to avoid discretionary dual criminality refusals.
  - Extradition (R.32, 37 & 39, & SR.V)
    - Specifically criminalise provision/collection of funds involving a single terrorist to avoid extradition refusals.

- Other issues
  - General framework – structural issues
    - Consider a review of current and future requirements of the AML/CFT system; encourage greater collection of relevant statistics and more formal multi-agency co-operation where appropriate.

*Source: _cr0778*

### 1.  Background Information

### 1. Background Information

### Scope and purpose
- Report on the Observance of Standards and Codes for the FATF 40 Recommendations for Anti-Money Laundering and 9 Special Recommendations Combating the Financing of Terrorism.
- Prepared by the Financial Action Task Force (FATF).
- Provides a summary of the AML/CFT measures in place in Ireland as at July 2005 (the date of the on-site visit).
- Describes and analyses those measures and provides recommendations on how certain aspects of the system could be strengthened.
- Views in the document have been agreed by the FATF and Ireland, but do not necessarily reflect the views of the Boards of the IMF or World Bank.
- The Irish Government recognises the need for an effective AML/CFT regime and is in the process of updating its ML/TF framework and legislation to implement the revised FATF Recommendations.

### Major predicate offenses and laundering methods
- Narcotics offences provide a substantial source of the proceeds of crime in Ireland.
- Considerable illegal proceeds are also derived from:
  - fraud-related offences,
  - tax evasion,
  - the evading of excise duties (taking advantage of price differentials from higher rates of excise duty in Northern Ireland),
  - criminal activity associated with terrorism.
- Criminals, including terrorists, have used a variety of techniques to launder money.
- Increasing use of financial institutions, businesses or professions that are either not regulated or have a low compliance culture to launder money.
- Investigations have indicated use of: credit institutions, money remittance companies, solicitors, accountants and second hand car dealerships in ML schemes.

### Financial sector and DNFBPs
- Ireland has a modern, international financial services sector with a wide range of financial services and institutions operating from the jurisdiction, including:
  - depository corporations (such as banks, building societies and credit unions);
  - financial markets (exchanges);
  - insurance corporations and pension funds (life insurance and general insurance);
  - other financial corporations, including financial intermediaries (such as Agency Fund Managers, investment business firms and stockbrokers);
  - financial auxiliaries (such as insurance brokers);
  - money remittance dealers and bureaux de change.
- A full range of Designated Non-Financial Businesses and Professions (DNFBPs) operate in Ireland:
  - Real estate agents/auctioneers,
  - dealers in precious metals and stones,
  - lawyers (solicitors and barristers),
  - accountants,
  - trust and company service providers.
- There are also a number of private clubs that provide casino type gaming facilities.

### Legal framework and institutional responsibilities
- Ireland is a republic with a parliamentary system of government and a common law legal system with a Constitution.
- Department of Justice, Equality and Law Reform: responsible for development and implementation of the criminal law.
- Department of Finance: responsible for policy and legislative implementation in relation to the financial sector.
- Money laundering (ML) criminalised under the Criminal Justice Act (CJA) (1994); since 2001 the ML offence applies to all indictable offences.
- Penalties under the CJA 1994 apply to both natural and legal persons under s.59 of the Act.
- Terrorist Financing (TF) offence established by the Criminal Justice (Terrorist Offences) Act (2005); TF offences are predicate offences for ML.
- TF offence criminalised in accordance with the UN Convention for the Suppression of TF and UN S/RES/1373 (2001).
- TF offence does not currently cover the funding of a single terrorist or two terrorists acting in concert.
- Ireland has provisions for confiscation of proceeds of crime through criminal and civil procedures:
  - CJA (1994) allows courts, on conviction on indictment, to require payment of a person’s benefits from crime.
  - Between 2001 to 2004 freezing and confiscation measures under the CJA (1994) were taken in 14 cases covering a total amount of €800,000.
  - Proceeds of Crime Act (1996) provides for civil forfeiture on balance of probabilities.
  - Between 2001 and 2004 property to the approximate value of €43 million was frozen.
  - Criminal Justice (Terrorist Offences) Act (2005) provides legislative basis for confiscation orders relating to TF.
- Measures for freezing of terrorist funds have been implemented (UN Security Council Resolutions 1267 (1999) and 1373 (2001)) under EU Council Regulations with direct force of law in Ireland.
- Regulations under the Criminal Justice (Terrorist Offences) Act (2005) provide for penalties for non-compliance with freezing obligations.

### Law enforcement, FIU, prosecution and effectiveness
- Garda Bureau of Fraud Investigation (GBFI) hosts the FIU (established in 1995).
- FIU receives STRs and after assessment disseminates them to Garda financial investigation units for further investigation.
- FIU shares receipt responsibility for STRs with the Revenue Commissioners (which investigates STRs relating to possible tax/customs offences).
- STR numbers:
  - 3,040 in 2001,
  - 5,491 in 2004,
  - 10,735 received during 2005.
- Resources available to the FIU to effectively manage and conduct analysis on increasing STR numbers are limited.
- Between 2001 and 2004 inclusive:
  - 15 people were charged with ML,
  - 8 people have been convicted.
- Sentences on conviction generally appear appropriate (from 2 to 5 years imprisonment).
- There have been a relatively low number of convictions; lack of comprehensive statistics on ML investigations, prosecutions and convictions prevents full evaluation of effectiveness.
- No prosecutions for TF as the TF offence was implemented in March 2005.
- Adequate powers available to Garda, CAB and Revenue Commissioners to gather evidence and compel production of financial records and files from financial institutions and DNFBPs.
- Structures, staffing and resources to investigate ML/TF also responsible for examining a range of white collar crimes; while legal measures exist, few cases lead to successful prosecution.

### Preventive measures for financial institutions
- CJA (1994) (as amended) defines financial institutions subject to AML/CFT obligations, classifying them as designated bodies.
- Designated bodies are obliged under s.32(2) of CJA (1994) to:
  - identify customers,
  - retain records in relation to customers and transactions,
  - adopt measures to prevent and detect ML and TF – including training employees and detecting and reporting suspicious transactions.
- Irish legislative framework does not impose AML/CFT obligations on the basis of risk.
- Customer Due Diligence (CDD) requirements:
  - Designated bodies required to take reasonable measures to identify customers when establishing business relationships or when performing transactions over €13,000.
  - Provisions apply to identifying/verifying relationships for legal persons or arrangements.
  - No explicit provision requires the identity of the beneficial owner to be established and verified.
  - Legislation does not impose other CDD requirements; s.32 application does not extend to customers with existing business relations prior to May 1995 except where service is suspected to be connected with commission of a ML offence.
  - More extended CDD measures are outlined in guidance notes, but guidance does not impose directly enforceable legal obligation with adequate sanctions.
- Section 32(6) CJA (1994) provides exemptions from CDD where customer is another designated body, or corresponding body in an EU Member State or another prescribed state or country; all non-EU FATF countries, Liechtenstein, the Channel Islands and the Isle of Man have been prescribed.
  - Evaluation team informed identification procedures are performed in practice regardless of counterpart status.
- No specific obligations regarding:
  - higher risk relationships for politically exposed persons (PEPs),
  - correspondent banking,
  - policies to prevent misuse of technological developments in ML/TF.
- AML/CFT obligations on introduced business within the financial sector are contained in guidance.
- Sectoral guidance notes (issued by the Money Laundering Steering Committee - MLSC) complement CJA (1994) and provide detailed information for banking, securities, stockbroking, insurance sectors and credit unions on:
  - internal controls,
  - CDD,
  - record keeping,
  - STR reporting,
  - education and training procedures.
- Guidance provided to financial institutions in relation to TF after enactment of Criminal Justice (Terrorist Offences) Act (2005).
- Guidance notes are comprehensive and provide thorough explanation of how to apply AML/CFT controls, but do not impose mandatory requirements with sanctions as required by FATF Recommendations.
- Banking secrecy does not inhibit FATF implementation; framework reconciles confidentiality with competent authorities' access needs.
- Record-keeping requirements:
  - Designated bodies required to keep records in relation to customer identification for five years after business relationship ended, and for transactions for five years after the date of the transaction.
  - Additional record/book-keeping obligations set out under Companies Acts (1963 and 1990), Central Bank Acts (1989 and 1997), the Investment Intermediaries Act, 1995 and the Stock Exchange Act, 1995.
- No provisions imposing specific information gathering, retention and onward transmission requirements with reference to wire transfers under Special Recommendation VII.
- No explicit requirement to pay attention to all unusual, complex large transactions and transactions with no visible economic purposes, nor to further examine these situations and set out findings in writing; guidance notes provide assistance.
- Financial Regulator distributes information on NCCT countries to financial institutions; Minister for Justice may designate countries lacking appropriate ML measures.
- Section 57(1) CJA (1994) requires designated body to report to Garda and Revenue Commissioners where they suspect ML has been or is being committed; obligation also applies to infringements of preventive measures in s.32.
- Section 36 Criminal Justice (Terrorist Offences) Act (2005) amended s.57 to create obligation for designated bodies to report suspicions that an offence of TF has been or is being committed.
- Overall STR numbers are comparable to similarly sized jurisdictions and have risen over time as legislation extended STR obligations; reports are being made in relation to suspected TF.
- General requirement under CJA (1994) for designated bodies to adopt measures to prevent and detect ML; s.32 of Criminal Justice (Terrorist Offences) Act (2005) extends to TF.
  - Measures include establishment of procedures for employees and instructions on application of AML measures.
  - Guidance notes outline compliance management arrangements such as appointment of a Money Laundering Reporting Officer (MLRO), MLRO access to relevant information, internal and onward reporting procedures, and testing these procedures.
  - Staff training required under s.32 (9B) of CJA (1994).
  - Directors and managers subject to fit and proper checks by the Financial Regulator.
- Guidance notes recommend group policy for foreign branches/subsidiaries to comply at minimum with Irish guidance; legislation allows exchange of information when supervisors observe non-compliance abroad.
  - Could be strengthened by requiring particular attention to branches and subsidiaries in countries that do not, or insufficiently, apply FATF Recommendations.
- Banking authorisation process effectively precludes establishment and operation of “shell banks” within Ireland.
  - Ireland does not prohibit financial institutions from entering into correspondent banking relationships with shell banks, nor require satisfaction that respondent foreign institutions do not permit accounts to be used by shell banks.
- In practice, financial institutions often adopt measures stricter than guidance.

### Supervision and regulatory resources
- Irish Financial Services Regulatory Authority (the Financial Regulator) applies strict licensing and supervision requirements before authorising financial institutions in Ireland.
  - Authorisation applications must include detailed information on ownership including legal form and structure; checked as part of “fit and proper” review.
  - Financial Regulator supervises and monitors compliance with Core Principles (banking, insurance and securities) and AML/CFT legislation.
  - On-site inspections are significant in monitoring compliance with authorisation terms.
- Ireland follows a principles-based approach to regulation and supervision, placing responsibility on boards and management to implement risk management systems and effective AML/CFT internal controls.
- Fitness and probity of those who manage financial institutions monitored closely by the Financial Regulator.
- Financial Regulator requires designated bodies to take all necessary measures to counteract ML and TF per CJA (1994), Criminal Justice (Terrorist Offences) Act (2005) and sectoral guidance notes.
- Financial Regulator is adequately structured, funded, staffed, and provided with sufficient technical and other resources to fully and effectively perform functions; has sufficient operational independence and autonomy.
- Central Bank Act (1997) gives authorised officers of the Financial Regulator power to enter premises, seize and review documents and require a regulated financial service provider to submit a compliance certificate.
- Between May 2003 and 31 December 2004 there were a total of 497 inspections and review meetings with banks, insurance companies, investment/stock broking firms, funds service providers and credit unions.

*Source: _cr0778 - 1. Background Information*

### 33. The  Financial  Regulator  is  obliged  to  report  to  the  FIU  and  the  Revenue  Commissioners

### 33. The  Financial  Regulator  is  obliged  to  report  to  the  FIU  and  the  Revenue  Commissioners

### Role and powers of the Financial Regulator
- The Financial Regulator is obliged to report suspicions of ML or TF offences, or a breach of Irish AML/CFT requirements, by a regulated financial service provider to the FIU and the Revenue Commissioners.
- The Financial Regulator has very limited powers to directly apply administrative sanctions for failure to comply ML or TF obligations.
- At present the Financial Regulator is unable to use its general powers of sanction for specific breaches of the CJA (1994), though such breaches are liable to criminal prosecutions under the Act.
- Failure by a regulated financial service provider, or its management, to comply with a statutory demand of the Financial Regulator for information or to allow inspections, or the provision of false or misleading information, would make it liable to supervisory action.
- Types of general supervisory actions can range from inspection letters requiring appropriate remedial action to the revocation of a licence/authorisation to carry on business.
- The Financial Regulator has powers to impose a broad range of administrative sanctions, including fines, for breaches of designated supervisory enactments. However, the range of sanctions available specifically for AML/CFT breaches is limited to:
  - criminal prosecution; and
  - certain supervisory actions by the Financial Regulator such as issuing letters to financial service providers requiring action to be taken to rectify breaches of the AML/CFT regulations or revocation of a licence/authorisation.
- Ireland is reviewing its administrative sanctions for AML/CFT breaches in the context of the implementation of the 3rd EU ML Directive.

### Money transmission businesses
- Money transmission businesses or services that operate in Ireland will be supervised and monitored by the Financial Regulator in the same way as bureaux de change.
- All AML/CFT obligations that are applicable to other institutions are also applicable to the money remitters.

### Evaluation team findings on AML/CFT preventive framework
- The AML/CFT requirements contained in the CJA (1994), combined with the sets of guidance notes, go some way towards meeting the FATF requirements but do not fully set out the necessary legally enforceable and sanctionable obligations relating to CDD and related preventive measures.
- Legislative and other changes will be needed to rectify these deficiencies.
- Further consideration could be given to more fully incorporating a risk-based approach.
- The creation of the Financial Regulator has assisted in providing a consistent approach to AML/CFT supervision and regulation of financial institutions, and it is operating effectively, though it needs increased powers to sanction.

### Designated Non-Financial Businesses and Professions (DNFBPs)
- Most DNFBP categories operate in Ireland: real estate agents/auctioneers, dealers in precious metals and stones, solicitors and barristers, accountants and trust and company service providers.
- Ireland extends the same AML/CFT obligations for financial institutions to accountants, dealers in high value goods, solicitors and auctioneers and estate agents who are subject to the requirements of sections 31, 32, 57 and 59 of the CJA (1994). They are therefore subject to requirements to identify customers, keep records, have internal procedures to prevent and detect ML and TF and report STRs.
- Generally, the provisions lack effectiveness because they impose limited requirements with respect to the application of CDD measures.
- Trust and Company service providers are not covered as a separate DNFBP category despite the presence of specialist providers in Ireland.
- Casinos, including internet casinos, are illegal; however private gaming clubs operate casino like facilities that create an AML/CFT risk but fall outside the scope of the CJA (1994).
- Lack of AML/CFT requirements for the trust and company service and gaming sectors was a matter of concern for the evaluation team.
- Self-Regulatory Organisations (SRO) have assisted in implementation of AML/CFT obligations for some DNFBP sectors, particularly in producing sectoral guidance notes, though guidance regarding internal controls and the reporting of STRs is somewhat limited.
- Results achieved are limited so far, with few STRs having been made by the DNFBP sector (less that 1% of all disclosures received in 2004).
- Regulatory authorities and/or SROs have not been designated and empowered to apply sanctions for DNFBP non-compliance with AML/CFT requirements and existing bodies are not resourced to provide adequate oversight.
- Although breaches can be reported to the Garda for prosecution, the range of possible sanctions is limited.

### Legal persons, trusts, and beneficial ownership
- Types of legal persons in Ireland include private companies, public companies, public companies limited by shares, credit unions, friendly societies and associations.
- The Office of the Director of Corporate Enforcement (ODCE) enforces compliance by companies and company officers with the Companies Acts.
- All companies and societies operating a business in Ireland are required to register with the Registrar of Companies or the Registrar of Friendly Societies.
- A list of shareholders is required to be registered annually with the Company Registration Office (CRO), and this data, together with other information such as directors, is made available to the public on the CRO website.
- Individuals can obtain annual return information from the CRO for a small fee, including names and addresses of directors and shareholders.
- Any change in directorship must be notified to the CRO within 14 days, though the identity of directors is not verified.
- The law does not require disclosure to the CRO of beneficial ownership where the beneficial owner is a person other than the registered shareholder.
- Beneficial ownership information may be obtainable by use of police investigative powers, or through the appointment of an inspector under the Companies Act.
- Ireland has a system of trust law that allows creation of trusts. The settler, trustee or beneficiary under a trust is not recorded in any registry, nor do TCSPs hold significant information regarding trusts in Ireland.
- The Proceeds of Crime (Amendment) Act (2005) provides for application to the court for disclosure of the identity of persons for whom property is held in trust.
- Under the Taxes Consolidation Act (1997) resident trustees can be obliged to give details of the name and address of every person in receipt of funds from the trust.
- For trusts and companies, if beneficial ownership or control structures are complicated then details may be difficult to obtain and verify in a timely fashion.
- Recommendation: Ireland should broaden its requirements on beneficial ownership so that information on ownership/control is more readily available in a timely manner.

### Non-profit organisations
- Ireland is in the process of reviewing its non-profit sector to ensure appropriate oversight so it cannot be used to facilitate the financing of terrorism.
- Recommendation: Ireland should consider implementing specific measures from the Interpretative Note and Best Practices Paper to SR VIII or other appropriate measures.

### National and international co-operation
- Procedures exist to ensure cooperation between relevant organisations at a national level.
- At policy level Ireland is well represented within the EU structure and has been diligent in ensuring EU directives are enforced.
- At an operational level Ireland participates within the EU framework and in international fora including Europol, Interpol and the WCO.
- Departments and agencies cooperated mostly through informal channels.
- The Money Laundering Steering Committee (MLSC) is the main structure for AML/CFT cooperation and coordination, providing a forum for national coordination in policy and operational initiatives and for drafting and approving sectoral guidance notes for financial institutions and DNFBPs.
- Ireland has signed and ratified the Vienna Convention and signed the Palermo Convention but has not yet ratified it; the majority of its provisions are already implemented for AML purposes.
- The 1999 UN International Convention for the Suppression of the Financing of Terrorism has been signed, ratified and implemented.
- Ireland is party to multilateral conventions containing provisions for Mutual Legal Assistance (MLA), including:
  - Council of Europe Convention on Mutual Assistance in Criminal Matters 1957;
  - Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds of Crime 1990.
- Mechanisms have been put in place for international cooperation and a number of MOUs have been negotiated.
- Bilateral MLA agreements have been concluded with United Kingdom; Hong Kong, China; and the United States of America.
- In 2004, 106 requests for MLA were received.
- For enforcing foreign confiscation orders, provisions of the CJA (1994) apply as if the order were a domestic confiscation order.
- Ireland can extradite for ML and TF under Extradition Acts 1965 to 2001 and has bilateral extradition treaties with Australia and the United States of America.
- For EU states Ireland can utilise the European Arrest Warrant procedures allowing efficient processing of extradition actions without the requirement for dual criminality for certain offences, including ML and TF.
- Other cooperation channels: FIU, law enforcement to law enforcement, and regulator to regulator. In 2004, 209 inquiries were made through the Egmont group.
- International assistance does not appear to be prohibited or subject to unreasonable, disproportionate or unduly restrictive conditions. Implementation of the Recommendations concerning MLA appears to be working adequately in practice.

### Forty Recommendations — selected ratings and underlying factors
- 1. ML offence — LC
  - The number of prosecutions and convictions are low.
- 2. ML offence – mental element and corporate liability — LC
  - The regime for sanctions appears comprehensive, dissuasive and proportional; however the number of prosecutions and convictions are low.
- 3. Confiscation and provisional measures — C
  - This Recommendation is fully met.
- 4. Secrecy laws consistent with the Recommendations — C
  - The Recommendation is fully met.
- 5. Customer due diligence — PC
  - Financial institutions are not currently required to undertake full CDD measures on establishing business relations, when carrying out occasional transactions over €13,000 or in circumstances in relation to SRVII and there is no requirement to identify in cases where TF is suspected.
  - Several CDD requirements are implicit or established only in guidance rather than law/regulation (examples include ongoing due diligence; identification of the beneficial ownership of legal persons).
  - Certain requirements (information on nature and purpose of business relationship and timing of verification) are not required by “other enforceable means”.
  - No legally binding provision for enhanced CDD measures; guidance is weak on consequences of failure to complete CDD.
  - Provisions addressing identification of existing customers are limited to cases where ML is suspected.
- 6. Politically exposed persons — NC
  - No legislative or other enforceable obligations currently in force.
- 7. Correspondent banking — NC
  - No legislative or other enforceable obligations currently in force.
- 8. New technologies & non face-to-face business — PC
  - Limited measures in guidance for non-face-to-face business and new technologies.
- 9. Third parties and introducers — NC
  - No legally binding obligations currently in force governing identification carried out by third parties or introducers on behalf of designated bodies.
- 10. Record keeping — C
  - The Recommendation is fully met.
- 11. Unusual transactions — PC
  - No explicit requirement to pay attention to all unusual, complex, large transactions and transactions with no visible economic purposes, nor to further examine these situations and to set out findings in writing.
- 12. DNFBP – R.5, 6, 8-11 — PC
  - Not all DNFBPs are obliged to undertake CDD and record keeping for AML/CFT purposes as covered by Recommendation 12.
  - Same deficiencies for DNFBPs as for financial institutions in implementation of Recommendation 5.
  - No or limited requirements to apply higher risk measures under Recommendations 6, 8 and 9.
  - Guidance limited on obligations to pay attention to complex and unusual transactions (Recommendation 11).
  - Proportionate range of sanctions not directly available and not all DNFBPs have a designated body to impose AML/CFT sanctions (Recommendation 17).
- 13. Suspicious transaction reporting — C
  - The Recommendation is fully met.
- 14. Protection & no tipping-off — C
  - The Recommendation is fully met.
- 15. Internal controls, compliance & audit — LC
  - No legislative or other enforceable obligations to ensure appropriate compliance management arrangements, timely access to CDD and transaction information for compliance staff, or screening procedures for hiring employees.
- 16. DNFBP – R.13-15 & 21 — PC
  - Not all DNFBPs are subject to STR obligations.
  - DNFBPs are not required to develop internal policies, procedures, internal controls, ongoing employee training and compliance for AML/CFT.
  - Inadequate measures for DNFBPs to pay special attention to transactions involving certain countries or to make findings available in writing.
  - STR regime not effective with low numbers of STRs by DNFBPs.
  - Proportionate range of sanctions not available and not all DNFBPs have a designated body to impose AML/CFT sanctions (Recommendation 17).
- 17. Sanctions — PC
  - Overall not effectively implemented as there is no range of sanctions proportionate to severity.
  - Administrative sanctions are not yet directly available for AML/CFT purposes.
- 18. Shell banks — PC
  - Correspondent banking relationships with shell banks are not forbidden by law or regulation.
  - No prohibition on financial institutions from entering into or continuing correspondent banking relationships with shell banks.
  - Financial institutions are not required to satisfy themselves that respondent institutions in a foreign country do not permit accounts to be used by shell banks.
- 19. Other forms of reporting — C
  - The Recommendation is fully met.
- 20. Other NFBP & secure transaction techniques — C
  - The Recommendation is fully met.
- 21. Special attention for higher risk countries — PC
  - No mechanism in place to make designated bodies aware of weaknesses in other countries' AML/CFT systems.
  - No requirement to examine and monitor transactions from countries that insufficiently apply FATF Recommendations or to make findings available to competent authorities.
- 22. Foreign branches & subsidiaries — LC
  - Some requirements are in guidance; the requirement for financial institutions to ensure foreign branches and subsidiaries comply with FATF standards is mentioned briefly in guidance.
  - Legislation allows exchange of information when a supervisor observes a branch or subsidiary is unable to observe AML/CFT standards.
  - No legislative or other enforceable obligations to require higher attention to branches/subsidiaries in countries that insufficiently apply FATF Recommendations, nor to require a higher standard of AML/CFT obligations — although in practice this may be applied through group policies.
- 23. Regulation, supervision and monitoring — LC
  - The Financial Regulator has a full range of supervisory powers to adequately regulate and supervise for AML/CFT matters.
  - A fully implemented compliance regime for money transmission services is not yet in effect; initial steps are being taken through licensing of these entities.

*IMF country report content unit: _cr0778 - 33. The  Financial  Regulator  is  obliged  to  report  to  the  FIU  and  the  Revenue  Commissioners*

### 24. DNFBP - regulation, supervision

### 24. DNFBP - regulation, supervision

### DNFBP oversight: key findings
- Almost all DNFBPs are not subject to oversight for AML/CFT purposes.
- Where an oversight role exists the SROs do not have sufficient resources to perform these functions.

### Guidelines & feedback (LC)
- Sectoral guidance notes are provided to financial institutions providing direction in the application of the AML/CFT legislation; these are generally quite comprehensive but should be enhanced to include requirements to conduct ongoing CDD and pay particular attention to high risk business relationships as indicated in Recommendations 5 – 9, 11 and 21.
- General feedback could be improved by co-operation between the FIU and the Revenue Commissioners to enhance the provision of information on current methods, trends and techniques.
- Guidance is given to some DNFBP’s, but others are not covered.
- The guidance provided to DNFBP’s covered is not always sufficiently detailed.

### Institutional and other measures

FIU (LC)
- The FIU as a whole meets most of the individual requirements of the FATF methodology.
- The FIU’s ability to operate effectively is limited by resources available to: encourage quality STRs from designated bodies; research and develop intelligence for ML and TF investigations from STR information; and provide management information to assist the overall AML/CFT effort. The role and effectiveness of the FIU is therefore limited.
- The FIU does not release periodic reports or conduct strategic analysis.

Law enforcement authorities
- C Recommendation is fully met

Powers of competent authorities
- C Recommendation is fully met

Supervisors (LC)
- The Financial Regulator is unable to directly apply a range of administrative sanctions for AML/CFT breaches.

Resources, integrity and training (LC)
- Resources available to sanction, supervise and issue guidelines are good and those available to investigate ML and TF and to examine integrity of law enforcement agencies on the whole appear adequate.
- Resources for the MLIU to conduct a comprehensive role as the FIU, to develop STR information and conduct initial investigations are limited.

National co-operation (LC)
- A lack of formal AML/CFT framework outside the issuance of guidance notes limits the targeting of the resources that Ireland has directed at AML/CFT systems.
- There is room for more formal increased interagency co-operation particularly between the MLIU and the Financial Regulator.

Statistics (PC)
- Overall there are a limited number of statistics available to assess the effectiveness of the AML/CFT regime.
- The available statistics are not used for systematic review of the effectiveness and efficiency of AML/CFT systems.
- There is no overall proactive review of the AML/CFT effectiveness.

Legal persons – beneficial owners (PC)
- Competent authorities do not have access in a timely fashion to adequate, accurate and current information on beneficial ownership and control.

Legal arrangements – beneficial owners (PC)
- Competent authorities have limited powers to have timely access to information on the beneficial ownership and control of trusts.

### International Co-operation: conventions and MLA
- Conventions (LC): The Vienna Convention and TF Convention have been signed, ratified and implemented. The Palermo Convention has been signed but not yet ratified, although almost all of the provisions are already implemented for ML purposes.
- Mutual legal assistance (MLA): C The Recommendation is fully met
- Dual criminality: C The Recommendation is fully met
- MLA on confiscation and freezing: C The Recommendation is fully met
- Extradition: C The Recommendation is fully met
- Other forms of co-operation: C The Recommendation is fully met

### Nine Special Recommendations — summary assessments and findings

SR.I Implement UN instruments (PC)
- S/RES/ 1267 has been implemented but S/RES/1373 (2001) has not been adequately implemented. In particular, no mechanisms exist for the immediate freezing of funds of designated terrorists outside the EU listing mechanism.
- There is no system for effectively communicating action taken by the authorities under the freezing mechanisms to designated non-financial business and professions.
- Designated non-financial businesses and professions are not adequately monitored for compliance with measures taken under the Resolutions.

SR.II Criminalise TF (LC)
- The TF offence does not extend to the provision or collection of funds for the benefit of a group of less than three terrorists including a single terrorist (except where the funds are provided for use, in whole or in part, in order to carry out a terrorist act), due to the use and definition of the term “terrorist group” in the legislation.
- It is too early to assess the effective implementation of the TF offence provisions, because they have only been operative since March 8 2005.

SR.III Freeze and confiscate terrorist assets (PC)
- Ireland has limited ability to freeze funds in accordance with S/RES/1373 (2001) of designated terrorists outside the EU listing system.
- Ireland does not effectively communicate measures taken under freezing mechanisms to DNFBPs.
- Ireland does not adequately monitor DNFBPs for compliance with the relevant laws for freezing of terrorist funds, notwithstanding the existence of criminal penalties for non-compliance.

SR.IV Suspicious transaction reporting
- C The Recommendation is fully met

SR.V International co-operation
- C The Recommendation is fully met.

SR.VI AML requirements for money/value transfer services (PC)
- Overall implementation of Recommendations 5-10, 15, 17, 21, 22 and Special Recommendation VII is inadequate; this negatively impacts on the effectiveness of AML/CFT measures for money transmission services.

SR.VII Wire transfer rules (NC)
- Requirements for transfers to record and maintain originator information are limited and currently only contained in guidance.
- There is no obligation to verify that the originator information is accurate and meaningful.
- There are no obligations to require financial institutions to apply risk-based procedures when originator information is incomplete.

SR.VIII Non-profit organisations (PC)
- Ireland is in the process of completing a review of its NPO sector, but has not yet implemented measures to ensure accountability and transparency in the sector so that terrorist organisations cannot pose as legitimate non profit organisations, or to ensure that funds/assets collected by or transferred through non-profit organisations are not diverted to support the activities of terrorists or terrorist organisations.

SR.IX Cross-border disclosure (PC)
- There are no powers to obtain a truthful disclosure upon request by individuals suspected of physical cross-border transportation of cash or bearer negotiable instruments.
- No sanctions are available for false declarations/disclosure.
- Measures are not currently in place to fully comply with SR IX.

### Recommended Action Plan: prioritized measures (selected highlights)

1. General
- (No specific bullets beyond plan structure in source.)

2. Legal System and Related Institutional Measures
Criminalisation of ML (R.1 & 2)
- Criminalise the participation in an organised criminal group.
- Improve the implementation of the ML offence, providing necessary incentives to investigators and prosecutors to prosecute ML cases as separate and serious offences.
- Ascertain why the number of ML cases remains low.

Criminalisation of TF (SR.II)
- Criminalise the collection or provision of funds for an individual terrorist.

Confiscation, freezing and seizing of proceeds of crime (R.3)
- Consider extending civil forfeiture for all instrumentalities of crime.
- The Irish authorities should collect statistics on the number of cases and the amount assets seized in relation to criminal confiscation.

Freezing of funds used for TF (SR.III)
- Ireland should extend its current limited ability to freeze funds in accordance with S/RES/1373 and ensure that all freezing actions are communicated to relevant DNFBPs.
- There should be adequate monitoring of DNFBPs to ensure they comply with required freezing actions.

The Financial Intelligence Unit and its functions (R.26, 30 & 32)
- Allocate more resources (both staff and technical resources) to the FIU; a system of electronic reporting would assist in managing the increasing number of STRs.
- Establish a team of financial analysts to ensure STR information is thoroughly analysed.
- Seek and encourage regular feedback from partner agencies on the quality of information/intelligence and overall level of service; feed benefits and results back to the FIU.
- Improve FIU statistics and case management statistics by improving technological resources.
- In consultation with partner agencies, consider how information/results can optimally be shared with reporting entities.
- Continue to proactively negotiate MOUs with foreign FIUs.

Law enforcement, prosecution and other competent authorities (R.27, 28, 30 & 32)
- Investigative and prosecutorial authorities need to focus more on investigating and prosecuting ML offences.
- Keep clearer statistics on investigations and prosecutions of the ML offence.
- Consider establishing an AML working group with relevant government and investigation agencies to regularly discuss issues of common interest and develop approaches for emerging issues.
- Collect statistics concerning the types of criminal sanctions imposed for ML under Sections 31 and 32 of the CJA (1994) (as amended).

3. Preventive Measures – Financial Institutions

Customer due diligence, including enhanced or reduced measures (R.5 to 8)
- Require financial institutions to apply CDD requirements to existing customers on the basis of materiality and risk.
- Require identification of occasional customers as contemplated in SR VII for domestic transfers and where there is a suspicion of TF.
- Require obtaining information on the purpose and intended business nature of the business relationship, conduct ongoing due diligence, and keep CDD data up-to-date.
- Where adequate CDD data is not obtained, require consideration of filing an STR.
- Adopt enhanced due diligence for higher risk categories and PEP measures as contemplated in Recommendation 6 and measures for correspondent relationships as in Recommendation 7.
- Require policies to prevent misuse of technological developments in ML and TF.
- Adopt legally binding provision requiring financial institutions to make enquiries for the beneficial owner(s) of corporate customers.

Third parties and introduced business (R.9)
- Ensure legally enforceable regulations or guidelines establish obligations so financial institutions can obtain relevant customer identification and verification information in a timely manner.

Record keeping and wire transfer rules (R.10 & SR.VII)
- Implement the provisions of SR VII as soon as possible.

Monitoring of transactions and relationships (R.11 & 21)
- Adopt regulations or guidelines subject to sanctions for persons that fail to comply and establish explicit obligation for all financial institutions to perform requirements of Recommendation 11.
- Ensure enforceable regulations or guidelines are clear on obligations of Recommendation 21.

Suspicious transaction reports and other reporting (R.13-14, 19, 25 & SR.IV)
- Expand the definition of the TF offence to include the provision/collection of funds for an individual terrorist so as to ensure that transactions related to these activities are reportable.

Cross-border declaration or disclosure (SR.IX)
- Ireland should implement SR IX without restriction.

Internal controls, compliance, audit and foreign branches (R.15 & 22)
- Introduce enforceable obligations to ensure compliance staff has timely access to CDD and transaction information and require screening procedures for hiring employees.
- Require application of principles to branches and subsidiaries in countries that insufficiently apply FATF Recommendations.

Shell banks (R.18)
- Prohibit financial institutions from entering into, or continuing, correspondent banking relationships with shell banks and require satisfaction that respondent institutions do not permit accounts to be used by shell banks.

Supervisory and oversight system (R.23, 30, 29, 17, 32, & 25)
- Consider introducing an administrative penalties regime for non-compliance under section 32 and 57 of the CJA (1994) (as amended).
- Maintain statistics on number and type of sanctions applied.
- Enhance existing sectoral AML guidance to include ongoing CDD and attention to high risk business relationships as indicated in Recommendations 5 – 9, 11 and 21.

Money value transfer services (SR.VI)
- Continue intended supervision of money value transfer systems, implementing an effective licensing regime.

4. Preventive Measures – Non-Financial Businesses and Professions

Customer due diligence and record-keeping (R.12)
- Implement Recommendations 5 and 6 fully.
- Bring in legislative changes to ensure all DNFBPs have adequate CDD and record keeping obligations as required by Recommendation 12.
- Be aware of ML issues relating to illicit operation of casinos and be prepared to address these problems.
- Require DNFBPs to establish and maintain internal procedures, policies and controls covering CDD, detection of unusual and suspicious transactions and the reporting obligation; maintain an independent audit function and provide ongoing employee training.

Monitoring of transactions and relationships (R.12 & 16)
- Compel DNFBPs to pay special attention to transactions involving certain countries, make findings available in writing, and apply appropriate countermeasures.

Suspicious transaction reporting (R.16)
- Ensure that all DNFBPs are covered by the reporting obligation.

Internal controls, compliance & audit (R.16)
- Ensure DNFBPs develop internal policies, procedures, controls and ongoing employee training with regard to AML/CFT and that sanctions can be applied in the event of an AML/CFT breach.

Regulation, supervision and monitoring (R.17, 24-25)
- Extend the scope of the CJA (1994) (as amended) Act to bring all types of DNFBP under the AML/CFT regime.
- Require DNFBPs to establish and maintain internal procedures, policies and controls and communicate these to their employees.
- Introduce administrative sanctions for breaches of AML/CFT requirements by DNFBPs.
- Enhance the scope and coverage of reporting entities to include all DNFBPs; designate Supervisors or enable the financial regulator or SROs to regulate and supervise all categories for AML/CFT.
- Establish guidelines that cover the full range of DNFBPs to assist implementation and compliance.
- Adopt appropriate sanctions for non-compliance, including a regime of administrative sanctions.

5. Legal Persons and Arrangements & Non-Profit Organisations

Legal Persons – Access to beneficial ownership and control information (R.33)
- Take additional measures to ensure that information concerning beneficial ownership is available on a timelier basis.

Legal Arrangements – Access to beneficial ownership and control information (R.34)
- Take additional measures to ensure that competent authorities have timelier access to beneficial ownership and control of trusts.

Non-profit organisations (SR.VIII)
- Continue to review adequacy of laws and regulations to ensure terrorist organisations cannot pose as legitimate non-profit organisations.
- Give consideration to implementing specific measures from the BPP for SR VIII and other measures to ensure that funds or other assets collected or transferred through NPOs are not diverted to support terrorist organisations.

6. National and International Co-operation

National co-operation and coordination (R.31)
- Ensure that all existing co-operation mechanisms are functioning effectively.
- Improve co-operation and co-ordination between the FIU and the financial regulator, and enhance co-ordination at the policy level, possibly through the establishment of a formal national co-ordination mechanism.

The Conventions and UN Special Resolutions (R.35 & SR.I)
- Ratify the Palermo convention and ensure that S/RES/1373 (2001) is fully implemented.
- Ensure that DNFBP’s are advised of their obligations under S/RES/1267 (1999) and S/RES/1373 (2001).

Mutual Legal Assistance (R.32, 36-38, SR.V)
- Specifically criminalise the provision/collection of funds involving a single terrorist to ensure discretionary grounds of dual criminality are not used in the future to refuse legal assistance requests.

Extradition (R.32, 37 & 39, & SR.V)
- Specifically criminalise the provision/collection of funds involving a single terrorist to ensure discretionary grounds of dual criminality are not used in the future to prevent extradition of individual terrorists.

Other Forms of Co-operation (R.32 & 40, & SR.V)
- (No additional bullets beyond cited actions.)

7. Other Issues

General framework – structural issues
- Consider a review of current and future requirements of the AML/CFT system; encourage greater collection of relevant statistics and more formal multi-agency co-operation where appropriate.

*Source: _cr0778 - 24. DNFBP - regulation, supervision*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2007/_cr0778.pdf_