Anti Money Laundering: Ireland implements most of AMLD 5 with 2021 Act and Beneficial Ownership of Trust Regulations

The Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 (“Act”) was signed into law on 18 March 2021. A commencement order[1] has now enacted all the provisions of the Act. Further, a second order [2] enacted provisions for disclosure of beneficial ownership of trusts and a central register for beneficial ownership of trusts.

The purpose of the new legislation is to give further effect to domestic obligations under the Fifth Anti Money Laundering Directive. The aim of the directive is to respond to evolving trends in terrorism financing and beneficial ownership transparency. The legislation also provides for related matters.

Below is a summary of some of the main provisions of the legislation which we believe will interest members:

• The Act expands the definition of tax advisor who is a designated person under existing legislation to include any other person whose principal business or professional activity is to provide, directly or by means of other persons to which that other person is related, material aid, assistance, or advice on tax matters.
• The Act also includes new ‘designated persons’ who will be required to apply specific criteria relating to anti money laundering in the course of their business. These include certain letting agents, virtual currency service providers and high-value art dealers.
• The Beneficial Ownership of Trust Regulations 2021 reflect the “Beneficial owner” definition in the Act in relation to “relevant trusts” which is defined in the Act. They bring into force a regime similar to the existing regimes brought into force in recent years for beneficial ownership of corporate entities and for certain financial vehicles. There is a requirement to establish a Central Register of Beneficial Ownership of Trusts. The Revenue Commissioners will appoint the Registrar. Existing trusts caught by the Beneficial Ownership of Trust Regulations 2021 must register by 24 October 2021 and new ones within 6 months of coming into existence.
• When a designated person is entering a business relationship with an entity which is obliged to keep a beneficial ownership register (for example a trust or a company) the designated person must obtain beneficial ownership information from the register. The designated person must not engage in that business relationship until the relevant information is obtained. There is an exception that a financial institution may open an account ahead of obtaining the information but cannot allow any transactions on that account.
• The Act makes amendments to existing legislation concerning “politically exposed persons” (“PEP”). The definition is expanded to include any individual performing a prescribed function. It also permits a designated person to continue to monitor someone designated a PEP so long as a money laundering risk exists in connection with their designation. We understand that the Department of Justice will shortly issue guidance under the Act in respect of the definition of ‘prominent public function ‘and this guidance will be available on justice.ie when issued.
• The Act now includes a specific list of enhanced due diligence measures that the designated person is required to apply when dealing with a customer established, or residing, in a high-risk third country.
• The Act provides that if a firm has exhausted all possible means of identifying the beneficial owner of a company, they must take the necessary measures to verify the identity of the senior managing official in the company.
• The Act introduces a registration and supervision regime for virtual asset service providers (VASPs) based on standards issued by FATF of which Ireland is a long-standing member. The Irish Central Bank will be responsible for registration and supervision. Readers should note that in its supervision and enforcement priorities for 2021, Central Bank has said it will continue risk-based and intelligence led inspections adapted for the new working environment, across sectors and with a particular focus on certain areas to include Virtual Asset Service Providers.
• The list of factors suggesting potentially higher risk in schedule 4 of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 has been amended to include for example customers who are third country nationals applying for residence or citizenship in Ireland in exchange for property purchases or investment here.
• A new lower limit (€150) is set on the use of anonymous pre-paid cards and credit and financial institutions from creating anonymous safe-deposit boxes.