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FATF passes verdict on Ireland

Chris Hamblin, Editor, London, 29 September 2017

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The Financial Action Task Force, the world’s anti-money-laundering standard-setter, has conducted a 'mutual evaluation' of Ireland. It has identified some technical deficiencies in relation to 'politically exposed persons' or PEPs, correspondent banking and 'higher risk' jurisdictions.

The FATF believes that the country should review and strengthen its asset confiscation legislation, procedures and policies in relation to international asset freezing, seizing, confiscation and the sharing of assets with other jurisdictions.

Some of this might sound confusing as Ireland was, in the 1990s, the pioneer of asset confiscation in Western Europe. Its Criminal Assets Bureau, under Felix McKenna, blazed a trail for other, less successful asset tracers such as the UK's Assets Recovery Agency, which failed to meet its targets for the confiscation of criminal funds.

Ireland receives the slightly damning 'partially compliant' rating in respect of FATF recommendation 6 (targeted financial sanctions – against terrorists and terrorist finance); recommendation 7 (targeted financial sanctions against the proliferation of nuclear weapons); recommendation 8 (non-profit organisations); recommendation 12 (politically exposed persons); recommendation 13 (correspondent banking); recommendation 15 (new technology); recommendation 16 (wire transfers); recommendation 18 (foreign branches and subsidiaries); recommendation 22 (the 'customer due diligence' carried out by 'gatekeepers' such as lawyers and accountants); recommendation 25 (transparency of legal arrangements and beneficial ownership); recommendation 29 (performance of financial intelligence unit); recommendation 32 (cash couriers); recommendation 33 (statistics, which the FATF insists on receiving). Ireland is 'non-compliant' in only one area: recommendation 19 ('higher-risk' countries). On the subject of mutual legal assistance (recommendation 37), it has been judged 'compliant.' Its ratings for 'effectiveness' are, by varying degrees, moderate, substantial or high, but never low.

Priorities for action

The FATF wants the jurisdiction to take the following steps.

  • Ireland’s understanding of risks should include a more comprehensive range of quantitative data, such as those in relation to international co-operation (both formal and informal). In its next national risk assessment, it should be better at illustrating the links between the threat and vulnerabilities assessment and give greater consideration to cross-border money-laundering and terrorist finance (ML/TF) risks. Financial institutions and 'gatekeepers' (known to the FATF as DNFBPs or designated non-financial businesses and professions) in particular should try to acquire a better understanding of those risks, particularly in relation to cross-border ML/TF risks.
  • The FATF wants Ireland to pursue terrorist finance prosecutions more actively in line with its risk profile, with a view to securing convictions.
  • It also wants the country to prosecute a wider range of money laundering cases - both domestic ones and ones with an international component, relating to professional money-laundering schemes and complex financial products, in line with its risk profile. Ireland, it believes, should devote more resources to its dedicated money-laundering investigation teams.
  • On the subject of pursuing "the proceeds of crime moved offshore," the FATF instructs Ireland to strengthen its asset confiscation laws, procedures and policies in relation to international asset freezing, seizures, confiscation and the sharing of assets. Its authorities should also concern themselves with "mid-level criminality" as well as complex financial crime.
  • More anti-money laundering efforts should be focused on charities that the authorities have identified as 'vulnerable' to terrorist finance.
  • Ireland should ensure that there are adequate procedures in place to safeguard the role of the financial intelligence unit and make sure that it is 'independent,' a word that presumably refers to immunity from political interference.
  • The FATF finds fault with the "timely and accurate access" that the authorities should be having to information about beneficial ownership, not least from financial institution and 'gatekeepers.' It adds critically: "In this sense, Ireland should continue to take proactive steps to facilitate the operation of the central register of corporate beneficial ownership." All countries of the European Union ought to have these registers up and running by now, but in fact (according to a report by KPMG on 5th September) Ireland's government has put this off yet again.
  • The Irish Department of Justice should continue to expand its monitoring of entities under its remit, and increase its resources accordingly.
  • Supervisors, in particular for 'gatekeepers,' should concentrate more intensely on firms' compliance with their obligations regarding PEPs and financial sanctions. The Law Society and Ireland's accountancy bodies come in for some criticism here.

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