AML (Anti-Money Laundering) best practices in Ireland

AML (Anti-Money Laundering) best practices in Ireland

 

1. AML obligations in Ireland

2. Red flags for lawyers

3. AML-regulated legal services

4. Business Risk Assessment (BRA)

5. Conclusions

 

1.AML obligations in Ireland

The AML (Anti-money laundering) legislation in Ireland is provided by the Criminal Justice (Money Laundering and Terrorists Financing) Acts 2010-2018.

AML is a serious business for firms in Ireland and the Law Society (Ordine degli Avvocati) has developed some guidelines (Guidance Notes) which are really useful for the matter at stage.

The mind-set of the Anglo-Saxons is to put in place forms and procedures which simplify potentially complicated matters and, more importantly, to set up a model that everyone is happier to adopt rather than having to come up with one of their own.
 

2.Red flags for lawyers

Firstly, the Law Society provided a list of “red flags” for lawyers:

• instructions of a legal professional at a distance from the client or transaction without legitimate or economic reason;
• instruction of a legal professional without experience in a particular specialty or without experience in providing services in complicated or especially large transactions;
• the client is prepared to pay substantially higher fees than usual, without legitimate reason;
• the client has changed advisor a number of times in a short space of time or engaged multiple legal advisers without legitimate reason;
• the required service was refused by another professional or the relationship with another professional was terminated.
   

3.AML-regulated legal services

There are three categories/types of client due diligence – (1) simplified, (2) enhanced and (3) “standard”.

Just to give you a hint, a “standard” due diligence would consist in:

1. “identifying the client and verifying the client’s identity;
2. identifying the beneficial owners and taking measures reasonably warranted by the Money Laundering/Terrorists Financing risk to verify their identity;
3. obtaining information reasonably warranted by the risk of Money Laundering/Terrorists Financing on the purpose and intended nature of the business relationship;
4. conducting ongoing monitoring.”

Law firms must apply Client/Customer Due Diligence (CDD) to clients to whom they provide AML-regulated legal services.

The Law Society provided a list of the most relevant AML-regulated legal services:

1. The provision of assistance in the planning or execution of transactions for clients concerning, for instance:
   1. buying or selling land or business entities;
   2. managing the money, securities or other assets of clients;
   3. opening or managing bank, savings or securities accounts;
   4. organising contributions necessary for the creation, operation or management of companies;
   5. creating, operating or managing trusts, companies or similar structures or arrangements.
2. Acting for or on behalf of clients in financial transactions relating to land.
    

4.Business Risk Assessment (BRA)

Business Risk Assessment (BRA) is a key step in a law firm to guarantee AML compliance with the statutory duties. The Law Society provided a form for this too – to be adapted by law firms according to their own specific needs.

Law firms are advised to start by assessing the type of customer, such as determining whether they know the client personally or whether the client or the beneficial owner(s) of your client are based or operate their businesses in high risk jurisdictions. These jurisdictions will be those which:

“• have deficient anti-money laundering legislation, systems and practice

• have high levels of acquisitive crime or higher levels of corruption

• are situated in ‘offshore financial centres’ or tax havens

• are subject to sanctions.”

Then, law firms should consider which type of legal services are required for the client and if any such services are attractive to money launderers, such as the sale or purchase of real property, the creation and/or management of trusts or companies.

In addition, further consideration might be given to

“• the size and value of the transaction

• the payment type (for example cash or fund transfers from outside the EU into your

client account)

• transactions or products that are complex, facilitate anonymity or don’t fit a usual

pattern.”
 

5.Conclusions

The 2018 Act introduced changes in the AML legislation in Ireland in order to avoid AML compliance becoming a mere administrative tick-the-box process.

So, policies and duties to be implemented by the firms have been substantially modified by the introduction of the Business Risk Assessment which is a risk-based approach requiring more detailed assessment of the client and new emphasis was put on developing policies which introduce controls to mitigate money laundering risk.