This document discusses anti-money laundering regulations and obligations for solicitors and credit unions. It provides an overview of key legislation, requirements for customer due diligence, identifying beneficial owners, reporting suspicious transactions, record keeping, and training staff. It notes the penalties for non-compliance and examples of suspicious activities and red flags that could trigger reporting obligations.

1. ANTI-MONEY LAUNDERING
18th MAY 2012

2. INTRODUCTION

3. WHO?

4. WHY?

5. OUR PRESENTER
• ICAI –
• Advising Practices
• Technical compliance
• Regulatory compliance
• General Advisory
• Private practice
• Consultancy

6. 1. Latest legislation
2. Solicitors and AML
3. Credit Unions and AML
4. Reporting suspicions
5. Practical approach
6. Where can it all go wrong?

8. • Applicable from 15 July 2010
• Anti Money Laundering Compliance Unit of
the Department of Justice
• Http://www.antimoneylaundering.gov.ie/en/A
ML/Pages/Home

10. Obtain information reasonably warranted...on the
purpose and intended nature of a business relationship
with a customer prior to the establishment of a business
relationship S.35(1)
If unable to obtain such information.....shall not provide
the service.... S. 35(2)
Monitor dealings, scrutinise source of wealth or of funds
used for transactions to check:
– Consistency with knowledge of business patterns
– Any knowledge of involvement in ML or terrorist
financing

11. Prior to establishing business relationship
Section 33(2) –
Identify the customer
Verify the documents can be relied upon to confirm
customer’s identity
Identify any beneficial owner ..and taking any measures
‘reasonably warranted by the risk of money laundering or
terrorism’
Section 33(5) ...the designated person shall take
reasonable steps to verify the identity of the customer or
beneficial owner, .....as soon as practicable

12. Beneficial owner direct or indirectly owns
more than 25 per cent of shares/votes/control
– S 26-30
Politically Exposed Persons (PEPs) – S37

13. 1. Verification of identity of at least two of those who direct the business or
entity (Directors/partners/sole trader/executor/trustee) – photo ID/at least
one recent utility bill
2. Name/address of beneficial owners noted
3. Categorise all clients/customers (even pre 15/9/2003 or pre 1994)
4. Document procedures
5. Report suspicions internally to MLRO
6. MLRO reports externally, where necessary
7. Keep records for at least 5 years after last business transaction - Section
55(4)

15. 1. Exempt from reporting when providing services
not included in Section 24 (1) of the legislation
2. Legal activities falling outside this list are exempt
3. Exempt where legal privilege arises
4. Solicitors allowed to cease to act for a client if
they have made an AML report and it will net be
deemed ‘tipping off’
Law Society Guidance Notes paras 1.36 to 1.39

16. AML reporting obligations only arise where a
solicitor participates in certain types of legal work
This work is specified in the definition of the term
“relevant independent legal professional” as a
barrister, solicitor or notary who carries out certain
specified services
Section 24 (1)

19. Have a Risk Committee (as required n the Final
Report of the Commission on Credit Unions – April
2012)
Customers with no ID – pre 1994
The need to classify all customers into low,
medium and high risk and say why
Junior member accounts – get ID of
parent/guardian
Dormant accounts – being closed after a period or
commence usage again unexpectedly

20. Trigger events e.g.:
Large lodgements over €5k or €10k
Loans paid back early
Does your computer software produce an
automated report if these events occur?
No-face to face transactions – internet banking
Sanctions list countries
PEPs – use C6 of Veriphy
Regular MLRO reports for board – Central Bank will
inspect

21. What are my responsibilities?

22. Actual knowledge
Knowledge of circumstances which would have
raised suspicion with reasonable or honest person
More than speculation but less than proof
Not required to have hard evidence – that’s up to
the authorities
No obligations to search for suspicious activity
Not limited to transactions activity

23. Sudden and unexplained drop in income of cash
business after change in ownership
Dividing large transaction values into smaller
amounts for no apparent reason
Clients using more > bank a/c than necessary
Client preferring cash rather than cheques
Senior manager being sole signatory on client a/c
and authorisation procedures not followed

24. High incidence of international transactions for no
apparent purpose
Any transaction activity which did not appear to make
sense
A client who is always changing their mind about what
the transactions in the business are for
Lodgements made from distant branches for no real
reason
Client reluctant to give Know Your Clint (KYC)
information
Third party payments for no apparent reason

25. Repayment of loans within short period
Any activity which might generate a different tax
outcome if all facts were known to the Revenue
Customer whose lifestyle is at odds with known
sources of income
Long standing employees/customers/suppliers of
clients

26. Falsified invoices/lack of proper books
Insurance broker struck off by CRO for consistently
late annual returns – duty to tell the Financial
Regulator – breach of licensing requirement –
‘money laundering’ as well
Illegal directors’ loans
Charity giving ‘overseas’ aid – is the subject of the
aid legitimate? How robust are the charity’s
clearance procedures?
Hotel/restaurant not implementing fire safety
regulations due to the recession

27. Minister for Justice may designate certain places outside the
EU if ‘satisfied that they do not have adequate procedures in
place for the detection and prevention of money laundering or
terrorist financing’
It’s compulsory (under S 43) to report clients who do business
with these territories
http://www.finance.gov.ie/viewdoc.asp?fn=/documents/Financi
alSanctions2008/Finsanctionsindex08.htm
http://www.centralbank.ie/regulation/processes/Intfs/Pages/No
tifications.aspx
FATF list

28. Afghanistan Liberia
Belarus Libya
Burma (Myanmar) Somalia
Sudan
Democratic Republic of Syria
Congo Terrorist Groups
Cote d’Ivoire - Usama bin Laden, the Al-
Egypt Qaida network and the Taliban
- Counter Terrorism
Eritrea Tunisia
Republic of Guinea Uzbekistan - revoked
Iran Yugoslavia
Iraq - Slobodan Milosevic and
Associated Persons
Democratic People’s Republic - International Criminal
of Korea (North Korea) Tribunal for the former
Lebanon Yugoslavia (ICTY)
Zimbabwe

29. Staff member is suspicious Staff member has legal
obligation to report under
section 42(1) Act
Internal notification completed: By following internal procedures,
Flowchart of an •dated and signed staff member discharges personal
Example Firm’s •give relevant facts & background obligation sec 44 Act (sec 57(3)
Procedure for Reporting & basis for suspicion 1994). And must not tip-off (sec
49 Act
Suspicious Transactions’
MLRO acknowledges receipt
Good Practice
of report
Whatever decision is
MLRO determines whether made, the decision
the report & other information must be recorded as it
gives rise to a suspicion relates to a transaction:
sec 55 Act
Report filed with Garda
No report & Revenue (sec 43 Act)
NB: May not complete transaction
unless Report filed (Sec 42(7) Act)
Respond to queries,
court orders etc
Part 3 Act
29

31. 1. Stratify clients into ‘low’, ‘medium’ and ‘high’ risk
based on the likelihood they may be involved in
money laundering and/or terrorist financing
2. If non face to face contact = ‘high risk’
3. Then document the above
4. Then say why they are in each category
5. Then ongoing monitoring of business
transactions of clients/customers
6. Appoint MLRO to supervise the process

32. Train staff - All client/customer facing and any back
office staff who process time
records/billing/cash/new accounts
At the very least, staff should be made aware of:
Money laundering legislation and their personal
obligations
Internal reporting procedures/manual
CDD procedures
Record-keeping extremely important
Consider how to evidence comprehension – quiz
Remember the "training defence"...
Employer/MLRO in the frame

34. Start dealing with clients/customers before the ID obtained
In a Credit Union – just cannot do it
In a service business - put clients without full ID on a watch
list/restricted list
Once you have billed them and got paid, you have laundered their
money
Accepting ID by post or fax
Accepting certified ID from a non-designated or independent person
Accepting ID from another professional/financial institution without
actually obtaining the documents
Not assessing clients/customers into risk categories and saying why
Not identifying PEPs and treating them as ‘high’ risk
Accepting cash up front from a client
Special AML training required by FexCo for handling foreign exchange
transactions in a credit union

36. Why today?
• Need for technical update
• Opportunities from the legislation!!!
• Opportunities from today - networking
• Share our marketing strategy

37. LEGAL FIRMS
• Law Society • Helping firms support their
• Profitability clients
• Cash Flow • CAT - Planning – Filing Tax
• Monthly/Annual Reporting returns
• Tax compliance • CGT – complex issues
• Advice on • Buying/Selling a Business
• Tax - Strategy –Succession • Buying/Selling a property
• Payroll services • Dealing with an insolvency
• Setting up a business
• Forensic accounting –
litigation support

38. CREDIT UNIONS
• Audit • Advice on:
• Accounting – Corporate Governance
• Internal Audit – Amalgamations
• Support supervisors – Results improvement
– Tax issues
• Monthly Reporting
– Capital Projects
• Tax compliance
• Payroll

39. WHAT CAN
CREDIT UNIONS DO?
• Market to solicitors
– Loans to clients for legal cases
– Budgeting accounts for their personal clients
– Deposits for their clients
• Market to Accountants
– Loans for small business clients
– Loans for asset finance
– Personal credit for tax payments
– Promote savings
– Promote family finance
– Promote Gifts to children/grandchildren
• Advertise on their website
• Have information at their premises

40. WHAT CAN
SOLICITORS DO?
Market to CREDIT UNIONS Market to ACCOUNTANTS
• Regulatory compliance • Specialist services
• Review Legal Agreements • Debt collection
• Family law advice
• Property issues
• Commercial agreements
• Debt collection • Look for relationships with
• Security for loans their clients
• Information for their clients • Contribute to accountant’s
• Advice desk for members newsletters
• Wills service for members
Advertise on their websites
Have information at their premises

41. CONCLUSION
HELP OURSELVES HELP OTHERS
BY:
• RECOMMEND
• EXCEEDING MUTUAL OTHERS
EXPECTATIONS SUPPORT • MAKE
• ASKING FOR INTRODUCTIONS
REFERRALS • SHARE
• NETWORKING INFORMATION
EFFECTIVELY • CORPORATE
• RECOMMENDING SOCIAL
OTHERS RESPONSIBILITY