Criminal Justice (Money Laundering and Terrorist Financing) Act 2010

Conor KennedyLaw Library,Four Courts,

Dublin 7.

Background

• Purpose of Act is to transpose the Third Money Laundering Directive into Irish law

• Criminal Justice Act 1994 (S.31 – 32A, 57, 57A 58(2) & relevant stat instruments (2003 Regs) repealed.

• Introduced for the purposes of giving effect to 2nd Money Laundering Directive

Section 6 – Criminal Conduct

• conduct that constitutes an offence, or

• conduct occurring in a place outside the State that constitutes an offence under the law of the place and would constitute an offence if it were to occur in the State;

• “proceeds of criminal conduct” means any property that is

derived from or obtained through criminal conduct, whether directly or indirectly, or in whole or in part, and whether that criminal conduct occurs before, on or after the commencement of this Part.

Section 7 - Offence• concealing or disguising the true nature, source, location,

disposition, movement or ownership of the property, or any rights relating to the property;

• converting, transferring, handling, acquiring, possessing or using the property;

• removing the property from, or bringing the property into, the State,

• the person knows or believes (or is reckless as to whether or not)

the property is the proceeds of criminal conduct.

• Attempts any of the above

Section 7 - Penalties

• on summary conviction, to a fine not exceeding €5,000 or imprisonment for a term not exceeding 12 months (or both), or

• on conviction on indictment, to a fine or imprisonment for a term not exceeding 14 years (or both).

Section 7 - Miscel• Knowing or believing also means knowing or believing that the property

probably comprises the proceeds of criminal conduct.• A person is reckless if disregards a risk of such a nature and degree that,

considering the circumstances in which the person carries out any act referred, the disregard of that risk involves culpability of a high degree.

• A person handles property if– receives, or arranges to receive, the property, or– retains, removes, disposes of or realises the property, or arranges to do any of

those things, for the benefit of another person.• A person does not commit an offence so long as—

– the person does the thing in accordance with a direction, order or authorisation given under Part 3, or

– the designated person makes a report in relation to the property, and does the thing, in accordance with section 42.

Chap 2 – Other Sections

• Section 8 - Offences outside the State• Section 9 – Attempts outside the State• Section 10 – Aiding and Abetting• Similar penalties

Section 11• specified conduct

– concealing or disguising the true nature, source, location, disposition, movement or ownership of property, or any rights relating to property;

– converting, transferring, handling, acquiring, possessing or using property;– removing property from, or bringing property into, the State or a place

outside the State.

• Where an accused has engaged, or attempted to engage, in specified conduct – He is presumed to have known, believed, or reckless, unless the court or

jury, is satisfied, having regard to the whole of the evidence, that there is a reasonable doubt that the accused knew, believed or was reckless.

• Statutory Examples

Section 17 - Direction or Order

• Gardai - Superintendent• District Court– Order not to carry out transaction

• Not subject to civil or other penalty for compliance

• Penalties

Definitions

• Section 24 – General– Relevant Independent Legal Person engaged• Buying/selling land/businesses• Managing money• Acting in relation to financial transactions

• Section 25 – “Designated Person”– Financial Institutions– Auditor/Accountant/Tax Advisor– Relevant Independent Legal Person

Customer Due Diligence

• Section 33– Prior

• establishing relationship• Carrying out a transaction or service

– Required to • Identify customer on basis of documents• Identify who beneficial owner is

• Section 35 – obtain information to ensure bona fides or else refuse to act– Monitor dealings– Penalties for failure

• Section 39– Discretion to apply enhanced safeguards

• Section 40– Reliance on 3rd party info

Reporting Suspicious Transactions

• Section 41– Designated person also includes employee and

agent• Section 42 – Obligation to report suspicious transactions– As soon as possible – However must have first “scrutinised” information

Reporting Requirement

• Obligation to furnish to Gardai & Revenue a report containing:– Reasons for disclosure– Identity of client– Whereabouts of property

• Obligation not to proceed with suspicious transaction unless– Not practicable to delay of stop it or– Client’s suspicions could be aroused– Except if directed by Gardai/Court (S.17)

• Penalties

Defences

• Section 44– Permits an internal reporting procedure – Employees

• Section 46– Report not required if associated with legal privilege– However doesn’t apply in the furtherance of a criminal

purpose• Section 47– Disclosure not treated to be a breach for purposes of

any enactment or rule of law

Tipping Off

• Section 49– Designated person prohibited to do anything that

will prejudice investigation– Penalties – Summary/Indictment and/or fine– Also extends to employee or agent

• Section 50– Defence if disclosure made pursuant to S.17– Disclosure as a result of direction of Garda/Judge

Tipping Off – Defences

• Section 51– Disclosure within group or undertaking

• Section 52– Disclosures from banks to banks– Legal advisers to legal advisers

Internal Policies, Procedures, Training & Record Keeping

• Procedures to detect money laundering offences– Identification of large/complex transactions– Unusual patterns of transactions lacking economic rationale

• Employees – are properly instructed– Provided with on-going training

• Penalties– Summary/Indictment and/or fines

• Sole practitioner excluded from internal reporting requirements

Records to Keep

• Section 55– Obligation to keep records for• Each customer

– Records to be kept for 5 years– Applies to corporate successions/acquisitions– Penalties

Monitoring of Designated Persons

• Section 60– Competent Authority• Central Bank• CCAB• ITI• Law Society• Bar Council

Functions of Competent Authorities

• Section 63– Monitor ‘Designated Persons’– Ensuring compliance – Procedures to report to Gardai & Revenue– Obligation to report to Gardai & Revenue

• Section 65– Obligation in Annual Report to refer to activities

carried out under the Act

Guidelines

• Section 107– Minister may draft guidelines– Defence if relied on such guidelines

• Section 111 – Body Corporate– Offence deemed to committed individuals

Summary

• Know your client• Update & train• Monitor transactions• 3rd party reliance• Procedures in place– Internal reporting– Reporting officer