The Central Bank recently gave a wake-up call to the firms and entities it authorises and regulates for investment business and banking activities. Under its regulatory powers of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (CJA 2010) it levied a penalty of €65,000 on a regulated financial services provider for failures to meet the requirements of the CJA 2010.
Amongst the failures which were mentioned in the notice was that the firm had:-
- Failed to instruct its staff in relation to the changes of legislation from they came into force on the 15th July 2010 until December 2010 and that Directors of the firm were not instructed of there until the 26th April 2011. These failures were breaches of Section 54 (6)(a) of the CJA 2010;
- A failure to implement appropriate procedures to demonstrate reliance on third party identification, thereby it had itself failed to comply with the appropriate identification and verification of customers in accordance with Section 40 (3) of the CJA 2010; and
- That it had failed to adopt written policies and procedures in relation to the identification and reporting of suspicious transactions which was a failure of Section 54(2).
Accountants, and particularly those in practice, are deemed to be ‘designated persons’ as defined in the CJA 2010 and so are also regulated under that Act. Accountancy practices are expected to have procedures in place which will meet the requirements outlined within it. The regulation of accountants is primarily performed by the relevant authorising and regulating Institute, however it should be borne in mind that the same requirements apply to all those who are designated persons when it comes to the implementation of procedures particularly in relation to risk assessment of clients, identification and verification, record keeping, appropriate training and the reporting of offences or suspected offences.
It is almost 2 years since the CJA 2010 brought about changes to the way in which firms must identify and verify who their clients are, the way they treat that compliance internally and the requirement to ensure appropriate and proper training be rolled out to staff, yet it is our experience, as a recognised training company, that many practising firms have not yet fully implemented appropriate procedures or trained staff to date.
The financial penalty and reprimand levied also sends out a timely reminder to firms in practice that hold investment business authorisation. The Central Bank regulates the Accountancy institutes under the Investment Intermediaries Act 1995, and will expect your bodies to have carried out adequate testing as part of their monitoring regimes in this area, thus bringing complaince with the requirements of the CJA 2010 into sharper focus.
Whilst the CJA 2010 does not specifically require the appointment of an MLRO it is a role that we have encouraged be given to a senior manager or partner to enable the firm to be satisfied that someone within the practice is taking ownership for the compliance, reporting and training requirements. At this point in time firms should be aware that a requirement to appoint a MLRO is a change, which is proposed by a current Bill making changes to the CJA2010 and which is currently awaiting approval.
For those firms that have not yet implemented procedures OmniPro has an Anti Money Laundering Procedures Manual which you may find to be of use to assist you with your compliance responsibilities. Our Anti-Money Laundering Procedures Manual includes guidance material, the procedures required and all the standard forms and documentation that practising accountants require. We also provide a face to face or online training session for the individual who is assuming the role of the Money Laundering Reporting Officer (MLRO) within the firm and are happy to assist you with implementation and compliance reviews.