AML Scope & Basics

Money Laundering

Money-laundering is concealing the origin of money representing the proceeds of crime.  It is  a method by which proceeds of crime are legitimised and concealed. Since the mid-1990s, legislation, most of which has derived from European Union, has been enacted with the purpose of preventing money-laundering.  The September 11^th 2001 attacks, has led to further legislation, aimed at organised criminals and terrorists.

The law on money-laundering and terrorist financing was updated by 2010 legislation. The primary purpose of the 2018 Act was  to amend the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (“the Act of 2010”) in order to transpose, in part, the Fourth EU Money Laundering Directive (2015/849) into national law, and to give effect to the recommendations of the Financial Action Task Force.

Identity

Banks have always had duties in relation to establishing the identity of their customers and ensuring that their accounts were not used for fraud.  A bank which receives money, which it knows or has reason to believe is paid in breach of trust or constitutes the proceeds of crime, may be liable to return the money or be sued for compensation by the true owner.  See the separate sections on the equitable remedies of tracing and constructive trusts etc.

Money-laundering legislation places strict legal obligations on banks, to establish procedures in order to detect money laundering.  Financial services firm, banks, solicitors, accountants and many other bodies have obligations in relation to combatting money laundering.  They must train their staff to detect money-laundering and report it to the Gardai.

Criminal Conduct

Criminal conduct is conduct that constitutes an offence or would if done in the State, constitute an offence.  A person is guilty of the offence of money laundering, if he engages in any of the following in relation to property that is the proceeds of criminal conduct;

• concealing, disguising the true nature, source, location, disposition, movement or ownership of the property or any rights relating to it;
• converting, transferring, handling, acquiring, possessing or using the property;
• removing the property from or bringing the property into, the State,

where the person knows, believes or is reckless as to whether the property is the proceeds of criminal conduct.

The property is the proceeds of criminal conduct where it is derived from or obtained through criminal conduct, whether directly or indirectly, in whole or in part or whether the criminal conduct occurs before or after the commencement of the legislation.  It is an offence to attempt to commit any of the above.

Terrorist Financing

Terrorist finance includes provision a collection of funds directly or indirectly with the intention or the knowledge that it is to be used to carry out designated terrorist offences.  Institutions must establish procedures whereby suspicions are reasonable grounds of money-laundering or terrorist financing activity is disclosed to the authorities.

Funding acts of terrorism directly or indirectly, collecting or receiving funds intended or knowing that they are to be used to carry out terrorist activities is a serious offence.   There are provisions whereby the Couts can freeze funds where there is evidence that they are being used or may be used in committing terrorist offences.

The money-laundering officer also deals with financing terrorism offences.  There are similar tipping off provisions.  This includes tipping off and disclosing information which may prejudice an investigation into drug trafficking or whether a person is a person against whom a confiscation order may be made.

Designated Businesses

A range of money laundering vigilance and compliance obligations apply to designated persons.  They include:

• most credit institutions,
• financial institutions,
• operators of regulated markets
• auditors
• external accountants,
• legal professionals, including barristers solicitors and notaries providing certain services
• tax advisers
• trusts or company service providers,
• Virtual asset service providers
• property service providers,
• casinos,
• directors of private gambling club,
• intermediaries dealing in art where the total transactions exceed €10,000
• persons trading in goods, in respect of transactions to a person in cash of a total of at least €10,000 in one transaction or a series of transactions, which appear to be linked.  The threshold will apply to payments made by the person as well as payments made to the person.

Legal professionals are only subject to the Act insofar as they carry out certain services.

Financial institutions include credit institutions insurance undertakings investment funds various investment service providers and intermediaries.

The requirements may apply to a wider class of persons as may be prescribed.

• A person is not treated as a designated person for the purpose of the legislation if the annual turnover of the business attributable to operating as a financial institution, credit institution, etc. is less than €70,000
• the total of any single or series of transactions that appear to be linked does not exceed €1000;
• the annual turnover of the person’s business attributable to credit institution or financial institution operations does not exceed 5% of the total business turnover;
• the person provides services when operating as a credit institution only to persons who are customers for the main business activity.

Exemptions may apply by regulations made by the Minister where e the activities are carried out on a limited basis and  there is no risk

Offences

It is an offence to deal with the proceeds of crime in a manner designed to prevent detection or enable the perpetrator or its associates to enjoy the fruits of the crime. It is an offence to assist in money-laundering. Money-laundering includes any conversion, handling or moving property with the intention of concealing its true identity, nature, source, location, movement or ownership, assisting a person in avoiding prosecution for criminal conduct or avoiding confiscation or concealing its ownership.

It is an offence where a person knows or has reason to believe that assets represent the proceeds of crime or where they are reckless as to whether it represents the proceeds.  The lender itself and its agents may be criminally liable.  Where they have reported their suspicions to the Garda Siochana, they are cannot be complicit in the crime. provided they comply with the directions of the Garda Siochana in relation to the assets.

The range of offences covered by anti-money-laundering legislation have increased over the years. It has been extended to a wider range of service providers and professions. 2003  regulations extended cover to lawyers, auditors, accountants and estate agent. Following the  September 11^th 2001 attacks, the legislation was extended to include terrorist financing.

A person who commits the offence of money-laundering is liable on summary conviction, to a fine of up to €5,000 or 12 months imprisonment or both, or on conviction on indictment, imprisonment of up to 14 years or both.

Knowing or believing that property or assets is the proceeds of criminal conduct includes knowing or believing that it probably comprises such proceeds. A person is reckless as to whether or not property is the proceeds of criminal conduct, if he disregards a risk of such nature and degree that, considering the circumstances in which he carries out the act above, the disregard of that risk involves culpability of a high degree.

A person handles property if he receives, arranges to receive, retains, removes, disposes or realises the property, or arranges to do any of these things, for the benefit of another.

A person does not commit a money laundering offence in  doing anything in relation to property that is the proceeds of criminal conduct, for so long as he does the thing in accordance with a direction or authority given under the legislation, or where he is a designated person, makes a report in relation to the property.

Connection with State

A person who, engages in conduct outside the State, which would constitute the above offence, is guilty of an offence in any of the following circumstances:

• the activity is on an Irish registered ship; a registered aircraft;
• the conduct constitutes an offence under the law of that place and the person is an individual who is a citizen of Ireland or ordinarily resident in the State, or a company established under the laws of the State or a company registered under the Companies Act;
• A request for the person for the purpose of trying him for an offence in respect of the conduct, has been made under extradition legislation or a European arrest warrant has been received from an issuing State for the purpose of bringing proceedings against the person, and a decision has been made that the person is not to be surrendered in accordance with the warrant.

A person who has his principal residence in the State for the 12 months before the offence, is taken to be ordinarily resident in the State of commission of the offence. It is similarly an offence to attempt in a place outside the State, to commit any of the above offences.  This is subject to the same sanctions.

Similarly, it is an offence to aids, abets, counsel or procures the commission of an offence in the State or outside of the State.  The same sanctions apply.

Proceedings for an offence committed out of the State may be taken in any place in the State. The offence is deemed to be committed in that place.

Where the offence relates to criminal conduct occurring in a place outside the State, a certificate by a lawyer practicing in the state, stating that the offence is a conduct in that place, is evidence that this is the case unless the contrary is shown.  It is presumed to be signed by the person who has forwarded it.  Provision is made for certification of translation of the document.

A person who has been acquitted or convicted of an offence outside the State is not to be tried again for the same conduct which constituted the offence of which he had been acquitted or convicted.  It is confirmed for the removal of doubt that the legislation extends to Revenue offences committed outside the State.

Presumptions in Offences

Where an accused has engaged or attempted to engage in any of the following in relation to property that is the proceeds of criminal conduct, in circumstances in which it is reasonable to believe that the accused knew or believed the property was the proceeds of criminal conduct, or was reckless as to whether it so was, he is presumed to have so known or been reckless, unless the Court, is satisfied, having regard to the totality of the evidence, that there is a reasonable doubt that the accused so knew or was reckless.  The relevant conduct is the commission of the principal offence, i.e., concealing, disguising, converting, removing from the State etc.

Where an accused has engaged in, or attempted to engage in, the offence in circumstances where it is reasonable to conclude that the property is the proceeds of criminal conduct, those circumstances are evidence that this is the position.

Circumstances in which it is reasonable to conclude that property is the proceeds of criminal conduct include any of the following:

• the value of the property is, it is reasonable to conclude, out of proportion to the income and expenditure of the accused or other person in a case where the accused engaged in the conduct on behalf of or at the request of, the other person;
• the conduct concerned involves actual or purported purchase or sale of goods or services of an amount where it is reasonable to conclude is out of proportion to their market value whether by overvalue or overvalue;
• involves use of false names;
• the accused has stated he is engaged in the conduct concerned on behalf of, or at the request of another person, but has not provided information allowing the other person to be identified;
• where the accused has concealed, disguised the true nature, source, location, disposition, movement or ownership of the assets, or rights to assets and has no reasonable explanation for such concealment or disguise.

Official Directions

A member of An Garda Síochána of the rank of superintendent or above may, direct a person not to carry out a specified service or transaction during a period of up to seven days, if the member is satisfied on information that a direction is reasonably necessary to enable Gardai carry out preliminary investigations into whether there are reasonable grounds to suspect that the service or transaction would, consist of money laundering or terrorist financing.

The District Court may grant an equivalent order for up to 28 days. It may be made and extended on more than one occasion.  A one-sided unilateral application may be made. The District Court in private. Breach of a direction constitutes an offence.

There is provisions for the notification of the order to the person concerned. The notification should give reasons for the direction or order concerned and advise the person affected that he or she may make an application below for payment of monies for certain necessities

There are exceptions when it is not reasonably practicable to ascertain the person’s whereabouts or there are reasonable grounds for believing that disclosure would prejudice the investigation in respect of which the direction is given. In such circumstances the reasons may be excluded from the notice.

An application may be made to revoke or vary the order by the person affected. If the district judge is satisfied that the relevant criteria no longer apply the order may be amended or discharged.

There are provisions for cessation of the order when the investigation has concluded. The person affected is to be notified.

Reports made under the legislation to the authorities are not to be disclosed in the course of proceedings other than to the judge.

While there is a direction in force in relation to property, a judge may, on the application of any person affected, make an order that the judge considers appropriate in relation to the property if satisfied it is necessary to discharge reasonable living and other necessary expenses, including legal expenses, or to carry on a business, trade, profession or occupation to which any of the property relates. The application must be on notice of An Garda Siochana’s direction, or the order ceases at the conclusion of the investigation.