Money Laundering Regulations (MLR 2017)

The new Money Laundering Regulations are here:

Businesses need to be aware of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“MLR 2017”), which came into force on 26 June 2017.Broadly speaking, this introduces a greater emphasis on risk assessments and an enhanced risk-based approach in respect of anti-money laundering/counter-terrorism financing (AML/CTF) compliance programmes. Sonel Martin highlights some of the changes:

1. MLR 2017 does away with “automatic” simplified due diligence (SDD) categories. Instead, each business area or function – as well as individual relationships and transactions – requires a risk assessment to decide whether a lower degree of risk exists and SDD can be applied. This should take into account a list of specific risk factors referred to in the MLR 2017.
2. Enhanced due diligence (EDD) is required in respect of PEPs, correspondents, larger or complex transactions, as well as transactions with unusual patterns. More generally, EDD has to be applied in any case where there exists a higher risk of money laundering. Again, MLR 2017 refers to a list of high risk factors that should be considered.
3. The definition of politically exposed persons (PEPs) for AML requirements is extended to include domestic PEPs, “members of the governing bodies of political parties” as well as “directors, deputy directors and members of the board or equivalent function of an international organisation”.
4. This substantially broadens EDD’s scope. Where a person ceases to be a PEP, entities should continue to monitor the risk they pose for at least another 12-months.
5. The threshold for customer due diligence (CDD) in respect of cash transactions has been reduced to €10,000.
6. Under MLR 2017, estate agents are required to conduct CDD on the purchaser and the seller.
7. A new blacklist of high-risk jurisdictions is to be published from time to time. Any transactions or business relationships in such jurisdictions will require EDD.

Application of AML/CTF requirements will clearly demand more than a tick box approach; focused risk assessments and comprehensive due diligence, supported by documented evidence, in respect of individual business relationships, customers and third parties will be essential to avoid potential personal liability.