Donegal based credit union Swilly Mulroy has been fined by the Central Bank after breaching money laundering laws.
The credit union was issued with a fine of €36,273 for breaching requirements of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (the 2010 Act) and the Credit Union Act 1997 (the 1997 Act).
The 2010 Act requires firms to put in place safeguards against the risk of money laundering, while the 1997 Act requires credit unions to develop and implement risk management systems to monitor and manage risks.
The Central Bank’s investigation found that Swilly Mulroy operated a practice of soliciting and accepting cash from depositors who did not hold accounts with the credit union.
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“This money would then be electronically transferred to a branch of a local bank, without first being deposited in an account in the customer’s name at Swilly Mulroy,” the Central Bank said.
“As a result, Swilly Mulroy failed to conduct the necessary anti-money laundering checks on the depositors and the transactions.
“This specific cash intensive practice had been flagged to the credit union sector as presenting a heightened money laundering risk.”
The investigation found that Swilly Mulroy operated in this way between January 2nd, 2014, and June 30th, 2021, during which time it processed €8,751,694 in deposits from 2,329 cash lodgements.
The regulator said the board of Swilly Mulroy was “aware of the risks associated with the practice from 2015 but failed to act on its risk management obligations under the 1997 Act”.
A new management team ceased the practice in 2021 and subsequently brought it to the attention of the board.
The issue was not brought to the Central Bank’s attention but was discovered in 2022 during an inspection by the Central Bank’s anti-money laundering division. The Central Bank commenced the enforcement investigation in 2023.
The investigation yielded multiple examples of cash lodgements, which in the usual course should have triggered additional and careful scrutiny but instead were processed without any anti-money laundering checks.
“Swilly Mulroy has therefore breached multiple requirements of the 2010 Act,” the Central Bank said.“
Swilly Mulroy has admitted the breaches and has agreed to the facts as set out by the Central Bank.
As part of the settlement agreement reached between the Central Bank and Swilly Mulroy, it was determined that sanctions comprising a reprimand and monetary penalty in the amount of €51,819 was “both warranted and proportionate to the size of the firm”.
However, the application of a 30 per cent settlement scheme brought the amount down to €36,273.
The sanctions have been accepted by Swilly Mulroy, although they are subject to confirmation by the High Court.
The credit union was contacted for comment.
