AIB is reviewing its procedures for implementing the anti money laundering provisions of the Criminal Justice Act following stinging criticism of its Cahir branch in the Cork Circuit Criminal Court.
"If there is anything we can learn from it, we will," a bank spokeswoman said. She admitted that in the light of subsequent events "a mistake" was made in not reporting the Jehle account in its Cahir branch to the Garda Bureau of Fraud Investigation.
But she insisted that an earlier review of the procedures in Cahir showed that "the staff acted in good faith". That review was undertaken as the Garda investigated the affairs of a customer, Ms Maria Bernadette Jehle, who was sentenced to five years imprisonment this week after Ireland's first ever money laundering trial.
In a scathing comment in the Cork court on Monday, Mr Justice Moran accused the AIB branch of being more concerned with the debt of £169,000 on the Jehle account than with the anti-money laundering provisions of the Criminal Justice Act. The bank must have been suspicious, he said, when in August, 1996 500,000 deutschmarks (about £210,000) arrived in her account from Switzerland. "I hope that in future the bank will have more regard for the legislation," Judge Moran said. He praised the TSB branch in Middleton which reported the arrival of 800,000 French francs (about £90,300) in the Jehle account in May, 1997. "Only for the action of the TSB in Middleton, this case may never have come to light," he stated.
This criticism of AIB followed the questioning in April for 12 hours of an official from a County Cork branch of the bank about allegations that his branch was used to launder money from a tax evasion building fraud operated by Irish sub-contractors in Australia. "We are very disappointed by the judge's comments", AIB said yesterday. "From our review and understanding of the circumstances of the account we believe the staff at the Cahir branch acted in good faith," the bank spokeswoman said.
"We comply fully with the provisions of the Criminal Justice Act. Customer confidentiality does not come into it. The primary instruction to staff is that if they know or suspect a transaction is suspicious they must report it. The slogan is `If in doubt report'," she said.
"It is not a choice between customer confidentiality and reporting. The choice is - is the transaction suspicious or not. There is nothing in it for us in not reporting," she insisted. The activities and circumstances of this account did not give any indication that it was a suspicious account, she said. But she declined to discuss details of those transactions.
Mr Justice Moran's comments followed recent criticism of some financial institutions by the head of the Garda Bureau of Fraud investigation, Mr Frank Glackin. He accused some banks and building societies of failing to report suspicious transactions to the Garda and of selective interpretation of the Criminal Justice Act 1994. The Act which came into force in May, 1995 requires financial institutions to report suspicious transactions. But some bankers maintained that in some cases deciding whether a transaction is "suspicious" or not is a matter of judgement.
"Sometimes it is very difficult to know what you should or should not report. It is easy to have 20:20 vision in hindsight. It is not always clear-cut," one senior banker commented. Guidance notes to the Criminal Justice Act are used by financial institutions to interpret and apply the legislative requirements. Bank sources refused to disclose these guidelines. They were confidential, they said, maintaining that disclosure would make it easier for potential money launderers to get around the rules and find ways to carry out illegal transactions.
In addition to the guidelines, staff at AIB staff have "an easy reference guide" as well as regular training and briefings, the spokeswoman said.
"If the guidelines are followed and the transactions fulfil the criteria then there is no reason to be suspicious. At the end of the day it comes down to a judgement call," she added. But the Garda Fraud Squad is understood to feel that some financial institutions interpret "reasonable" suspicion to mean that unless they have are very strong reasons to be suspicious, they must maintain client confidentiality.
The Irish Bankers Federation is adamant that the money laundering provisions are "working very well overall". In 1997 it said the banks reported 500 cases of suspicious transactions, up from 200 cases in 1995. This Garda said a total of 504 cases were reported by all the financial institutions in 1997.
