Banks have been urged to be particularly vigilant of the activities of politicians, their families and known close associates when it comes to detecting potential money laundering.
Central Bank director general for financial conduct Derville Rowland was speaking at the unveiling of new guidelines to assist firms to meet their anti-money laundering and countering the financing of terrorism obligations.
Ms Rowland said firms must adopt a risk-based approach to fulfilling their obligations and ensure that their controls, policies and procedures are fit for purpose, up-to-date, tested and kept under constant review and scrutiny.
She said banks were obliged to carry out “enhanced customer due diligence” in relation to “politically exposed persons” – both domestic and overseas – as well as their immediate families and known close associates.
“That’s because people who hold – or have held – a high political profile can pose a higher money laundering risk to firms as their position may make them vulnerable to corruption such as accepting bribes or contributions to election campaigns and political parties in return for advantages,” she said.
“The categories of people who can be regarded as politically exposed now also include members of the governing bodies of political parties.”
Corruption risk
Ms Rowland said firms should be asking a series of questions. “Firms should be asking questions like: Who are my customers? Who are the beneficial owners of the accounts they are opening? Do they have links to sectors associated with higher corruption risk?
“Have there been adverse media reports about them? Are they based in countries where economic or financial restrictions apply? Or ones with weak regimes in place to prevent money laundering and the financing of terrorism?”
She said the scale of such activity was hard to assess, but that some estimates suggest between two and five per cent of global GDP is laundered each year. That amounts to anything between €715 billion and €1.87 trillion, according to Europol.
“Effective regulation in this area strengthens the integrity of the financial sector and contributes to the safety and security of citizens by preventing drug dealers, and those engaged in human trafficking, terrorist attacks and organised crime, from using the financial system to support these activities,” Ms Rowland said.
“Financial institutions must know their customers, understand their customer profiles, monitor the way accounts are used and make reports of suspicions to An Garda Síochána, and the Revenue Commissioners where appropriate.
“It is important to note that An Garda Síochána investigate money-laundering cases, not the Central Bank.”
