Peter Fitzpatrick (Louth, Fine Gael) | Oireachtas source

The Bill before us seeks to amend the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010. This is in light of the deficiency identified since its operation over the past two years, and also to enhance Ireland's compliance with the Financial Action Task Force standards following its evaluation of the 2010 Act. The 2010 Act consolidated the existing legislation in line with international standards. The Act also transposed the third money laundering directive into Irish law. The Financial Action Task Force is an inter-governmental body whose purpose is to develop and promote policies to combat money laundering and terrorist financing.

The overall aim of the Bill is to strengthen and clarify measures to deter, detect and disrupt money laundering and terrorist financing. The Bill seeks to make amendments and, in so doing, make Ireland's anti-money laundering legislation more robust. This is in light of the experience of the 2010 Act's operations over the past two years. The main proposed amendment relates to customers' due diligence measures. This involves taking steps to identify customers and check whether an alleged identity is correct. Other proposed amendments include specific requirements for policies and procedures, and keeping customers' due diligence data and information up to date. The Bill also proposes to strengthen monitoring measures of designated persons. In addition, it includes a requirement for policies and procedures on measures to be taken to prevent the risk of money laundering or terrorist financing which may arise from technological developments.

Money laundering is a process whereby the proceeds of crime are disguised in order to conceal their illicit origins. Financing terrorism is the provision of support to those who engage in, encourage or plan terrorism. When criminal activity generates substantial profits, the individual or group involved must find a way to control the funds without attracting attention to the underlying activity or persons involved. Criminals do this by disguising sources, changing forms, or moving funds to a place where they are less likely to attract attention.

Due to the underground nature of money laundering, it is not possible to give precise figures regarding the extent of the activity. According to a 2011 report by the United Nations Office on Drugs and Crime, in 2009 criminals and drug traffickers in particular may have laundered approximately $1.6 trillion or 2.7% of global GDP. This figure is consistent with the 2% to 5% range previously established by the International Monetary Fund to estimate the scale of money laundering. The process of money laundering involves three stages, the first of which is the initial or placement stage, whereby the illegal proceeds of crime are introduced into the financial system. This may be done by breaking up large amounts of cash into small less conspicuous sums that are then deposited into a bank account or by purchasing a series of monetary instruments such as cheques or money orders that are then collected and deposited into accounts at other locations. The second or layering stage involves a series of conversions or movements of funds to distance them from their original sources. This may be done by the purchase and sales of investment instruments, by wiring the funds through a series of accounts at different banks across the globe or by disguising the transfer as payments for goods or services, which may give them a legitimate appearance. The third or integration stage involves the re-entering the funds into the legitimate economy. This may be done by investment of the fund into, for example, real estate, luxury assets or business ventures. The current definition of "vocational transaction" provides that once the transaction or series of transactions exceed €15,000, obligations such as customer due diligence apply. Section 2 of the Bill amends this and lowers the monetary threshold to €2,000 in the case of a private member gaming club and €1,000 for wire transfers of funds. In all other cases, the definition applies when an amount of €15,000 is reached.

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