AML/CTF legislation country profile
ECBA Questionnaire filled in for Ireland
a) Legislation
1. Definition of money laundering in the local legal system.
The offence of money laundering is contained in the Criminal Justice Act 1994, as amended,
("the 1994 Act")1.
The definition of the offence of money laundering is contained in section 31 (1) of the 1994 Act as follows:
"A person is guilty of money laundering if, knowing or believing that property is or represents the proceeds of criminal conduct or being reckless as to whether it is or represents such proceeds, the person, without lawful authority or excuse (the proof of which shall lie on him or her) -
(a) converts, transfers or handles the property, or removes it from the State, with the intention of -
(i) concealing or disguising its true nature, source, location, disposition, movement or ownership or any rights with respect to it, or
(ii) assisting another person to avoid prosecution for the criminal conduct concerned, or
(iii) avoiding the making of a confiscation order or a confiscation co-operation order (within the meaning of section 46 of this Act) or frustrating its enforcement against that person or another person,
(b) conceals or disguises its true nature, source, location, disposition, movement or ownership or any rights with respect to it, or
(c) acquires, possesses or uses the property."
A person is guilty of money laundering if he converts, transfers, handles or removes property that he knows, believes or is reckless as to whether it represents the proceeds of criminal conduct.
The term “criminal conduct” means conduct which constitutes an indictable offence in Ireland. It also encompasses conduct occurring outside the State which would constitute an offence within the State and in the Country where it occurs. This includes drug trafficking offences, organised crime, theft and fraud, forgery, blackmail, extortion and tax evasion. Offences covered by the provisions are not confined to Ireland.
1. The various amending legislation is as follows; the Disclosure of Certain Information for Taxation and Other Purposes Act 1996, the Criminal Justice (Miscellaneous Provisions) Act 1997, the Criminal Justice (Theft and Fraud Offences) Act 2001, the Central Bank and Financial Services Act 2003 and the Criminal Justice (Terrorist Offences) Act 2005. Caution should always be exercised in researching Irish Statute Law as typically amendments are made other than in co-defying legislation and can be especially difficult to track.
As of 15th September 1998
2. Sanctions for money laundering offence.
Section 31(2) of the 1994 Act sets out the penalties:
"(a) on summary conviction, to a fine not exceeding £1,500 or to imprisonment for a term not exceeding 12 months or to both, or
(b) on conviction on indictment, to a fine or to imprisonment for a term not exceeding 14 years or to both."
3. (Legal) professions especially affected by local AML/CTF legislation.
The legal profession is especially exposed in two fashions.
Firstly, the substantive offence, contained in section 31 of the 1994 Act, may be unwittingly committed by legal professionals. Practitioners need to be particularly careful where they act to transfer property, even between spouses, if there are suggestions that the assets have been purchased with untaxed income or if the solicitor or barrister has other reasons for believing that the assets have been so acquired. A solicitor or barrister who advises on or effects such a transaction could commit the offence of money-laundering. The legislation does not require actual knowledge on the part of the solicitor or barrister that the assets are 'tainted'. The test is recklessness. The legislation does not contain any de minimis provision and an asset is considered "tainted' even if only a small proportion of the funding arose from untaxed income and regardless of the length of time that has elapsed since the asset was acquired.
In addition, solicitors (but not barristers) are designated bodies for the purposes of money laundering legislation. Accordingly they have obligations to retain records or report suspicious transaction where a solicitor participates in certain types of legal work identified in Article 2a(5) of the 2001 EU Directive on Money Laundering, as implemented by the Criminal Justice Act 1994 (Section 32) (Prescribed Activities) Regulations 2004, S I No. 3 of 2004, namely:
(a) assisting in the planning or execution of transactions where a client concerning the-
(i) Buying and selling of real property or business entities;
(ii) Managing of client money, securities or other assets;
(iii) Opening or management of bank, savings or securities accounts;
(iv) Organisation of contributions necessary for the creation operation or management of companies;
(v) Creation, operation or management of trusts, companies, or similar structures; or
(b) acting on behalf of and for a client in any financial or real estate transaction.
The Criminal Justice Act 1994 (Section 32) Regulations 2004, S I No. 242 of 2003, as amended by the Criminal Justice Act 1994 (Section 32) (Amendment) Regulations 2004, S I No. 416 of 2003, provides solicitors with a number of exemptions from the obligation to make a suspicious transaction report under section 57 of the 1994 Act with regard to information they received from or obtain in relation to their client:
(a) In the course of ascertaining the legal position for that client,
(b) When performing their task of defending or representing that client in or concerning judicial proceedings, or
(c) When advising that client in relation to instituting, avoiding or defending judicial proceedings.
The obligation to make such a report under section 57 is coupled with the criminal offence contained in section 58 of the 1994 Act of tipping off a client that a report has been made. However, the Law Society of Ireland, the representative body for solicitors, obtained a letter from the then Minister for Justice to the effect that ceasing to act for a client would not amount to tipping off in this context.
When the Third Money Laundering Directive is incorporated into Irish domestic law (it was due to be incorporated by 15th December 2007) lawyers will have enhanced due diligence obligations.
4. Specific regulations imposed upon attorneys at law.
While barristers at law, as distinct from solicitors, are not designated bodies under section 32, they are, nonetheless, encompassed by the provisions of the substantive offence contained in section 31. Legal professional privilege does not constitute a defence to the substantive crime contained in section 31.
b) Bar Association
1. Directives – formulated by the Bar Association – guiding the interpretation of the legislation and the force of these directives (binding, guideline,…).
The Law Society produced comprehensive guidance notes for solicitors on anti-money laundering legislation in 2005. They were provided to each member. An anti-money laundering web area is accessible to members of the Society. In addition, a bi-monthly FAQ article is distributed to over 7,000 members via the Society's eZine (electronic newsletter). The purpose of the Guidance Notes is to provide recommendations as to good practice.
They do not constitute a legal interpretation of the 1994 Act. Because the obligation to make a suspicious transaction report is based on a subjective test in each particular set of circumstances (i.e. is the transaction suspicious?), the assessment as to whether the reporting obligation arises must be made by each solicitor, in conjunction with the firm’s Money-laundering Reporting Officer, if one is appointed. However, by way of assistance to practitioners, the Society has included a non-exhaustive list of indicators of potentially suspicious circumstances at Appendix 1 of the Guidance Notes.
Under section 57(6) of the Act, in determining whether a solicitor has complied with his obligations, a court may “take account of any supervisory or regulatory guidance …issued by a body that regulates, or is representative of, any trade, profession, business or employment carried on by that person”. Accordingly, compliance with these Guidance Notes is strongly recommended for all solicitors and their employees.
2. Causes for discussion at the implementation stage of the European Directive in local legislation especially in relation to a possible conflict between this legislation and your professional code of ethics?
The Law Society of Ireland made representations to the Government of Ireland, and through the CCBE to the European Commission, to the effect that imposing reporting obligations on solicitors was a violation of the fundamental lawyer/client privilege, which it was contended was fundamental principal of Irish Constitutional law. There is little doubt that this is the position. The resistance mounted succeeded in delaying designation for a number of years but designation occurred in 2005. The designation is defended by drawing a distinction between transactional lawyers who have the obligation and litigation lawyers who do not.
Clearly in many cases there is an overlap between where litigation starts and ends with a transaction or where a transaction fails and turns into litigation. The situation is unsatisfactory. The only comfort that was obtained was a letter from the then Minister for Justice of 3rd September 2003 in relation to the section 58 tipping off offence.
In short the implementation of the Directive is an obligation of EU membership and was viewed by the Government as such.
Concern has been expressed however that the domestic legislation goes beyond what was strictly required by the Directive by adding on additional obligations and covering extra areas, in the practice known as “gold plating”.
3. Any action taken by the local Bar Association against the way in which the European directive was implemented in local legislation?
At the time of designation of solicitors, consideration was given to challenging the legislation. However, the reality is that as the legislation was enacted in furtherance of the obligations of Ireland’s membership of the European Union, it is immune from constitutional challenge in our domestic law by virtue of Article 29 of the Irish Constitution which states at paragraph 10:
"No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State which are necessitated by the obligations of membership of the European Union or of the Communities, or prevents laws enacted, acts done or measures adopted by the European Union or by the Communities or by institutions thereof, or by bodies competent under the Treaties establishing the Communities, from having the force of law in the State.It is only on grounds of unconstitutionality that legislation can be struck down in Ireland."
There is a theoretical possibility that a declaration of incompatibility with the European Convention on Human Rights could be given by an Irish Court in respect of the domestic implementation of the Directives but that is considered remote.
4. Other bodies that have undertaken any form of action to safeguard the rights of their members in this respect.
Many groups made representations to Government upon designation and they continue to do so with regard to preparation of the domestic legislation to incorporate the Third Money Laundering Directive. No group, however, has brought successful judicial proceedings.
c) Legal practice
1. Particularities that foreign attorneys at law in contact with the local legal system should be aware of / recommendations to be taken into consideration?
1. Primarily, that Irish money laundering offences are extra-territorial and that Ireland is part of the European Arrest Warrant network and a person sought for trial in Ireland in respect of money laundering offences, could be arrested elsewhere within the European Union.
2. Foreign lawyers should expect Irish lawyers to require very detailed evidence of identification in respect of clients they are being asked to represent and information in respect of the provenance of funds, which are to be used to discharge fees.
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Last Updated (Friday 30 April 2010)
