James Browne
Question:338. Deputy James Browne asked the Minister for Finance if a financial institution can request a letter stating that an individual is not a politically exposed person. [48730/23]
View answerTuesday, 7 November 2023
Questions (338)
Written answers
The policy responsibility for the matter of politically exposed persons, or PEPs, rests primarily with the Minister for Justice, but clearly, rules in relation to customer due diligence in respect of any individual, often arise to be applied by financial institutions.
The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 is the relevant piece of Irish legislation which outlines the conditions for a designated person or body to take measures in assessing whether or not a customer, or a beneficial owner connected with the customer, is a politically exposed person or an immediate family member or close associate of a politically exposed person.
In January 2023, the Minister for Justice, with the consent of the Minister for Finance, approved the issuance of guidelines, under Section 37(12) of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, in respect of functions in the State that may be considered to be prominent public functions. These guidelines were issued to competent authorities and published on the Department’s website.
The Central Bank of Ireland (the “Central Bank”) is the competent authority in Ireland for monitoring and supervising financial and credit institutions’ (“firms”) compliance with their anti-money laundering and countering the financing of terrorism (“AML/CFT”) obligations under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (as amended) (the “CJA 2010”). Sections 37 to 39 of the CJA 2010 provide a definition of persons who are classified as Politically Exposed Persons (“PEPs”) and prescribes circumstances in which firms are required to apply enhanced customer due diligence (“EDD”) measures. Section 37(4)(c) of the CJA 2010 requires firms to apply enhanced monitoring of the business relationship with PEPs. Section 37(4A) of the CJA 2010 requires firms to continue to apply the measures set out in Section 37(4), to a PEP, for as long as is reasonably required until the person is no longer deemed to pose a risk, arising from his or her previous PEP status.
The Central Bank’s Anti-Money Laundering and Countering the Financing of Terrorism Guidelines for the Financial Sector (the “AML Guidelines”), available on the Central Bank’s website, seek to assist firms in understanding their AML/CFT obligations under Part 4 of the CJA 2010. Section 5.5 covers enhanced due diligence (EDD) and provides that firms should apply risk proportionate levels of EDD measures in those situations where it is commensurate to the money laundering/terrorist financing (“ML/TF”) risk they have identified. In circumstances in which a firm has determined that customers or business scenarios present a higher ML/TF risk, EDD measures should be applied. Firms should also ensure that they clearly document their rationale for applying EDD measures. Section 5.6 covers EDD in relation to PEPs and Section 5.6.4 covers Enhanced on-going Monitoring of PEPs. The AML Guidelines emphasise that “PEP status itself is intended to apply higher vigilance to certain individuals and put those individuals that are customers or beneficial owners into a higher risk category. It is not intended to suggest that such individuals are involved in suspicious activity.”
The Central Bank does not:
expressly provide the actions/steps that firms should take in the identification of PEPs;
prescribe the length of time that such measures should be applied; or
provide legal or interpretive advice to firms in respect of their obligations under legislation.