Committee on Finance, Public Expenditure and Reform and Taoiseach publishes Report on Politically Exposed Persons

Launching the report, Deputy John McGuinness, Cathaoirleach of the Finance Committee, said: “Anti-Money Laundering and Counter Terrorism measures remain an essential tool in combatting fraud and the illegal use of the financial system. The Committee on Finance supports these efforts and believes that such measures are essential for the integrity of a transparent and effective financial system.

“Politically Exposed Persons, also known as a PEPs, are individuals with prominent public functions and are subject to additional enhanced due diligence. The Committee, as politicians, accept the necessity of such measures. However, it is essential that any enhanced due diligence measures undertaken by financial services against PEPs, their close associates or their family members are balanced, appropriate and fair.

“The Joint Committee notes the growing concerns that the application of such measures is impacting individuals significantly and unfairly. We heard evidence that anti-money laundering measures will impact an increasing number of individuals, and will eventually include all who use the banking services.

“Therefore, it is important that a balance is struck in ensuring that PEPs, close associates or family members, with little or no involvement in politics or other public functions are not treated in a manner so differently as to prevent routine day-to-day banking services. Furthermore, such measures should not become a barrier to persons that wish to partake in politics or in other careers that are deemed as undertaking a ‘prominent public function’.”

The report published today examines current anti-money laundering measures and specifically, their impact on politically exposed persons, their family members and their close associates. The regime is dynamic with additional measures recently transposed into Irish legislation and further changes due to be implemented. The report is intended to allow for a better implementation of these changes that allow for an effective but also fair and appropriate system.

The Joint Committee met with officials from the Department of Finance and the Department of Justice to discuss Politically Exposed Persons on 5 October 2022. In addition, this report considers written evidence for a variety of sources including submissions from Irish Members of the European Parliament (MEPs) and further written responses from the Departments.

Arising from these engagements and evidence heard, the Joint Committee recommends that:

• A review should be undertaken by the Department of Finance and Department of Justice to examine anti-money laundering measures including the impact of enhanced due diligence measures against Politically Exposed Persons, family members and close associates;
• The Minister for Finance should provide an annual report to the Joint Committee detailing the work undertaken by the Financial Action Task Force (FATF);
• All significant directives emanating from the EU must be discussed by a Committee of the Dáil before final acceptance due to the lack of political input at the various stages;
• The Department of Finance and the Department of Justice re-assess the guidelines in defining persons with a ‘prominent public function’. The Joint Committee has concerns that the current definitions remain ambiguous and that some individuals, who undertake such functions, may remain outside of the current parameters or to the salary thresholds within the current guidelines.
• The Department of Justice and the Department of Finance provide an annual report to the Joint Committee on ongoing work undertaken at a national and EU level in relating to applying effective anti-money laundering measures against Trusts, Shell Companies and Section 110s and on any proposals for further guidelines and advice on the matter.

Deputy McGuinness said: “The review to be undertaken by the Departments of Finance and Justice should examine the number of cases in which individuals deemed as PEPs have been refused/ delayed from undertaking routine banking transactions, examine the time taken to undertake enhanced due diligence measures against individuals and to reach a decision on whether to authorise a transaction, and examine the impact on close associate or family members of PEPs who have no ‘prominent public functions’. The outcome of this review should be published to allow for consideration by the Joint Committee and the Oireachtas.

“Far greater scrutiny is needed at EU level to ensure that balance and fairness is achieved in whatever legislation or regulation is proposed. The Oireachtas should strengthen its oversight processes of all EU directives from the date that each one is suggested to the date of completion. In this regard members of the EU Parliament need to be more accountable to Dáil Éireann. This report details some of the key issues and I recommend that the report allows for a greater debate on the matter.”

The Joint Committee also acknowledges the high risk of crypto transfer and the difficulties in applying anti-money laundering and counter terrorism measures in such transfers. The Joint Committee welcomes the Markets in Crypto-Assets (MiCA) Regulations in this regard and will continue to examine the area of Crypto.

Deputy McGuinness thanked the officials from the Department of Finance and the Department of Justice for engaging on this topic and the Oireachtas Library and Research Service for their assistance with briefing material. He also thanked the members of the Joint Committee for their engagement throughout.  

The Report on Politically Exposed Persons is available on the Oireachtas website.

The Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach has 14 Members, nine from the Dáil and five from the Seanad.