The fight against financial crime, which includes money laundering (ML) and terrorist financing (TF), is essential to the integrity of EU financial markets. Such illicit activity continues to increase in sophistication and volume, which is why Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) continue to be a key focus of the EU Commission.
Historically, the EU Commission has issued “Directives” setting out its AML and CFT expectations for all EU Member States. For example, when the 4th AML Directive set out the EU Commission’s expectations for a more risk focused and sophisticated framework in addressing ML/TF, a considerable amount of work was required from each EU Member State to:
- Interpret the Directive;
- Transpose the Directive into domestic legislation; and
- Update relevant jurisdictional and sector AML/CFT Guidance
In doing so, all Irish regulated financial institutions (FI) (which includes Irish funds, Irish Schedule 2 SPVs, and their service providers) could in turn update and manage their AML/CFT framework in line with the Directive’s goals, and their Irish legal obligations. However, the use of multiple AML/CFT Directives has unintentionally resulted in varying interpretations and implementation across EU member states causing some frustration in the industry.
To avoid further frustration, the EU Commission has proposed a significant reform where the EU will move away from the directive-led approach introducing a regulation-led approach which includes a new “Single Rulebook”, which will be implemented and maintained by the EU Commission’s new regulatory and supervisory watchdog- the Anti-Money Laundering Authority (AMLA). With the “Single Rulebook” in place the EU Commission expects will have established a clear set of AML/CFT rules which will be harmonious and consistently applied across the EU avoiding the diverging approaches between EU Member States under the directive-led approach. The Single Rulebook entered into force on the 9th of July 2024 but has a three-year implementation period which means it officially takes effective on the 10th of July 2027.
Under Regulation (EU) 2024/1620: Anti-Money Laundering Authority (AMLA), the AMLA, which will sit in Frankfurt, will ‘go live’ from 1st July 2025. The AMLA will be the centre of an integrated system composed of the authority itself and the national authorities with an AML/CFT supervisory mandate. It would also support EU financial intelligence units (FIUs) and establish a cooperation mechanism among them.
With a “Single Rulebook” and the AMLA in place, the EU should be in a better position to effectively and efficiently fight financial crime.
Irish Impact
In similar fashion to the EU Commission, AML/CFT remains a key focus of the Central Bank, and its underlying FIs. As such, Ireland’s financial sector will collectively need to remain vigilant updating its respective Irish AML/CFT regime and its internal AML/CFT framework to ensure compliance with the EU Commission’s new expectations. To do so, FIs, specifically senior management with AML/CFT responsibility (e.g. Directors and MLROs), will need to be proactive making sure their assurance testing regularly assesses compliance and the effectiveness of their AML/CFT framework when compared to the Single Rulebook and the Criminal Justice Act as both evolve under this new regulation-led approach.
6th AML Directive
Whilst the EU Commission is looking to avoid the reliance on a directive-led approach, the 6th AML Directive will still need to be transposed into Irish Law by the 10th of July 2027, noting Article 74 must be transposed by the 10th of July 2025 allowing access to the central registers of beneficial ownership of corporates and trusts to specified recipients (including obliged entities). With this in mind, it is imperative that an FI stay abreast of the Single Rulebook and the 6th AML Directive’s progression.
JTC Corporate Services (Ireland) Limited (JTC)
At JTC, we understand how the required regulatory requirements can often become a regulatory burden for clients. Led by Clay Dupuy, the JTC solution involves the provision of a MLRO service offering to assist with these requirements.
JTC Corporate Services (Ireland) Limited’s MLRO team is based in Ireland and provides an outsourced MLRO oversight control function that will assist an FI in maintaining an effective AML/CFT framework ensuring compliance with applicable AML/CFT Legislation, Regulations, Guidance and the day-to-day operation of the FI’s AML/CFT policies and procedures and engagement with the CBI.
Your JTC Irish MLRO Service Contact:
Clay Dupuy
Director of AML Officer Services
JTC Corporate Services (Ireland) Limited
(t) +353 53 910 8160
(e) [email protected]
