Politicians' accounts to be checked by banks
BANKS will have to check out the accounts of politicians and their families under new rules aimed at combating money laundering and terrorist financing.
The move to scrutinise the bank accounts of politicians is part of a new EU directive, being negotiated at the moment, to combat money laundering and terrorist financing, bankers were told.
Central Bank director of enforcement Derville Rowland warned that this would mean banks would have to considerably step up their compliance with anti-money laundering and terrorist financing rules.
Her comments come months after Ulster Bank, AIB and Bank of Ireland were separately fined for breaches of anti-money laundering legislation. The three banks had to pay the regulator a total of €8.8m.
Speaking at an event hosted by the Banking Payments Federation of Ireland yesterday, Ms Rowland said the fifth EU directive on anti-money laundering and terrorist financing was being negotiated at the moment by the 28 European Union members.
She explained: "There is an extension of the meaning of what constitutes a politically exposed person to include domestic politically exposed persons.
"This means that domestic politicians and their families will be subject to enhanced customer due diligence measures."
A politically exposed person is an individual who is or has been entrusted with a prominent public function.
Many hold positions that can be abused to launder illicit funds or commit other offences such as corruption or bribery.
Ms Rowland said there are also plans at EU level to introduce a register of beneficial owners that will require information on beneficial owners of companies and trusts to be stored in a central register.
"A statutory instrument has already been introduced setting out the requirement to collect this information and further legislation will be introduced to set up a central register."
Banks were warned that they "need to work harder" to ensure compliance with the anti-money laundering regime.
Among the serious issues identified were incomplete risk assessments, she said.
There were also failures to report suspicious transactions without delay and shortcomings in customer due diligence processes, including the identification of politically exposed persons, she added.
Compliance with anti-money laundering requirements is and will remain a key Central Bank priority, she said.