Central Bank won't accept "tick box" approach to money laundering safeguards

Terrorist financing also on the agenda as bank outlines risk-based AML supervisory framework...

Central Bank won't accept "tick box" approach to money laundering safeguards


The Central Bank's director of enforcement has put renewed pressure on Irish banks and firms to effectively manage money laundering and terrorist financing risks.

Derville Rowland was outlining the Central Bank's risk-based AML supervisory framework at a Banking Payments Federation of Ireland (BPFI) event this morning.

Rowland called on financial institutions to invest in and maintain strong compliance frameworks to help protect the integrity of the financial system, with a key expectation being that firms conduct risk assessments specific to their particular business.

She stressed that the Central Bank would not accept a “tick box” approach that does not assess and address underlying money laundering and terrorist financing risks.

Her comments come after it was revealed last week that Bank of Ireland had been fined €3.15 million over 12 breaches of laws introduced in July 2010.

Bank of Ireland admitted to the breaches and reached a settlement with the Central Bank.

In a statement at the time, Rowland said:

"Reporting suspicious transactions to the authorities without delay is a fundamental component of an anti-money laundering and counter terrorist financing framework.

"It is particularly disappointing that another large retail bank failed to submit six time-critical suspicious transaction reports to An Garda Síochána and the Revenue Commissioners promptly.

"Furthermore, it is concerning that Bank of Ireland did not identify deficiencies in its processes and procedures relating to enhanced customer due diligence for its non-EU correspondent banking relationships."

The Criminal Justice (Money Laundering & Terrorist Financing) Act requires financial institutions to fulfill a number of obligations - such as reporting suspicious transactions, and maintaining risk management policies and procedures.

Derville Rowland, director of enforcement at the Central Bank. centralbank.ie

Rowland said today:

"Investment in AML controls and focus on a risk-based approach to compliance must continue to be a priority for firms.

"The banking sector is particularly vulnerable to money laundering and terrorist financing given that it is a main gateway for consumers to the financial system that provides a diverse range of services and products.

"Weaknesses in AML controls expose the financial system to abuse that not only damages the financial system but is also detrimental for society, as it may facilitate crime and terrorism.”

Rowland added that while the banking sector has responded positively to the Central Bank’s concerns and is taking steps to remediate shortcomings, the Central Bank would continue to take necessary action in cases of non-compliance.

She said:

"From a regulatory perspective, our objective is to secure compliance with AML legislation and we will continue to take all necessary steps, including enforcement action, to achieve that objective."