Brokers Ireland AntiMoney Laundering Presentation Paul Fisher Byrne

Brokers Ireland Anti-Money Laundering Presentation Paul Fisher, Byrne. Wallace

About Byrne. Wallace • One of Ireland’s largest law firms with a team of almost 300 legal and tax professionals including 39 highly experienced partners. • ü ü ü Insurance Practice Advisory - compliance, regulatory Dispute Resolution - Litigation, Mediation, Arbitration Cyber Risk Corporate Crime, D&O Liability Professional Indemnity EL, PL, Motor, Property • An industry leader with international best practices standards: – First Irish law firm with ISO 27001 information security standard. – First large Irish law firm with Lexcel - the quality mark of excellence. • Paul Fisher Litigation and Dispute Resolution pfisher@byrnewallace. com +353 1 6915000 Award winning service delivery: • Ireland Client Service Award 2017, Chambers Europe • Excellence in Client Service Award 2017, Irish Law Awards • Excellence in Business Awards, Top Legal Adviser and Top Construction Team 2017, Public Sector Magazine • Law Firm of the Year 2016, Irish Law Awards • Client Service Award, ILO Highly Confidential 2

Agenda • Legislation • Obligations under 4 AML • Additional Responsibilities • Central Bank AML Report 2016 - Life Sector • Case Studies September 12, 2021 3

Legislation – Summary • Third Anti-Money Laundering Directive (“ 3 AML”) • Criminal Justice (Money Laundering & Terrorist Financing) Act 2010 (the “ 2010 Act”) • The Criminal Justice Act 2013 (the “ 2013 Act”) • Fourth Anti-Money Laundering Directive (“ 4 AML”) • European Union (Anti-Money Laundering: Beneficial Ownership of Corporate Entities) Regulations 2016 (the “ 2016 Regulations”) • Fifth Anti-Money Laundering Directive (“ 5 AML”) September 12, 2021 4

Case Study: Ulster Bank Ireland DAC (2016) • What happened? • Significant failings over a six year period in Ulster Bank’s AML/CFT framework and accompanying procedures. • Risk assessment and customer due diligence failings identified. • Result: - CBI fined Ulster Bank € 3, 325, 000 for breaches of the 2010 Act. September 12, 2021 5

Case Study: Western Union Payment Services Ireland Ltd (2015) • What happened? • Western Union had failed to demonstrate that it had sufficiently robust polices and procedures regarding AML/CFT. • Deficiencies identified in AML/CFT outsourcing, CDD retention, training of staff and reporting of suspicious transactions. • Result: - Western Union fined € 1, 175, 000 and reprimanded by the CBI. September 12, 2021 6

Central Bank AML Report 2016: Issues identified re 3 AML Obligations • AML/CFT and FS polices • Suspicious transaction reporting process • On-going monitoring • Considering pre-2010 AML September 12, 2021 7

Central Bank AML Report 2016: Issues identified Cont’d • Third Party Reliance and Outsourcing Arrangements • Definition and Identification of PEPs • Recording and Application of EDD to PEPs September 12, 2021 8

Money Laundering September 12, 2021 9

Obligations under 4 AML - Summary • Must Do: • Implement Compliance Measures • Obtain Purpose & Intended Nature of Business relationship • Report Suspicious Transactions • Must Not Do: • “Tip Offs” re Suspicious Transaction Reports September 12, 2021 10

Risk Based Approach • Increased Emphasis on a Risk Based Approach – Risk assessment of your products and services – Risk assessment of your customers • • Appropriate Level of CDD No Automatic Exemptions Beneficial Ownership >25% Outsourcing Management September 12, 2021 11

Additional Responsibilities: (1) Record Keeping • Internal Staff Training • Internal Procedures – Compliance • Suspicious Activity Reports September 12, 2021 12

Additional Responsibilities: (2) Due Diligence (“Risk Assessment”) • Simplified Due Diligence • Customer Due Diligence • Enhanced Due Diligence • Politically Exposed Persons (“PEPs”) September 12, 2021 13

Additional Responsibilities: (A) Simplified Due Diligence • Automatic Exemptions Abolished • Risk Based Approach Applied • Specified Products Exemption Abolished September 12, 2021 14

Additional Responsibilities: (B) Customer Due Diligence • CDD - Default Standard – Risk Based Approach • Life Insurance Exception • Low Risk Factors/High Risk Factors - Escalation • AML Document Deviations September 12, 2021 15

Additional Responsibilities: (C) Enhanced Due Diligence • Risk Based Approach • Senior Management/Designated Person Approval • High Risk Countries September 12, 2021 16

Additional Responsibilities: (D) Politically Exposed Persons (“PEPs”) Definition: ‘Politically Exposed Person’ means a natural person who is or who has been entrusted with prominent public functions. • • Expanded PEP Definition under 4 AML Procedure for identifying PEPs Beneficial Owner = PEP? Established Policyholders - Senior Management Approval September 12, 2021 17

New Policyholders Existing Policyholders • CBI Expectations • CDD Deficiencies • Timing of CDD • Remediation Plan • Suspicious Transaction Reporting Obligations • Explore all Options • Return of Funds Procedures • Relationship Discontinuation September 12, 2021 18

Ongoing Monitoring of Policyholders • Renewing CDD • Existing Policyholder Becomes a PEP • Be Proactive September 12, 2021 19

5 AML – Amendments to current 4 AML • AML 5 - In Force in 2019 • Specific Enhanced Due Diligence Measures • Beneficial Ownership Register – Public Access September 12, 2021 20

Key Takeaways Applicable Now • Beneficial Ownership Register Applicable when 4 AML is Implemented • Risk Based Approach • Record Compliance Measures • Record Internal Staff Training • Automatic Exemptions Abolished • Expanded PEP Definition under 4 AML September 12, 2021 21

Q&A September 12, 2021 22