With the European Union’s (“EU”) focus on strengthening its rules to prevent money laundering and terrorism financing, Ireland recently joined the ranks of member states who incorporated the EU’s financial crime regulations into domestic law. Ireland’s legislation, The Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill, strengthens existing anti-money laundering legislation and gives effect to the EU’s 5th Anti-Money Laundering Directive.
The EU’s 5th Anti-Money Laundering Directive, among other things, seeks to (i) improve transparency on the real owners of companies; (ii) extend anti-money laundering and counter terrorism financing rules to virtual currencies, tax related services, and traders in works of art; and (iii) enhance the powers of EU Financial Intelligence Units and facilitate their cooperation. Given the public, private, and governmental interest in virtual currency trends, it is the anti-money laundering and counter terrorism rules on Irish digital firms that are causing the biggest stir. Specifically, these rules now apply to Irish entities which provide services that are in charge of holding, storing, and transferring virtual currencies which means these businesses will have to identify their customers and report any suspicious activity to the EU’s Financial Intelligence Units, which compile and process reports about suspicious transactions.
In honoring its commitments as an EU member state and to comply with the most recent directive, the new Irish law requires businesses in Ireland that provide financial services for virtual currencies to comply with anti-money laundering rules. The Central Bank of Ireland commented that Irish digital firms, also known as virtual asset service providers, will need to register with the Central Bank for anti-money laundering and counterterrorist financing purposes. While Irish digital firms are no doubt aware of best practices in the industry, the new rules will require each affected entity to reassess their day-to-day approach and comply with enhanced scrutiny and additional monitoring.