Section 54 of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, as amended (CJA 2010), requires a firm, such as an externally or internally managed Irish corporate fund or a manager of a trust fund, to ensure that all persons involved in the conduct of the firm’s business (including directors, other officers and employees) are instructed on the law relating to anti-money laundering and countering the financing of terrorism (AML/CFT) and are provided with ongoing training on identifying a transaction or other activity that may be related to money laundering or terrorist financing and on how to proceed once such a transaction or activity is identified.
The Core AML/CFT Guidance issued in 2012 (2012 Guidance) on foot of the transposition of the Third EU AML/CFT Directive (3AMLD) recommended that refresher training should take place on at least an annual basis. The Fourth EU Anti-Money Laundering Directive (4AMLD) which replaced and updated 3AMLD was transposed into Irish law in November 2018. Following a consultation process which ended in April of this year, the Central Bank published final Anti-Money Laundering and Countering the Financing of Terrorism Guidelines for the Financial Sector (2019 Guidelines) on 6 September 2019. These Guidelines replace the 2012 Guidance. There is greater emphasis on governance, oversight and training in the 2019 Guidelines than in the 2012 Guidance.
Senior management, including a firm’s board, has responsibility for managing ML/TF risks by demonstrating active engagement in the firm’s approach to effectively mitigating those risks.
Training on AML/CFT law and the Firm’s AML/CFT Policy
Paragraph 8.1 of the 2019 Guidelines provides that firms should provide appropriate and sufficient training which is tailored to the nature, scale and complexity of the firm and which is proportionate to the level of ML/TF risk faced by it. Firms should ensure that all employees, directors and agents:
- are trained in relation to the firm’s AML/CFT policy, which should be drafted in clear and unambiguous language;
- are trained in the firm’s procedures in order that they can recognise and address potential instances of money laundering or terrorist financing;
- are made aware of the firm’s internal reporting procedures in respect of Suspicious Transaction Reporting (STRs) and the identity and responsibilities of the firm’s MLRO; and
- understand their own individual obligations under the CJA 2010 as well as those of the firm.
Firms should ensure that AML/CFT training is provided to all new staff in a timely manner and to all staff at least on an annual basis thereafter. Firms exposed to a higher level of ML/TF risk or who have a greater exposure to constantly evolving ML/TF risks should provide training at more frequent and regular intervals if necessary. Firms should also provide enhanced AML/CFT training tailored to the specific needs of staff who perform key AML/CFT roles within the firm, for example the firm’s MLRO or senior management responsible for AML/CFT oversight.
Training Assessment or equivalent
Paragraph 8.8 of the 2019 Guidelines provides that firms “should ensure that the AML/CFT training provided includes an assessment or examination during the training session, which should be passed by all participants in order for the AML/CFT training to be recorded as completed. If the training does not contain an assessment or examination, firms must be in a position to demonstrate effectiveness of training and staff understanding in relation to same”
Firms are also required to retain records of all AML/CFT training provided to staff, senior management and agents during a given year. Information should include the dates on which AML/CFT training was provided, attendance and sign-in sheets (where relevant) of those who received the AML/CFT training, the type AML/CFT training provided and the results of the assessment and examination during the training session (paragraphs 8.7 and 9.2.7).
Obligations regarding Outsource Service Providers
Paragraph 8.5 also imposes obligations on a firm to ensure that staff at any outsource service provider (e.g. a fund administrator/transfer agent) performing services on the firm’s behalf have received specified appropriate training on AML/CFT legislation and their obligations and responsibilities thereunder and the ML/CFT risks relevant to the firm. Firms should ensure that relevant staff in the outsourced entity are aware of the identity and responsibilities of the firm’s MLRO and of the firm’s internal reporting procedures in respect of STRs.
Impact of 2019 Guidelines on Fund ManCos and Funds
As regards training obligations, the impact of the 2019 Guidelines on a firm which is an externally or internally managed Irish corporate fund or a manager of a trust fund, which outsources day to day AML/CFT tasks to a fund administrator/transfer agent, is that the firm will have to include an assessment as part of its minimum annual training or otherwise demonstrate effectiveness of training and staff understanding and will also ideally obtain evidence from the fund administrator/transfer agent as to the satisfaction of the fund administrator/transfer agent’s training obligations in respect of AML/CFT generally and with respect to the firm.
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