Ireland is still in breach of the latest EU anti-money-laundering directive despite a reprimand from Brussels last month. On 18 March the European Commission took infringement action against the government when it issued a letter of formal notice for full information on Ireland's implementation of the Third Anti-money Laundering (AML) directive following a previous court judgement on the matter. The bill is the responsibility of the Department of Justice, led by Dermot Ahern.
The bill adopting the directive, which was supposed to have become law in December 2007, has been stuck in the Seanad report stage since 22 March. Passage of the law will now have to wait for the end of the Oireachtas holiday. Until the directive becomes law, the Financial Regulator will issue guidance to firms on how to comply, but will lack the legal backing to take necessary enforcement action.
Regulatory consultant Peter Oakes of Compliance Ireland said this was depriving the authorities of a useful tool in tackling financial crime. Officials at the Financial Regulator have told the Sunday Tribune that money-laundering laws are very important for uncovering "primary violations", such as drug dealing or fraud.
Ireland could be facing millions of euro in fines if the government fails to pass and implement the legislation by the end of the this year, according to sources.
In October the European Court of Justice ruled that Ireland had failed in its duty to transpose the law. Last month's infringement action was a further step from Brussels towards taking material action against the state.
The regulator, which will be responsible for monitoring anti-money-laundering activities through the firms it authorises, expected the law to have been enacted by the end of last year, as mentioned in its 2008 annual report.
According to regulatory sources, the grace period allowed so far by the EU will end in late 2010, leaving the state liable for millions in fines if the law has not been passed and put into practice by then.
Sources close to the process of crafting the law told the Sunday Tribune the government could have saved itself the delay by "cutting and pasting" the language of the EU directive, but the process was slowed by attempts by the Attorney General's office to redraft the directive and incorporate existing Irish law. The sources said now the legislation deviates from the original directive it was meant to implement.