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Banks ordered to be extra careful with 'high-risk customers' like political figures

The Central Bank has found problems across the local industry.

Image: Shutterstock/Minerva Studio

IRELAND’S BANKS ARE falling down on key policies for dealing with political figures, or stopping customers’ accounts being used for money laundering and to fund terrorism.

The Central Bank, which oversees the country’s financial institutions, has found a raft of problems with how local banks both identified risky customers and transactions, and then dealt with those dangers.

In a report today, which was based on inspections it carried out over the past two years, it said no one bank was guilty of all of the issues, but there were problems across the industry including:

  • “Deficiencies” in banks’ dealings with “politically-exposed persons” – those entrusted with important public functions – in areas like tracing and documenting the source of peoples’ money
  • Not following stated policies to counter money laundering and the funding of terrorism
  • Failing to provide proper training to board and committee members, and extra training for staff who worked in the most-relevant areas 

The Central Bank’s report said its investigators found bank boards and senior managers had been taking a “reactive approach” to dealing with money-laundering or terrorism-financing risks.

Appropriate challenge at formal committee meetings is not evidenced by the relevant meeting minutes,” it said.

Central Bank Quarterly Bulletins The Crann an Oir outside the Central Bank's Dublin offices Source: Laura Hutton/Photocall Ireland

The report also said many banks’ policies contained “out-of-date information or do not reflect operating processes” and the practices hadn’t been rolled out across all parts of their businesses.

In addition, banks were failing to go through extra due diligence for “high-risk customers”, including political figures.

It found the “trigger events” for monitoring customers were “largely manual, with considerable reliance placed on front-line staff to both identify and action accordingly”.

Offshore bank accounts

Among its many criticisms, the Central Bank found the financial institutions’ “correspondent banking” dealings – in which they offered accounts and services to banks outside the EU – had lots of flaws despite the added danger of these transacitons.

The problems included “procedures that do not stipulate what steps should be taken to ensure a respondent is not a shell bank or that the respondent does not have relationships with shell banks”.

READ: The Central bank still doesn’t know what to do with its golden ball >

READ: Rich heiresses, film starts, supermodels and criminals: Who is on the HSBC list? >

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About the author:

Peter Bodkin  / Editor, Fora

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