Ethics and governance in the European Financial centers

The FATF Third Round of Mutual Evaluations began in 2004 and has adopted a more detailed approach to the assessment based on the tough new standards that the FATF adopted in June 2003. Since early 2005 Belgium, Switzerland, Australia, Norway, Italy, Sweden and Ireland have been evaluated. Ireland’s ratings are comparable to those obtained by these countries.

Many of the recommendations on which Ireland is currently assessed as either partially compliant or non-compliant will be addressed in the transposition into Irish Law of the 3rd EU Money Laundering Directive. The special recommendation on regulation of wire transfers (to counter terrorist financing) on which Ireland and most EEA Member States are rated non-compliant is being addressed by an EU Regulation (which will be directly applicable).

The main findings of the recent Evaluation are that Ireland generally achieves a high standard in relation to legal measures to criminalise money laundering and terrorist financing, in its institutional and other arrangements and in international co-operation. The Evaluation notes in particular that Ireland has a broad money laundering offence, which meets the FATF requirements and the provisions for the confiscation of the proceeds of crime appear effective and comprehensive. The offence of Terrorist Financing is criminalised broadly in accordance with the UN requirements.

The Ministers noted that process of reviewing and updating the Irish legal framework to meet both our domestic needs and international obligations is already under way. Ireland opted to be evaluated early in the 3rd Round of Mutual Evaluations because this would be of considerable assistance in planning the transposition of the 3rd EU Money Laundering Directive into Irish Law.

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HM Treasury is conducting a consultation on the Government's proposed implementation of the Third Money Laundering Directive. The Directive was adopted in October 2005 and will need to be implemented into UK law by December 2007. The aim of the Directive was to update European legislation in line with the Financial Action Task Force recommendations. The purpose of this consultation document is to seek views on our proposals for implementation into UK legislation.

This consultation document sets outs our proposed implementation for the articles of the Directive. It also contains a Partial Regulatory Impact Assessment (PRIA) and poses a number of questions to which interested parties are invited to respond. Consultees have until 20th October 2006 to respond.

Following on from this consultation process, draft new Money Laundering Regulations will be issued and consulted upon by the end of this year.

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The Third Money Laundering Directive: Regulatory Impact Assessment

The Isle of Man was targetted by US Senate subcommittee report (see article "Tax Haven Abuses: The Enablers, The Tools & Secrecy (US Senate hearing)").

A spokesman for the Financial Supervision Commission (FSC), said: "'Any financial institution doing any business in the Island is required to understand the nature of the transaction being done and also has to ensure that the transaction is not deliberately breaking the laws of another country. We do not tolerate misuse of the financial system in any circumstance".

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