Central Bank fines Co Donegal credit union for anti-money laundering breaches
The Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 requires firms to put in place safeguards against the risk of money laundering and the 1997 Act requires credit unions to develop and implement risk management systems to monitor and manage risks.
The Central Bank said its investigation found that Swilly Mulroy Credit Union operated a practice of soliciting and accepting cash from depositors who did not hold accounts with the Credit Union.
This money would then be electronically transferred to a branch of a local bank, without first being deposited in an account in the customer's name at Swilly Mulroy.
The Central Bank said that as a result, Swilly Mulroy failed to conduct the necessary anti-money laundering checks on the depositors and the transactions.
The probe found that Swilly Mulroy operated in this way between 2 January 2014 and 30 June 2021, during which time it processed €8,751,694 in deposits from 2,329 cash lodgements.
The Central Bank said the Board of Swilly Mulroy was aware of the risks associated with the practice from 2015 but failed to act on its risk management obligations under the 1997 Act.
A new management team ceased the practice in 2021 and subsequently brought it to the attention of the Board.
But the issue was not brought to the Central Bank's attention and was discovered in 2022 during an inspection by the bank's Anti-Money Laundering Division.
Swilly Mulroy has admitted the breaches.
As part of the settlement dealt, the Central Bank said it had determined that sanctions comprising a reprimand and monetary penalty in the amount of €51,819 were both warranted and proportionate to the size of the firm.
The application of a 30% settlement scheme brings the amount to €36,273.
The sanctions have been accepted by Swilly Mulroy and are subject to confirmation by the High Court. They will not take effect unless confirmed.
This is the Central Bank's 160th enforcement outcome to date, and brings the total fines imposed by it to over €407m.
Colm Kincaid, the Central Bank's Director of Enforcement, said that anti-money laundering and counter terrorist financing legislation is designed to prevent the financial system being used to launder the proceeds of crime or fund terrorist activities.
"One of its key safeguards is that regulated financial service providers have controls in place to identify their customers and detect potential money laundering or terrorist financing." he said.
"Where firms allow gaps in their control framework, they create opportunities for criminals and terrorists to use our financial system to pursue their illegal activities. It is also important that, when firms identify that such control gaps exist, they must report it to the Central Bank, so that appropriate actions can be taken to manage and mitigate the risk," he added.
He said today's action demonstrates the Central Bank's continued focus on firms' compliance with their legal obligations to safeguard the integrity of the country's financial system.
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