Bray Credit Union breach created risk of ‘terrorist financing’

One of the State's largest credit unions has been fined nearly €100,000 by the Central Bank after it breached a number of regulations and thereby "created an unacceptable risk of money laundering and terrorist financing".

Bray Credit Union, Co Wicklow, was reprimanded for breaches of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, and fined €98,000.

The law requires all credit and financial institutions to adopt and implement adequate policies and procedures appropriate to their business to prevent and detect the commission of money laundering and terrorist financing.

All of the breaches – apart from one – persisted for five years and seven months, and have been admitted by Bray Credit Union.

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The Central Bank said the breaches represented “significant failings” in Bray Credit Union’s “anti-money laundering and the countering of the financing of terrorism” framework and procedures.

‘Widespread failings’

In particular, the breaches involved “widespread failings” in policies and procedures; customer due diligence; monitoring suspicious transactions; monitoring and management of compliance with the law; and record keeping.

Bray Credit Union currently has 26,886 members and is in the top 11 per cent of credit unions by asset size.

Director of enforcement at the Central Bank Derville Rowland said the bank was "concerned that a credit union of its size and scale was found to have breached key requirements for such an extended period of time".

“Credit unions must use the knowledge and insight they have of their customer base to comprehensively assess the money laundering and terrorist financing risks in their business and to implement effective and robust frameworks, system and controls to counter those risks,” she said.

“The breaches identify significant failings by Bray Credit Union in crucial areas such as the adoption of adequate policies and procedures, customer due diligence and monitoring dealings with members.

‘Unacceptable risk’

“The failure by Bray Credit Union to apply adequate identification and verification measures to members, and to scrutinise their transactions, meant that it lacked critical information to allow it to properly fulfil its obligations to monitor, identify and report unusual and potentially suspicious activity and created an unacceptable risk of money laundering and terrorist financing.”

Ms Rowland added it was “vital” for financial institutions to have adequate safeguards in place to combat money laundering and terrorist financing.

“It is vital that credit unions comply with all relevant requirements and that they have an embedded and effective compliance framework and culture,” she said.

“The enforcement of anti-money laundering governance and controls is an ongoing priority for the Central Bank and we will not hesitate to take action where non-compliance is identified.”