Brendan Burgess
Founder
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10 May 2019
Enforcement Action: Campbell O’Connor & Company fined €280,000 by the Central Bank of Ireland for anti-money laundering and countering the financing of terrorism compliance failures
On 8 May 2019, the Central Bank of Ireland (the “Central Bank”) reprimanded and imposed a fine of €280,000 on Campbell O’Connor & Company (the “Firm”) for five breaches of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (the “CJA 2010”). The Firm has admitted the breaches.
The Central Bank determined that the appropriate fine was €400,000, which was reduced by 30% to €280,000 in accordance with the settlement discount scheme provided for in the Central Bank’s Administrative Sanctions Procedure.
The Central Bank’s investigation into the Firm commenced following a themed supervisory inspection which was part of its ongoing engagement with the investment firm sector. The inspection identified failings in the Firm’s anti-money laundering and countering the financing of terrorism (“AML/CFT”) framework. The breaches occurred between July 2010 and November 2016 and related to the following:
· Failure to conduct appropriate money laundering/terrorist financing (“ML/TF”) risk assessment.
· Failure to adopt adequate policies and procedures for preventing and detecting ML/TF.
· Failure to monitor and scrutinise customer transactions.
· Failure to provide training to staff on identifying suspicious transactions.
· Failure to ensure that all necessary arrangements were in place with third parties whom the Firm relied on to conduct customer due diligence measures on the Firm’s customers.
The Central Bank confirms that the Firm took the necessary steps to rectify the failings that gave rise to the breaches by 9 August 2018 and that the investigation is now closed.
Seána Cunningham, the Central Bank’s Director of Enforcement and Anti-Money Laundering, said:
“The Central Bank is responsible for monitoring and supervising regulated financial service providers’ compliance with their AML/CFT obligations under the CJA 2010. This is the first enforcement action taken against a stockbroker for breaches of the CJA 2010, and is a timely reminder to the wider financial services sector that AML/CFT compliance is, and will remain, a key priority for the Central Bank.
The Central Bank’s investigation found that for a period of over six years, the Firm’s AML/CFT framework was not fit for purpose. The investigation found that the Firm failed to assess key ML/TF risks facing its business, for example, the Firm failed to undertake any assessment of terrorist financing risk at all. In the absence of a business-wide risk assessment, the Firm did not implement effective policies and procedures to prevent and detect ML/TF.
The investigation also found that the Firm failed to monitor and scrutinise customer transactions and failed to provide training to staff in relation to identifying suspicious transactions. The Firm placed too much reliance on personal knowledge of its customers in assessing ML/TF risk and failed to adopt the necessary policies and procedures to enable it to appropriately identify, assess and manage these risks.
The role of financial service providers in detecting and reporting suspected ML/TF is vital in safeguarding the financial services sector from criminal and terrorist activity. The Firm’s failure to comply with its AML/CFT obligations over a prolonged period is of significant concern to the Central Bank.
This enforcement action highlights the seriousness with which the Central Bank views failings of this nature by regulated firms and, demonstrates that in order to protect the integrity of the Irish financial services sector, the Central Bank will continue to take action where firms fail to meet their AML/CFT obligations.”
Further Information:
Central Bank Media Relations: 01 2246299/ [email protected]
BACKGROUND
The Firm was established in 1960 and is currently authorised as an investment firm under Regulation 5(2) of the European Communities (Markets in Financial Instruments) Regulations 2017 (as amended) and provides stockbroking services to its customers.
In November 2016, the Central Bank’s Anti-Money Laundering Division conducted an on-site inspection of the Firm as part of its ongoing engagement with the investment firm sector. The inspection identified a number of concerns regarding the Firm’s compliance with the CJA 2010. The Central Bank engaged with the Firm on remediating the issues of concern and commenced an enforcement investigation in May 2018.
Enforcement Action: Campbell O’Connor & Company fined €280,000 by the Central Bank of Ireland for anti-money laundering and countering the financing of terrorism compliance failures
On 8 May 2019, the Central Bank of Ireland (the “Central Bank”) reprimanded and imposed a fine of €280,000 on Campbell O’Connor & Company (the “Firm”) for five breaches of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (the “CJA 2010”). The Firm has admitted the breaches.
The Central Bank determined that the appropriate fine was €400,000, which was reduced by 30% to €280,000 in accordance with the settlement discount scheme provided for in the Central Bank’s Administrative Sanctions Procedure.
The Central Bank’s investigation into the Firm commenced following a themed supervisory inspection which was part of its ongoing engagement with the investment firm sector. The inspection identified failings in the Firm’s anti-money laundering and countering the financing of terrorism (“AML/CFT”) framework. The breaches occurred between July 2010 and November 2016 and related to the following:
· Failure to conduct appropriate money laundering/terrorist financing (“ML/TF”) risk assessment.
· Failure to adopt adequate policies and procedures for preventing and detecting ML/TF.
· Failure to monitor and scrutinise customer transactions.
· Failure to provide training to staff on identifying suspicious transactions.
· Failure to ensure that all necessary arrangements were in place with third parties whom the Firm relied on to conduct customer due diligence measures on the Firm’s customers.
The Central Bank confirms that the Firm took the necessary steps to rectify the failings that gave rise to the breaches by 9 August 2018 and that the investigation is now closed.
Seána Cunningham, the Central Bank’s Director of Enforcement and Anti-Money Laundering, said:
“The Central Bank is responsible for monitoring and supervising regulated financial service providers’ compliance with their AML/CFT obligations under the CJA 2010. This is the first enforcement action taken against a stockbroker for breaches of the CJA 2010, and is a timely reminder to the wider financial services sector that AML/CFT compliance is, and will remain, a key priority for the Central Bank.
The Central Bank’s investigation found that for a period of over six years, the Firm’s AML/CFT framework was not fit for purpose. The investigation found that the Firm failed to assess key ML/TF risks facing its business, for example, the Firm failed to undertake any assessment of terrorist financing risk at all. In the absence of a business-wide risk assessment, the Firm did not implement effective policies and procedures to prevent and detect ML/TF.
The investigation also found that the Firm failed to monitor and scrutinise customer transactions and failed to provide training to staff in relation to identifying suspicious transactions. The Firm placed too much reliance on personal knowledge of its customers in assessing ML/TF risk and failed to adopt the necessary policies and procedures to enable it to appropriately identify, assess and manage these risks.
The role of financial service providers in detecting and reporting suspected ML/TF is vital in safeguarding the financial services sector from criminal and terrorist activity. The Firm’s failure to comply with its AML/CFT obligations over a prolonged period is of significant concern to the Central Bank.
This enforcement action highlights the seriousness with which the Central Bank views failings of this nature by regulated firms and, demonstrates that in order to protect the integrity of the Irish financial services sector, the Central Bank will continue to take action where firms fail to meet their AML/CFT obligations.”
Further Information:
Central Bank Media Relations: 01 2246299/ [email protected]
BACKGROUND
The Firm was established in 1960 and is currently authorised as an investment firm under Regulation 5(2) of the European Communities (Markets in Financial Instruments) Regulations 2017 (as amended) and provides stockbroking services to its customers.
In November 2016, the Central Bank’s Anti-Money Laundering Division conducted an on-site inspection of the Firm as part of its ongoing engagement with the investment firm sector. The inspection identified a number of concerns regarding the Firm’s compliance with the CJA 2010. The Central Bank engaged with the Firm on remediating the issues of concern and commenced an enforcement investigation in May 2018.