A Co Donegal credit union has been fined a total of €36,273 for breaching anti money-laundering requirements.
The Central Bank took the enforcement action against Swilly Mulroy Credit Union under the Criminal Justice (Money Laundering and Terrorist Financing) Act and the Credit Union Act 1997 (the 1997 Act).
The 2010 Act 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’s investigation found that Swilly Mulroy 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.
As a result, Swilly Mulroy failed to conduct the necessary Anti-Money Laundering checks on the depositors and the transactions. This specific cash intensive practice had been flagged to the credit union sector as presenting a heightened money laundering risk.
The investigation 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 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.
The issue was not brought to the Central Bank’s attention and was discovered in 2022 during an inspection by the Central Bank’s Anti-Money Laundering Division. The Central Bank commenced this enforcement investigation in 2023.
The investigation yielded multiple examples of cash lodgements, which in the usual course should have triggered additional and careful scrutiny but instead were processed without any Anti-Money Laundering checks.
Swilly Mulroy has therefore breached multiple requirements of the 2010 Act.
Swilly Mulroy has admitted the prescribed contraventions and has agreed to the undisputed facts as set out in the attached Settlement Notice.
As part of the settlement agreement reached between the Central Bank and Swilly Mulroy, the Central Bank has determined that sanctions comprising a reprimand and monetary penalty in the amount of €51,819 are 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. The sanctions are subject to confirmation by the High Court and will not take effect unless confirmed.
Colm Kincaid, the Central Bank’s Director of Enforcement, said “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.
“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.
“This action demonstrates the Central Bank’s continued focus on firms’ compliance with their legal obligations to safeguard the integrity of our financial system.”
