The Irish Minister for Justice Equality and Law Reform has very recently approved the drafting of a new Bill intended to transpose the EU's Third Money Laundering Directive into Irish law. The new legislation is intended to strengthen Ireland's current legislative provisions with regard to the prevention of money laundering and terrorist financing. Ireland's current anti money laundering legislation is contained, primarily, in the Criminal Justice Act 1994, as amended.

Of particular relevance is the applicability of the new legislation to operations carrying out casino-like activities. While we have long been promised legislation regulating casino-type activity in Ireland, such legislation has yet to be drafted. However, the fact that the general scheme of the Criminal Justice (Money Laundering) Bill 2008 (the "Bill") envisages operations carrying out casino-like activities coming within its remit, is indicative that the Irish Government is slowly but surely making progress in bringing Irish casinos and private member clubs into the legislative environment.

Under existing legislation, casinos are included in the anti money laundering regime. However, the Bill will also cover businesses carrying on casino-like activities which includes private members club casinos.

It is proposed that a period of consultation between the Department of Justice Equality and Law Reform and interested parties will take place before the completion of the drafting and publication of the Bill. The Scheme of the Bill has however been published and it proposes 52 Heads and 3 Schedules.

Of particular importance to the Irish gaming and gambling industry is Head 3 which deals with "Designated Persons" and provides that "casinos or any other place in which casino-like activities are provided" fall within the definition of "Designated Persons". Accordingly, it is clear that casinos including, private member club casinos, now have to fulfil anti money laundering requirements similar to banks, solicitors, accountants and other professional bodies. This will no doubt be welcomed by the Financial Action Task Force who in its 2006 Report made critical comments about the number of private member casino clubs which operate casino-like facilities in Ireland which created the risk for money laundering which fell outside the scope of the Criminal Justice Act 1994.

Head 11 of the Criminal Justice (Money Laundering) Bill 2008 sets out the customer due diligence that casinos and other "Designated Persons" may have to carry out if the Bill is adopted in its current form. Head 11 states that a "designated person" shall apply customer due diligence measures in the following cases:

"When establishing a "Business Relationship".

In respect of occasional transactions that, either as an individual transaction or a series of transactions which are or appear to be linked, amount in the aggregate to €15,000 or more or the amount for the time being prescribed by regulations made under Head 4;

Where there is a suspicion of money laundering or terrorist financing regardless of any derogation, exemption or threshold;

Where there are doubts on the part of the designated person about the veracity or adequacy of previously obtained customer identification data."

Head 12 deals with the type of customer due diligence measures which may be applied if the Bill comes into force. Those include independently identifying and verifying the customer's identity and conducting ongoing monitoring of the business relationship, including the scrutiny of transactions undertaken throughout the course of the business relationship.

Essentially the approach to customer identification is founded on a risk based approach in that, if required, additional information over and above identification information should be used by entities.

It is fair to say that many of the private member club casinos in Ireland do operate some sort of customer identification procedure. Indeed, in some instances certain private member club casinos use fingerprint technology to establish and verify the identity of the customer entering the club.

The obvious difficulty with private member club casinos at the moment is that the area is not regulated so it is unknown if such procedures are strictly adhered to in every private member club casino. If enacted the Bill is likely to prompt a more uniform approach of the industry

Enhanced customer due diligence measures are also required where the customer has not been physically present for identification purposes. Such measures include ensuring that the customer's identity is established by additional documentation or by requiring supporting documentation from a financial institution.

The scheme of the Bill also sets out various reporting obligations which would require Irish casinos and other "Designated Persons" to report to An Garda Siochana (the Irish police) and to the Irish Revenue Commissioners in circumstances where Irish casinos suspect, or have reasonable grounds to suspect, that an offence of money laundering or terrorist financing has been or is being committed or attempted either in or outside of Ireland. The Bill also sets out offences in the event that a Designated Person (including an Irish casino) fails to fulfil its customer identification due diligence requirements or its reporting obligations.

While the Bill is still only at its initial stages, it would be advisable for Irish casinos to start to anticipate the requirements set out in the Bill. If enacted Irish private member club casinos and operators of other casino-like activities will need to ensure that adequate and appropriate policies and procedures are put in place relating to customer due diligence, reporting, record keeping, internal control, risk assessment and management compliance management and communication.

The requirements set out in the Bill will require a level of organisation and professionalism and Irish private member club casinos will have to adopt not only strict customer due diligence measures but also a document management system to ensure that all records are kept for five years. Compliance is key and operations carrying out casino-like activities would be well advised to focus on requirements under the Bill.

For further information please contact Áine Matthews of the Gaming and Gambling Unit.

April 2008.