ANYONE opening a bank account in one of the Irish banks now faces quite rigorous identification requirements. This follows the implementation in the past year of the 1994 Criminal Justice Act to tackle money laundering.

Money laundering can broadly be described as any financial transaction which involves concealing, disguising, disposing of, transferring ownership, or transferring out of the State, the proceeds of any criminal activity, not just drug trafficking.

Apart from actually being involved in the laundering of money, which is an offence under the Act, any person who assists in any of these transactions and either knows, or - because of the circumstances - should know that the money (or some of it) relates to the proceeds of criminal activity, also commits a criminal offence.

The Act imposes duties and obligations upon financial institutions who deal in, or handle, large sums of money. Noncompliance amounts to a criminal offence.

To whom, or to what institutions do the regulations apply?

The regulations apply to all "designated bodies", including banks licensed under the Central Banks Act 1971, or those authorised to carry on such business under regulations made under the European Communities Act 1972.

The 1994 Act includes all banks, An Post, ICC, ACC, credit unions, and various types of stock brokers, money dealers, portfolio managers, life assurance companies and insurance brokers.

The Minister for Justice is also empowered to bring additional institutions within the scope of the Act, and last December did so by bringing the sale of units or shares of collective investment schemes (UCITS) within its ambit.

The Money Laundering Directive states that Member States must extend its provisions to "other types of professions and categories of undertaking... to include those whose activities are particularly likely to be used far money laundering purposes".

It also seems that lawyers and accountants will be subject to the legislation where they are "providing a service in relation to the buying, selling of stocks, shares and other securities".

What types of business are covered?

Section 32(2) of the 1994 Act sets out the type of operations or services to which the regulations apply. The list is extensive: it includes deposit taking, lending (including consumer credit), financial leasing, money transmission, administering means of payment (credit cards, travellers cheques, bankers drafts), guarantees and commitments; money broking; portfolio management and advice; safekeeping and administration of securities and safe custody.

It also includes trading on own account or for others in money market, bills of exchange, financial futures and options, exchange rate instruments, transferable securities, participation in share issues and provision of services related to such issues, advising undertaking on capital structures, industrial strategy, and mergers and acquisitions.

What obligations are imposed?

. Identity: A "designated body" must take reasonable measures to establish the identity of any person for whom it proposes to provide a service:

(a) where these transactions are on a continuing basis;

(b) where transactions are, or may be, linked and have an aggregate value of £10,000 or more;

(c) where it suspects that the service it is requested to provide relates to money laundering.

. Retention of Documents: Copies of tile materials used to identify a customer, or proposed customer, must be retained for five years from the date of the termination of the relationship.

. Duty to Disclose: If a "designated body", or its directors, employees or officers, suspect that an offence has been committed, either by way of money laundering itself, or by false or misleading information relating to identity having been given, a report must be made to the Garda.

Equally a supervisory body, such as the Central Bank, must report to the Garda many suspicions which it has relating to an offence.

. "Tipping off": It is an offence to "tip off" any customer of any report to the Garda or of any investigation into any transactions.

. Penalties: Penalties for contravention of the relevant sections run to five years in prison, and unspecified fines.

Guidance Notes.

To facilitate the practical implementation of the legislation, Guidance Notes have been prepared by a Money Laundering Steering Committee set up under the aegis of the Department of Finance. The Central Bank has added weight to the Notes by indicating that it expects institutions under its supervision to comply with them.

According to the Notes, the Central Bank will use them as "criteria against which it will assess the adequacy of the credit institutions internal controls, policies and procedures to counter money laundering. The Central Bank will, from time to time, conduct inspections of credit institutions to assess their compliance with these guidance notes".

Under the Notes, the Central Bank requires credit institutions to:

(a) Establish adequate procedures of internal control and communication to forestall and prevent operations relating to money laundering;

(b) Take appropriate measures so that their employees are aware of the Act and the Central Bank's requirements in relation to money laundering;

(c) Ensure participation by relevant employees in training programmes;

(d) Designate from the institution's management staff a Money Laundering Reporting Officer, with full access to systems necessary to fulfil his responsibility.

(e) Establish a liaison with the Garda.

(f) Provide screening of potential new employees; continuing training for employees, and testing audit arrangements.