The European Commission has opened infringement proceedings against Ireland for incorrectly transposing an amended anti-money laundering directive. The State has two months to respond to the formal notice issued by the commission. This means that when Ireland launched a bid to host the EU Anti-Money Laundering Authority (AMLA), the State was not even compliant with the rules that the agency is responsible for enforcing.
This is an important issue. Michael McGrath, the Minister for Finance, and Jennifer Carroll MacNeill, the then junior minister in the Department of Finance faced a string of questions when they presented Dublin’s submission for hosting the AMLA before a European Parliament committee in January. Some were about the cost of living and housing. But there were quite a few that focused on Ireland’s alleged status as a tax haven.
Ireland’s reputation has taken a battering over the past couple of decades and remains problematic. Before the financial crash, the New York Times depicted Ireland as the “wild west” of the financial system on the basis that it was a lightly regulated jurisdiction. This perception gained traction in the aftermath of the 2008 collapse.
There has been sweeping changes to Ireland’s regulatory regime over the past decade. Indeed, there is an argument to be made that the regulatory pendulum has swung too far in the opposite direction. But as long as there are lingering concerns about aspects of Ireland’s financial rules, it will be hard to achieve the right balance. That is why being one of three EU member states cited by the European Commission for failure to comply with anti-money laundering regulations is unwelcome and counter-productive.
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Money laundering is an increasingly sophisticated crime orchestrated by international gangs involved in drugs, weapons, human trafficking, and prostitution, among other crimes. States must ensure that there are no gaps in their money laundering frameworks that these gangs can exploit. Ireland must rectify the issues identified by the European Commission immediately.