Ireland, which for years has served as a financial and research and development for many companies, has been hit last week with an unprecedented judgment by the Court of Justice of the European Union (hereinafter- CJEU).
The CJEU has slapped Ireland with a fine of 200000 EUR to be paid in a lump sum to the EU Commission, due to lack of compliance to 5 AMLD and due to lack of notification of Ireland to the EU Commission on plans to implement the Directive.
The judgment states that the EU Commission has lodged several notices to the Republic of Ireland, requesting Ireland to comply with the Directive and issue a transposition of EU instrument into national law. Ireland responded by stating that a Bill has been lodged for the purpose of implementation to national legislation, yet the Bill has never passed adaptation into Irish law.
The President of the Court, prior to the proceedings, has granted permission to the Republic of Estonia and the French Republic to assist in their support to Ireland.
This judgment correlates directly with plans of the EU Commission to enforce the implementation of 5 AMLD within all
27 Member States of the EU. Some Member States, such as Estonia and Lithuania have gone through many hurdles to implementing the Directive, have imposed on EMIs and cryptocurrency exchanges that have not been fully
compliant with the implementation of national AML laws, and have reported directly to the EU Commission on all matters relating to the transposition of 5 AMLD.
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The judgment issues a grave warning sign to current applications of EMIs and financial services in Ireland, as this
might impact the current application status and process. The mere fact that Ireland has not transposed the Directive, might cause a lack of compatibility between EU Law and Irish Law, which may cause a lack of certainty for the Irish Central Bank on how and whether to grant EMI and financial services licenses.
One of the ways to resolve this issue would most likely be for Ireland to start the process of transposition of 6 AMLD into national law, as the date for implementation is looming on the horizon. ESMA, the ECB, and the EU Commission have already stated that they are most likely not to allow any sort of derogation from the deadline stated in the Directive, even if it is due to the Covid-19 Pandemic, as two years for transposition is mandated under EU Law as the deemed time for drafting national legislation.
Bearing in mind the December deadline for transposition of 6 AMLD, and the current state of affairs in the EU in regards to financial services and AML, it is of crucial importance that Ireland and other Member States of the EU will comprehend to the new Directive, so 5 AMLD drama can finally be set to rest.
Ella Rosenberg is the founder of an Israeli- European Regulatory Consultancy Firm