Central Bank announces enforcement action against credit union for breaches of Anti-Money Laundering requirements

On 2 July 2025, the Central Bank of Ireland (“Central Bank”) published a settlement notice (“Settlement Notice”) in respect of Swilly Mulroy Credit Union (“Swilly Mulroy”) for breaches of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (“2010 Act”), and the Credit Union Act 1997, as amended (“1997 Act”), between January 2014 and June 2021.  

This is the third settlement under the  Administrative Sanctions Procedure (“ASP”) following the changes introduced by the enactment of the Central Bank (Individual Accountability Framework) Act, 2023.

Findings

The Central Bank’s anti-money laundering division carried out an inspection at Swilly Mulroy in April 2022. Due to issues identified, an enforcement investigation (“Investigation”) was commenced in 2023. 

The Investigation found that Swilly Mulroy had been engaging in a practice, between January 2014 and June 2021, whereby it solicited and accepted cash from depositors, the majority of which did not hold accounts with Swilly Mulroy. Such deposits were then forwarded by electronic funds transfer 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, normal AML / CFT procedures which should have applied to customer cash lodgements were not followed. Additionally, there were no other controls to address the AML / CFT risk associated with these cash deposits.

Specifically, the Investigation found that: 

• Swilly Mulroy failed to perform a customer or transaction risk assessment regarding those depositors who made lodgements with the Swilly Mulroy;
• Swilly Mulroy failed to examine the background and purpose of certain unusually large cash lodgements made by these depositors; and
• Swilly Mulroy failed to increase the degree and nature of monitoring of these depositors who lodged unusually large cash amounts.

It was also discovered that the board of Swilly Mulroy had been made aware, on a number of occasions, of the risks associated with accepting and lodging such cash deposits by its internal and external auditors and by the Irish League of Credit Unions.

Sanction

Swilly Mulroy has admitted to the prescribed contraventions set out in the Settlement Notice, specifically, failure to conduct customer due diligence / failure to carry out transaction monitoring / failure to carry out additional monitoring / failure to conduct a business risk assessment / failure to conduct a customer or transaction risk assessment / failure to adopt policies and procedures / failure to manage the identified risks with the cash lodgements service.

The Settlement Notice sets out that sanctions consisting of a reprimand and monetary penalty in the amount of €51,819 are both warranted and proportionate to the size of Swilly Mulroy. A 30% settlement scheme has been applied, bring the monetary value of the penalty to €36,273.

Next Steps

The sanctions have been accepted by Swilly Mulroy and are subject to confirmation by the High Court. The sanctions will not take effect unless such confirmation takes place.

2. Central Bank publishes updated appropriate and sustainable ARAs re CCMA

On 1 July 2025, the Central Bank of Ireland (“Central Bank”) published a document entitled “Appropriate and Sustainable Alternative Repayment Arrangements – Code of Conduct on Mortgage Arrears 2013” (“ARAs Guidance”).

The ARAs Guidance replaces the Central Bank’s Guidance on Appropriate and Sustainable Alternative Repayment Arrangements of 18 February 2020 (“2020 Version”) and the Internal Guideline – Sustainable Mortgage Arrears Solutions of 24 September 2013 as of 27 January 2025.

Purpose

The purpose of the ARAs Guidance is to set out the Central Bank’s expectations as to the criteria an ARA should fulfil such that it is considered to be appropriate and sustainable for a borrower’s individual circumstances for the purposes of the Code of Conduct on Mortgage Arrears 2013 (“CCMA”).

Structure

The ARAs Guidance is comprised of a number of sections and much of the content of the 2020 Version has been reorganised into these sections. 

The following is a summary of some of the changes:

• The section dealing with “Appropriate and Sustainable ARAs” in the 2020 Version is now encompassed in a section entitled “Overarching Criteria”, with some minor wording changes;
• Some of the further clarification on appropriate and sustainable ARAs in the 2020 Version are now contained in a section entitled “Additional Considerations”;
• The 2020 Version addressed borrower engagement, the obligation to document consideration of each option examined and innovative long term solutions in a number of ensuing paragraphs. However, the ARAs Guidance has restructured this and now contains new sections dealing with:
  • short-term ARAs (section 3);
  • existing ARAs (section 4);
  • borrower engagement (section 5); and 
  • the procedure to be followed where there is no appropriate and sustainable ARA option (section 6).

Future Updates

It should also be noted that, in advance of the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Consumer Protection) Regulations 2025 coming into force on 24 March 2026, the ARAs Guidance will be updated as appropriate to reflect the amended legislative references.

3. Central Bank Act 1942 (section 32d) (Certain Financial Vehicles Dedicated Levy) (Amendment) Regulations 2025 published in Iris Oifigiúil

On 4 July 2025, the Central Bank Act 1942 (Section 32D) (Certain Financial Vehicles Dedicated Levy) (Amendment) Regulations 2025 (“2025 Regulations”) were published in Iris Oifigiúil.

The 2025 Regulations amend the Central Bank Act 1942 (Section 32D) (Certain Financial Vehicles Dedicated Levy) Regulations 2021 (“Principal Regulations”) with an amended schedule as to the levy contribution payable as regards investment limited partnerships, common contractual funds, Irish collective asset management vehicles, unit trusts and credit unions. The relevant sum in respect of all the forgoing categories is €551. 

1. Central Bank publishes NCID Report on Employers’ Liability and Public Liability Insurance

On 2 July 2025, the Central Bank of Ireland (“Central Bank”) published the mid-year report (“Report”) on Employers' Liability (“EL”) and Public Liability (“PL”) insurance of the National Claims Information Database (“NCID”).  The Report is based on data up to and including the first half of 2024 – 1 January to 30 June 2024 (“H1 2024”).

Some of the key findings are outlined below.

Settled Claims Trends

• the cost of all EL and PL claims settling in H1 2024 totalled approximately €144m, spread across 3,800 claims approximately;
• 45% of claimants made damage claims in H1 2024, which accounted for 8% of total settled costs;
• 55% of claimants made injury claims, which accounted for 92% of total settled costs;
• the majority of damage claims arise from PL policies which has a mix of bodily injury and damage claims. Claims arising from EL policies are predominantly injury claims;
• across all settlement channels, fewer injury claims settled during the H2 2021 to H2 2022 settlement periods than in any other half year period that has been reported on;
• between H2 2023 and H1 2024, , there was an 8% increase in the number of claims settling directly, a 7% decrease in the number of claims settling through the Injuries Resolution Board (“Board”) and a 1% increase in the number of claims settling through litigation;
• the average time taken to settle claims directly was 2.0 years, 2.2 years for claims settling through the Board and 5.8 years for claims settling through litigation;
• the proportion of claimants settling directly with the insurer increased in H1 2024 compared to 2023;
• as regards total settled costs, claims settling through litigation make up the largest proportion at 87% of all injury claim costs in H1 2024;
• across all channels, the average compensation cost for claims that settled for less than €150,000 was 12% lower in H1 2024 compared to 2020; and
• legal costs are most significant for claims settled through litigation and there has been an upward trend in recent years reaching 43% of total costs (or 78% of the compensation award) in H1 2024. The Report compares this to the direct settlement route, where legal costs were 21% of total cost and the Board where legal costs were 2% of total costs;

Personal Injuries Guidelines

• across all channels, 42% of claims settled in H1 2024 settled under the Personal Injuries Guidelines (“Guidelines”), including 22% of litigated claims;
• for claims settled directly with insurers or via the Board, where claims settle faster compared to litigation, 99% of all settled claims in H1 2024 were assessed under the Guidelines;
• the proportion of litigated claims settling under the Guidelines has been increasing since their introduction, from 3% of claims in H1 2022 to 22% in H1 2024;
• in order to assess the impact of the Guidelines, the Report compares the average cost of claims settled under the Guidelines between 2021 and H1 2024  against the average cost of claims settled under the Book of Quantum in 2020. The findings are set out in a comparative table.

The Report notes that the Guidelines may not yet have materially impacted the cost of claims settled via litigation and that it will take time for the Guidelines to take effect in litigated settlements owing to the long duration between an accident being reported and the settling of a claim.

Additionally, the Report notes that while the impact of the Guidelines on claims settled directly and via the Board is significant, they have not yet had a significant impact on the overall average claims settlement cost.

2. Central Bank publishes NCID Report on Private Motor Insurance

On 2 July 2025, the Central Bank of Ireland (“Central Bank”) published its mid-year report private motor insurance data report (“Report”) of the National Claims Information Database (“NCID”). The Report is based on data up to and including the first half of 2024 – 1 January to 30 June 2024 (“H1 2024”).

The Report sets out key findings and emerging trends regarding settled claims and the personal injuries guidelines (“Guidelines”). An included data annex provides an update to the underlying data. A number of appendices contain supporting documentation, market coverage and a list of participating insurers.

Some of the key findings are outlined below:

Settled Claims Trends

• the cost of claims that settled during H1 2024 amounted to approximately €418m, across about 88,000 claims. The Report highlights that this is significantly higher than recent half year periods;
• both the number and overall cost of damage claims has increased considerably in recent years, with the Report noting that more damage claims were settled in H1 2024 than in any other half year period in the dataset. The total cost of such damage claims in H1 2024 amounted to €231m;
• there were approximately 4,700 injury claims settled in H1 2024 with a total cost of €183m, which compares to approximately 4,300 claims and €162m costs in H2 2023;
• the Report emphasises that damage claims settle faster than injury claims and accordingly, trends seen in the number of claims being reported to insurers will take longer to emerge in injury claim settlements compared to damage claims;
• the number of accidental damage, third party damage, and fire and theft claims have increased by 27%, 18%, and 30% respectively between H2 2023 and H1 2024;
• the total cost of damage claims settled in H1 2024 was 179% higher than the 2015 to 2019 average while the number of settled damage claims was 32% higher;
• the number and total cost of injury claims settled in H1 2024 are lower compared to the period 2015 to 2019, however, the number and total cost of injury claims settled in H1 2024 have increased by 45% and 53% respectively since H1 2022;
• between H1 2022 and H1 2024, there was a 44% increase in the number of claims settling directly, an 80% increase in the number of claims settling through the Injuries Resolution  Board (“Board”) and a 34% increase in the number of claims settling through litigation;
• in H1 2024, the average time taken to settle claims directly was 1.9 years, 2.8 years for claims settling through the Board and 5 years for claims settling through litigation;
• the proportion of both injury claimants and costs that settled in the litigated channel reduced in H1 2024;
• for injury claims that settled for less than €100,000 in H1 2024:
  • the average compensation cost was down 23% compared to 2020; and
  • the average total cost decreased by 13%.

However, the Report goes on to highlight that, when including all injury claims, the average total cost is effectively unchanged at €38,553 – emphasising the contribution of large injury claims towards total claims costs; and

• the average legal cost for litigated claims has increased over the period and was 14% higher in H1 2024 compared to 2020. For litigated claims that settled for less than €100,000 in H1 2024, legal costs made up 48% of the total claim cost (or 94% of the compensation cost) on average.

  Personal Injuries Guidelines

• 75% of claims settled in H1 2024 settled under the Personal Injuries Guidelines (“Guidelines”), including 46% of litigated claims, across all channels;
• in order to assess the impact of the Guidelines, the average cost of claims settled under the Guidelines was compared to the average cost of claims settled under the book of quantum in 2020. The Report found that the average cost of claims that settled under the Guidelines in H1 2024, when compared to claims that settled under the book of quantum in 2020, were:
  • 37% lower for claims that settled directly before the Board;
  • 8% lower for claims settling through the Board, and
  • 23% lower for claims settling directly after the Board.
• the Report notes that claims settled through litigation account for the greatest proportion of the total injury claims cost and that the impact of the Guidelines will be most uncertain in this channel; and
• for claims settling directly with insurers or through the Board, where claims settle faster compared to litigation, practically all settled claims in H1 2024 had awards set using the Guidelines. 

Between 2 and 7 July 2025, the European Banking Authority (“EBA”) launched three consultations under the Capital Requirements Regulation (“CRR”), as follows:

1. Consultation paper (“CFF Consultation”) on draft guidelines (“Guidelines”) on credit conversion factor (“CCF”) estimation under article 182(5) of the CRR.

   This  CFF Consultation states explains that the EBA did not include CCF estimation in its original internal ratings based (“IRB”) approach repair programme as updates in the Basel III framework restricted the scope of application of CCF models to revolving commitments.

   The Guidelines in the CFF Consultation are part of the IRB repair programme and are developed on foot of the now stabilised CRR framework. The Guidelines aim to provide clear and consistent expectations to institutions regarding CCF estimation.

   Additionally, the EBA states that the Guidelines aim to ensure alignment and coherence as regards key risk parameters in the IRB approach, ultimately promoting a harmonised and reliable modelling landscape.

   The CFF Consultation also includes a qualitative questionnaire in order to assess the impact of the proposed requirements on the rating systems

   Next Steps

   The CFF Consultation is open for feedback until 15 October 2025. A public hearing will be held on 3 September 2025, registration closes on 29 August 2025.

   Feedback received will be considered when specifying the final Guidelines.

2. Consultation paper (“Default Consultation”) on draft guidelines amending guidelines on the application of the definition of default under article 178 of the CRR.

   The Default Consultation proposes to maintain the 1% threshold for the net present value (“NPV”) loss in debt restructuring, for the following reasons:

   • the current framework is already sufficiently flexible and risk sensitive, particularly the EBA notes that the current framework does not lead to incorrect default identifications;
   • amending the framework would hinder the effort made following the great financial crisis to reduce the level of non-performing loans. Increasing the threshold would create inconsistencies and potential arbitrage opportunities in the framework as the thresholds on past due amounts are also set at 1%; and
   • any change in the definition of default would involve operational cost together with a new development and new validation cycle for certain prudential models.

      
     

     Next Steps

     The Default Consultation is open for feedback until 15 October 2025. A public hearing will be held on 3 September 2025, registration closes on 29 August 2025. Feedback received will be considered when specifying the final Guidelines.

3. Consultation paper (“ASU Consultation”) on draft guidelines (“Guidelines”) on ancillary services undertakings (“ASUs”) specifying the criteria for the identification of activities referred to in article 4(1)(18) of the CRR.

The EBA states that proper identification of ASUs is essential to ensure that the prudential framework is consistently and effectively applied. Further, it is an important factor as regards determining the scope of prudential consolidation for banking groups, allowing them to comply with their obligations under the CRR on a consolidated basis.

Examples of ASUs include operational leasing / the ownership or management of property / the provision of data processing services or any other activity insofar as those activities are ancillary to banking / any other activity considered similar by the EBA.

The Guidelines contain five sections, as follows:

• general provisions;
• criteria to determine activities to be considered a direct extension of banking under article 4(1)(18)(a) of the CRR;
• criteria to determine activities to be considered ancillary to banking under article 4(1)(18)(b) of the CRR;
• determination of activities to be considered similar to points (a) and (b) under article 4(1)(18)(c) of the CRR; and
• principal activity of an ASU. The assessment of the principal activity, such that an undertaking does or does not qualify as an ASU, should be carried out cumulatively. Effectively, this means that if an undertaking engages in more than one activity falling within the scope of the Guidelines, all such activities should be considered collectively in the assessment of its principal activity.

The ASU Consultation states that it should be read in conjunction with commission delegated regulation (EU) 2022/676 (regulatory technical standards on methods of prudential consolidation).

Next Steps

The ASU Consultation is open for feedback until 7 October 2025. A public hearing will be held on 2 September 2025, registration closes on 26 August 2025.  

On 3 July 2025, the European Supervisory Authorities (“ESAs”) and the EU’s new authority for anti-money laundering and countering the finance of terrorism (“AMLA”) announced that they have entered into a memorandum of understanding (“MoU”), dated 27 June 2025, as regards the framework for cooperation and exchange of information between the ESAs and the AMLA. 

Background

Article 91 of the AMLA Regulation stipulates that the AMLA establishes and maintains close cooperation with the ESAs and that an MoU regarding this cooperation should be concluded.

The MoU aims to promote supervisory convergence across the EU’s financial sector, enable the exchange of necessary information and foster cross sectoral learning and capacity building for supervisors.

Contents

Some of the areas addressed in the MoU include:

•  ESAs representation at AMLA board meetings, committees and their sub-structures;
• regular exchange of information in common areas of interest;
• ad-hoc exchange of information; and
• cooperation in the development of legal and policy instruments of common interest.

The EBA has stated that the MoU “part of the overall cooperation framework that AMLA is required to issue in relation to the financial sector and is an important component of the institutional arrangements going forward.”

Next Steps

The MoU is effective as of 27 June 2025. It is subject to review by the ESAs and the ALMA every two years or earlier if deemed necessary. 

1. Delegated Regulation on RTS on subcontracting ICT services supporting critical functions under DORA published in the OJEU

On 2 July 2025, Delegated Regulation (EU) 2025/532 (“Regulation”) was published in the official journal of the European Union (“OJEU”).

The Regulation supplements DORA and addresses regulatory technical standards (“RTS”) specifying the elements that a financial entity has to determine and assess when subcontracting ICT services supporting critical or important functions.

The Regulation was adopted by the European Commission on 24 March 2025 – for more information, see FIG Top 5 at 5 dated 27 March 2025.

Next Steps

The Regulation will enter into force on 22 July 2025, being 20 days after its publication in the OJEU.

2. Commission adopts delegated regulation on RTS on use of alternative internal models under CRR

On 3 July 2025, the European Commission (“Commission”) adopted a delegated regulation (“Regulation”) on regulatory technical standards (“RTS”) specifying the conditions for assessing the materiality of extensions of, and changes to, the use of alternative internal models, and changes to the subset of the modellable risk factors under the Capital Requirements Regulation (“CRR”). 

The RTS differentiate between material extensions and changes, to be approved by competent authorities, and non-material extensions and changes, to be notified to competent authorities four weeks in advance.

Non-material extensions and changes are further divided into two sub-categories:

• extensions and changes notified with additional information; and
• extensions and changes notified with basic information.

For the categorisation of model extensions and changes to the relevant categories / subcategories, the RTS set out a combination of qualitative and quantitative conditions.

The quantitative conditions aim to assess the effect of the extension or change on the overall alternative internal models own funds requirements and on its components, before and after the planned extension or change.

The RTS also include:

• guiding principles that institutions should follow in the categorisation process;
• provisions on the implementation of extensions; and
• changes and documentation requirements.

Next Steps

The Regulation will enter into force 20 days after its publication in the official journal of the European Union.

3. Commission adopts delegated regulation amending June 2025 delegated regulation on list of high risk third countries under MLD4

On 8 July 2025, the European Commission (“Commission”) adopted a delegated regulation (“Amending Regulation”) amending the delegated regulation that it adopted on 10 June 2025 (“June 2025 Regulation”).

The June 2025 Regulation updated the list of high-risk third countries with strategic anti-money laundering (“AML”) and counter-terrorist financing (“CTF”) deficiencies pursuant to article 9(2) of the Fourth Money Laundering Directive (“MLD4”). The June 2025 Regulation followed the recommendations of the Financial Action Task Force (“FATF”). For more information, see FIG Top 5 at 5 dated 12 June 2025.

The Amending Regulations adds a review clause to the June 2025 Regulation. This action was taken due to the fact that countries that are not publicly identified as subject to calls for action or increased monitoring by FATF might still pose a threat to the integrity of the EU’s financial system.

The Amending Regulation notes that where FATF membership of countries is suspended because of gross breaches of the FATF's AML and CTF standards, the threat to the EU financial system is likely to increase.

Accordingly, the Commission considered it necessary to take decisive action to preserve the integrity of the EU’s financial system and bring to completion an autonomous assessment of whether such countries are high-risk third countries under article 9 of MLD4.

Further, taking the current geopolitical situation into account, the Commission is of the view that it should act swiftly and so the Amending Regulation requires the Commission to conclude such assessment by 31 December 2025.

Next Steps

The Amending Regulation will be published in the official journal of the European Union and enter into force 20 days after such publication if neither the European Parliament nor the European Council object to it.