The need for the Minister for Finance to comment on the obligations of An Post in relation Anti Money Laundering requirements on the sale of Prize Bonds

Question Posed To: 
Minister for Finance

Prize Bonds are one of the products in the range of State Savings products which include Savings Bonds, Savings Certificates, Instalment Savings, National Solidarity Bonds and deposit accounts including the ordinary “demand” deposit account and the “30 day notice” Deposit Account Plus. State Savings products form part of the Sovereign Debt of Ireland which is managed by the National Treasury Management Agency.

An Post and the Prize Bond Company are agents of the National Treasury Management Agency (NTMA) in respect of the State Savings product range. Neither An Post nor the Prize Bond Company retain or manage any State Savings money. All State Savings money is placed directly with the Government under the management of the National Treasury Management Agency (NTMA) and forms part of the National Debt. The direct unconditional obligation of the Government to repay the National Debt applies equally to State Savings, which includes principal, interest and bonus payments if due, and in respect of Prize Bonds, cash prizes.

The value of one prize bond is €6.25 and the minimum purchase is four prize bonds costing €25. Each Prize Bond, that has not been encashed, is entered into a weekly draw with a range of cash prizes. The top prize is currently €1 Million in the last weekly draw of every second month (February, April, June, August, October and December) and €20,000 in all other weekly draws. Approximately eight thousand other cash prizes are awarded each week.

The European Council and European Parliament have adopted legislation to protect the financial system and certain professions and activities from being misused for money laundering and financing of terrorism. The anti-money-laundering obligations applicable in Ireland derive from the Third EU Money- Laundering Directive. The provisions of the Directive were transposed into Irish Law by the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 Part 4 of the Criminal Justice Act 2010 sets out the obligations in relation to customer identification for the purposes of the legislation. One such obligation set out in the Act is the obligation to conduct customer due diligence, prior to the establishment of a business relationship. Customer due diligence refers to the identification of customers and of any beneficial owners of financial products associated with the customer.

The extent to which any particular person or product may be exempted from the customer due diligence requirements of the Act is determined by reference to the Act having regard to the underlying Directives. An Post and the Prize Bond Company are deemed to be a “designated person” under the Criminal Justice Act 2010 as they fall within the definition of a ‘financial institution”. In light of this, An Post and the Prize Bond Company are required to comply with the relevant provisions of the Act in relation to the sale of Prize Bonds to customers. This means, in practical terms, that customer due diligence must be conducted on all purchases of prize bonds, irrespective of value.

Under the Criminal Justice Act 2010, the Central Bank is designated as the competent authority for financial services providers with the responsibility of monitoring them and taking measures that are reasonably necessary for the purposes of securing their compliance with the Act. The Central Bank of Ireland has no discretion to exempt certain firms from the requirement to comply with the Act.

In light of the above, I am exploring with the National Treasury Management Agency (NTMA) and my colleague the Minister for Justice whether or not exemptions available under the Directive may be applied to small-value purchases of prize bonds facilitated on behalf of the State by An Post and the Prize Bond Company.