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ECJ imposes €2m fine on Ireland over AML delays

Europe’s highest court, the European Court of Justice (ECJ), has ordered Ireland to pay a fine of €2 million to the European Commission over delays in implementing EU rules aimed at preventing the use of the financial system for the purposes of money-laundering or terrorist financing.

The case relates to EU Directive 2015/8491, which member states had to transpose into national law by 26 June 2017 and notify the European Commission of the relevant measures taken to implement the directive.

Obligations

In August 2018, the commission took Ireland and Romania to court for failure to fulfil its obligations on the directive, and sought the payment of a daily penalty for each day of delay, as well as a lump sum fine.

After both countries transposed the directive, the commission dropped the daily penalty part of its action.

Ireland had disputed the application of the system of penalties provided for in Article 260(3) TFEU, arguing that a lump sum fine was unjustified and disproportionate in the light of the facts of the case and the objective of that type of financial penalty.

But the court upheld the commission’s legal action, saying Ireland had failed to fulfil its obligations under the directive.

Discretion

The court has discretion to determine the size of the fine in such cases.

Even though Ireland had transposed the directive during the course of the proceedings, “the fact remains that that failure to fulfil obligations existed on the expiry of the period prescribed in the respective reasoned opinions, with the result that the effectiveness of EU law was not ensured at all times,” the court ruled.