THE CENTRAL BANK has settled legal action against an Irish arm of the Swiss bank UBS for three breaches of a 2010 law aimed at curbing the financing of terrorism.

The bank took action after a 2010 inspection found UBS International Life Ltd had failed to comply with provisions of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010.

That legislation came into force in July 2010, with the intention of protecting the Irish financial system from exposure to money laundering and activities financing terrorism.

In an inspection in 2010, however, the Central Bank found that its provisions had not been implemented.

The Central Bank today said UBS International Life had failed to demonstrate any instructions given to staff in relation to the new law and that, with one exception, the company’s directors were not given such instructions until April 2011.

Furthermore, the firm did not show that it had met the requirements for placing reliance on third parties, which was a breach of the new law, from July 2010 until May 2011.

It also failed to adopt the appropriate written policies and procedures needed to identify suspicious transactions, a failure which amounted to a third breach of the law.

The action is the first of its kind under the 2010 law, introduced by former justice minister Dermot Ahern.

In a statement this afternoon the Central Bank said the sanctions reflected “the seriousness with which the Central Bank views breaches of the legislative provisions which are designed to prevent the use of the financial system for the purpose of money laundering and terrorist financing”.

The bank said UBS International Life had stated that it took teh matter “extremely seriously” and that it had now provided documentation to show the breaches had since been rectified.

Its director of enforcement, Peter Oakes, said firms needed to adopt “robust and effective policies and procedures to prevent and detect money laundering and terrorist financing”.

This included measures to ensure that “policies, procedures and business practices are updated in timely manner on foot of changes to regulatory requirements”, he said.