Credit union shuts scheme, citing laundering rules

A credit union with a chequered history has shut down its group Christmas savings accounts, citing money-laundering regulations.

Gurranabraher Credit Union, on the northside of Cork City, wrote to members at the end of January saying that from February 9, it would no longer accept lodgements into the popular accounts. Members were instructed to withdraw money by February 16 “to facilitate the closure”.

The letter, from manager Philip Hosford, and seen by the Irish Examiner, said: “We appreciate that the withdrawal of the group Christmas savings account may be an inconvenience; however due to money laundering regulations, this particular savings service can no longer be provided.”

The Irish Examiner sent a series of questions to Mr Hosford asking what was behind his decision and if he had concerns that the accounts were being used to launder money. Mr Hosford failed to respond.

The chairman of the board of Gurranabraher Credit Union, Michael O’Connell, said: “We will not be commenting on the operational matters of the credit union.”

The Irish Examiner contacted the Irish League of Credit Unions to ask if other credit unions were taking the same steps in relation to money laundering regulations. A spokesperson said: “It is not a national initiative. The decision was taken locally by the credit union.”

The Central Bank, which regulates credit unions, said there were “no specific legislative or regulatory requirements relating to group saving clubs”.

Schemes such as the Christmas savings account are operated by a representative of the group and could include, inter alia, family members, work colleagues, and sports and social clubs.

Lodgements are made by the representative during the year and there is usually a set payout date before Christmas. The schemes are designed to make the festive period less financially stressful.

The Central Bank said credit unions must ensure, under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, that appropriate customer due diligence is undertaken to ensure the credit union has a means to identify and verify the identity of its customers.

Gurranabraher Credit Union was most recently in the news after a staff member was dismissed for alleged misappropriation of funds. The matter, which came to light last year, is the subject of a garda investigation. In the past, Gurranabraher Credit Union was the subject of a probe by the Registrar of Credit Unions. It has around 15,000 members and assets of €97m.