The Central Bank of Ireland has imposed a €36,273 fine on Swilly Mulroy Credit Union in Co Donegal after uncovering serious breaches of anti-money laundering legislation and the Credit Union Act 1997.
The enforcement action follows a detailed investigation by the Central Bank’s Anti-Money Laundering Division, which identified systemic failures in the credit union’s handling of deposits between January 2014 and June 2021. During that period, Swilly Mulroy Credit Union accepted over €8.7 million in cash deposits through 2,329 lodgements from individuals who did not hold accounts with the institution.
Breaches of National Legislation
Under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, financial institutions are legally obligated to identify and verify the identity of their customers as part of anti-money laundering (AML) controls. Similarly, the Credit Union Act 1997 mandates credit unions to implement risk management frameworks to monitor and mitigate potential risks.
The Central Bank’s probe revealed that Swilly Mulroy operated a longstanding practice of receiving and transferring third-party cash lodgements—amounts that were not initially deposited in accounts under the depositors’ names. Instead, funds were immediately forwarded electronically to a local bank branch, bypassing essential AML protocols.
As a result, the credit union failed to conduct critical due diligence checks, exposing the institution to potential misuse by criminal actors.
Longstanding Risks Ignored
The investigation highlighted that Swilly Mulroy’s Board had been aware of the risks associated with the unregulated cash lodgement practice as early as 2015. However, no substantial action was taken to address or halt the activity until a new management team took over in 2021.
The new management team discontinued the problematic practice and alerted the Board, yet the Central Bank was not informed of the compliance breach. It only came to light in 2022 during a routine AML inspection.
Swilly Mulroy Credit Union has since admitted to the breaches.
Central Bank Response and Enforcement
The Central Bank determined that both a reprimand and a financial penalty were warranted. The original penalty was set at €51,819 but was reduced by 30% under the regulator’s early settlement scheme, bringing the total fine to €36,273.
The sanction remains subject to confirmation by the High Court and will not take effect until approved.
This enforcement marks the 160th outcome under the Central Bank’s enforcement strategy, bringing the total fines levied by the regulator to over €407 million to date.
Regulatory Warning to the Sector
Colm Kincaid, the Central Bank’s Director of Enforcement, emphasized the importance of rigorous AML compliance.
“Anti-money laundering and counter terrorist financing laws are essential to protect the financial system from abuse,” said Kincaid. “Key to these protections is the obligation on financial institutions to verify customer identities and report control failures when they arise.”
He further warned that lapses in control frameworks present clear opportunities for criminal activity and urged all financial entities to maintain high standards of regulatory compliance.
“Today’s enforcement action underscores our commitment to maintaining the integrity of Ireland’s financial system,” he concluded.
Context and Implications
The enforcement against Swilly Mulroy Credit Union highlights persistent vulnerabilities in the credit union sector, particularly among smaller community-based institutions. This case serves as a stark reminder that all financial firms—regardless of size—must meet the same stringent regulatory standards.
The Central Bank continues to focus on ensuring that institutions have effective internal systems to prevent the misuse of Ireland’s financial infrastructure.
