Drimnagh Credit Union has been fined €125,000 by the Central Bank for “significant and widespread failings” in its policies to counter money-laundering and for making prohibited payments to directors.

The Central Bank reprimanded Drimnagh for two breaches of the 1997 Credit Union Act and five breaches of the 2010 Criminal Justice Act, which relates to money laundering and terrorist financing. It admitted all seven breaches.

A spokeswoman said that it had co-operated fully with the investigation and that members’ accounts had not been affected.

“The breaches identified included a lack of adequate anti money-laundering policies between July 2010 and September 2015, prohibited payments and expenses made to directors and a member of the board oversight committee . . . and failure to maintain the correct controls regarding claiming, recording and approving of expenses between August 2013 and November 2014,” the spokeswoman said.

“The credit union has taken steps to rectify these matters including the repayment of monies owed.”

The Central Bank said the breaches represented significant and widespread failings on Drimnagh Credit Union’s behalf, particularly in relation to its implementation of policies and procedures, and conducting customer due diligence.

Derville Rowland, director of enforcement at the Central Bank, said that the union was failing in its primary purpose, which was to safeguard and protect members’ funds.

“This is highly concerning behaviour and breaches of this nature will not be tolerated by the Central Bank,” Ms Rowland said.

She addedit was unacceptable that Drimnagh had no practices in place to counter money-laundering or terrorism for 11 months.

“When such policies and procedures were adopted, almost a full year after they should have been introduced, they were wholly inadequate in key areas such as customer due diligence, transaction monitoring, suspicious transaction reporting and training,” Ms Rowland said.

“In addition, Drimnagh Credit Union did not monitor and manage compliance with the policies once adopted and did not ensure they were internally communicated to staff members.”

The Central Bank has expressed concern about the governance structures of a number of credit unions after it found deficiencies during inspections carried out last year. It discovered “a minimalist compliance approach” in an “unacceptably large number of credit unions” with deficiencies identified across a range of areas including due diligence and record keeping.

The bank said that while some credit unions had embraced the rules set down in 2013, many were yet to adopt the requirements.

The issue of governance in the credit union sector was highlighted late last year when a liquidator was appointed to Rush Credit Union amid fears it could face a “disorderly collapse” after the discovery of a €4.7 million hole in its reserves.