Ireland: Department Of Finance Publishes National Risk Assessment For Ireland

Last Updated: 18 October 2016
Article by Robert Cain, Orla O'Connor and Maedhbh Clancy

The Department of Finance has published its first National Risk Assessment for Ireland (Money Laundering and Terrorist Financing) (the Risk Assessment) in conjunction with the Department of Justice and Equality with the intention of improving understanding of Ireland's risks in this area, enabling strategies to be developed to address those risks, and allocating resources to implement those strategies. In line with Ireland's ongoing commitments as a member of the Financial Action Task Force and in anticipation of its ongoing commitments once the Fourth Money Laundering Directive (MLD4) comes into force (see our recent briefing: MLD4: Earlier Transposition?), the Risk Assessment will be updated on an ongoing basis.

KEY FINDINGS – FINANCIAL SECTOR

Various financial services sectors were assessed and given an overall risk rating for potential money laundering (ML) and terrorist financing (TF) risks. The Risk Assessment noted that high risk ratings were not indicative of a lack of compliance in the relevant sector, but that instead some sectors, by their nature, always have a higher level of residual risk. High risk ratings were given to, among others, the retail banking and money remittance sectors, with the lowest ratings given to trust or company service providers (TCSPs) and retail intermediaries. Retail Banks

The core retail banks operating in the Irish system are viewed as being particularly vulnerable to ML and TF due to their central function within the banking system, with the volume of transactions processed by those banks making it more difficult to detect possible issues.

In 2015, 62% of suspicious transaction reports (STRs) were made by credit institutions, with the majority of that 62% reported by the core retail banks.

Non-Retail Banks

The 17 non-retail banks were assessed as having a medium-high ML and TF risk, largely attributable to the non-face-to-face nature of many of their dealings, their diverse customer base which can often include politically-exposed persons and the complex nature of the products that they offer.

Payment Institutions

Over 6% of STRs made in 2015 were made by payment institutions. Those payment institutions categorised as money remittance firms were assessed as being at high risk of exposure to ML and TF due to the cash-based nature of their business, their transient customer base and their use of agents. Other types of payment institutions were assessed as being at medium-low risk; their customer relationships are more long-lasting in nature, and their transactions are less cash-based.

Life Assurance

While overall the domestic and cross-border life assurance sector was assessed as having a medium-low risk due to the less flexible nature of some of the products, single premium investment products were deemed to be of higher risk; the Risk Assessment noted that this risk could be mitigated by due diligence and by controls at point of claim/encashment time.

Funds and Fund Administrators

The risk assessment for the funds industry was medium-high, in particular in light of its broad customer base, complex legal structures and wide geographical reach. The high level of outsourcing in this sector was also highlighted. Fund administrators were viewed as being particularly exposed to a high level of risk due to their direct relationship with the client.

Asset Managers and Investment Firms

The 77 asset managers authorised by the Central Bank were assessed as being at medium-low risk for ML and TF. While asset managers deal with complex ownership structures, there is often face-to-face customer interaction at the outset, with detailed source-of-funds information sought and long-lasting business relationships developed.

Investment firms other than asset managers were assessed as being at medium-high risk however, as many customer dealings are carried out without face-to-face contact and a number of higher-risk trade execution and wealth management services are provided.

Credit Unions

The ML and TF risk for credit unions was assessed as medium-low in light of the local services that they provide. It was noted however that, as more dealings move online rather than taking place face-to-face, this could make customer due diligence (CDD) more difficult for these entities.

Moneylenders

In light of the small cash amounts that are usually the subject of transactions carried out by moneylenders, the 40 authorised moneylenders within the scope of the Risk Assessment were viewed as being at medium-low risk for ML and TF purposes.

TCSPs

As the TCSPs that are authorised by the Central Bank are subsidiaries of credit institutions and financial institutions that are themselves regulated by the Central Bank, the ML and TF risk associated with these entities was viewed as low, as the services they provide are generally ancillary to those provided by their regulated parent entities.

Retail Intermediaries

For the approximately 2,000 Irish retail intermediaries, their risk of exposure to ML and TF was assessed as low on the basis that they generally do not handle cash.

OTHER NOTABLE FINDINGS

TCSPs in the non-financial sector

These entities, which often provide company incorporation services, registered office and nominee shareholder services were assessed as being at medium-high risk for ML and TF due to their potential exposure to high-risk jurisdictions, and a lack of face-to-face contact with potential customers. However, the Risk Assessment noted the strict authorisation and inspection processes imposed on those TCSPs by the Minister for Justice and Equality (as competent authority) were potential mitigants. When MLD4 comes into force, it may further reduce the risk in this sector as Member States must ensure that entities incorporated in their jurisdictions obtain and hold "adequate, accurate and current information on their beneficial ownership" which can be accessed by competent authorities and EU Financial Intelligence Units. For further details, see our briefing: Fourth Money Laundering Directive published in Official Journal.

Companies – Risk Mitigants

A number of factors were also listed in the Risk Assessment as reducing the exposure in respect of Irish corporates to ML and TF, including the following:

  • the fact that Irish competent authorities operate in a relatively unified manner;
  • the efficient nature of the "file and publish" regime in the Companies Registration Office (CRO);
  • the work of the Office of the Director of Corporate Enforcement;
  • the interface between the CRO and the Revenue Commissioners, leading to an increased level of cooperation between both organisations; and
  • the top compliance rating given to Ireland by the OECD regarding the exchange of tax-related information.

Digital Cash and Virtual Currency

The Risk Assessment noted that the area of electronic money will be kept under constant review due to possible ML and TF risks, but noted that there has been little indication to date that e-money is being used in Ireland for ML and TF purposes, perhaps due to the requirement that issuers of e-money be licenced, and the fact that only amounts below a low threshold would bring a transaction outside of CDD requirements.

Regarding virtual currencies, it was noted that these could provide an untraceable facility to carry out both ML and TF, but that the risks involved do not yet seem to have come to the forefront in Ireland. This particular area continues to be subject to monitoring both in Ireland and at EU level.

Overall, the Risk Assessment provides extremely useful insight into the current levels of ML and TF risks that financial services providers face in Ireland, the legal and supervisory structures in place to protect the financial services industry, and the avenues open to competent authorities in Ireland to pursue those who breach the anti-money laundering (AML) and counter-terrorist financing (CTF) regime.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.