20 February 2017
On 7 October 2016, the Department of Finance and the Department of Justice and Equality published the first National Risk Assessment for Ireland (NRA) on money-laundering and terrorist financing (AML/CTF). The NRA is a detailed document and reflects a key objective of the inter-governmental Financial Action Task Force (FATF) to promote effective implementation of legal, regulatory and operational AML/CTF measures. The NRA also anticipates the Fourth Anti-money Laundering Directive (EU 2015/849) (AMLD4) which is required to become law in EU member states in June 2017. AMLD4 introduces a requirement for member states to identify, assess, understand and mitigate AML/CTF risks, related data protection concerns and to keep their assessments up to date. It is envisaged that the NRA will be kept updated.
The NRA includes a review of the risks present in sub-sectors within the Irish financial services industry including investment funds. The various sub-sectors were given risk ratings based on ‘residual risk’ i.e. ‘the residual risk after taking mitigants and other relevant factors into account’. The report acknowledges that a higher risk rating does not necessarily indicate that there is low compliance within the particular sector, noting that: ‘Some sectors will by their very nature or scale remain higher risk even with robust AML/CTF compliance, whilst others may remain unproblematic, despite potential vulnerabilities’.
Risk ratings were ascribed to 21 sub-sectors within the financial services industry including the following:
The NRA is a very useful document and provides significant detail not just on Ireland’s legislative, supervisory and enforcement architecture and environment in the area of AML/CTF, but also information, statistics and risk assessments of financial and non-financial businesses and professions in Ireland which are subject to AML/CTF obligations and which are at risk of AML/CTF vulnerabilities.