IRELAND’S FIRST NATIONAL RISK ASSESSMENT EYES CHALLENGES IN BANKING, CRYPTO-CURRENCY AND CYBER RISK

Ireland National Bank

While Ireland is considered a country with a relatively low overall crime rate, the country still faces many of the same threats as neighboring United Kingdom and nearby European states, with organized crime groups, corrupt power brokers and opportunistic hackers at the gates.

Those are just some of the findings in the country’s first ever National Risk Assessment for Money Laundering and Terrorist Financing, a lengthy and illuminating portal into Ireland’s defenses against a broad array of financial crimes, but also a more detailed view into outstanding vulnerabilities and rising risk areas, such as virtual currencies, cyber threats and even the historically staid retail banking sector.

Much like the United States and other countries who have also engaged in the challenging national risk assessment initiative, Ireland had to complete the assessment to be in compliance with the arbiter of global financial crime standards, the Paris-based Financial Action Task Force (FATF), as well as the European Union’s Fourth Anti-Money Laundering (AML) Directive.

According to the assessment, suspicious transaction reports in Ireland have mushroomed some 40 percent in recent years, while figures for investigations, prosecutions and convictions have all seen significant jumps.

“Predicate offences are perpetrated by offenders of various levels of sophistication, from small scale criminals, through criminalized professionals to organized crime gangs (OCGs),” according to the nearly 100-page tome.  

Overall, there are an estimated 40 OCGs in Ireland, of which at least nine have international links with OCGs in regions such as the Netherlands, Spain, West Africa and the United Kingdom.

“The presence in Ireland of foreign OCGs is evident in multi-jurisdictional economic crime areas such as human trafficking, drugs smuggling and distribution, firearms smuggling, tobacco smuggling, vehicle theft, and counterfeiting,” according to the report.

Moreover, the level of multi-jurisdictional OCG activity in Ireland “has increased in recent years, both on a cross-border basis; with OCGs in Northern Ireland, and internationally, where increased collaboration has become evident.” Varying estimates peg the amount laundered in Ireland annually at roughly 1.1 percent of GDP, or more than $2 billion.

Ireland sees digital currencies as emerging laundering technique

Law enforcement intelligence suggests that the proceeds generated by financial crime, including social welfare fraud and computer enabled financial crime are “processed by means of electronic payments, with money often moved quickly through the banking, payments, and financial sectors.”

That is helped by these criminal groups using a tangled thicket of “mule accounts, bogus accounts, or opaque corporate accounts” to launder proceeds. “An emerging trend is the use of cryptocurrencies, such as Bitcoin, to launder the proceeds of computer-enabled financial crime, i.e. crimes such as phishing frauds committed with the assistance of general (e.g. email) and specialized (e.g. payment services) IT systems.”

Other areas highlighted by the risk assessment include the “increasing threat” of tobacco smuggling, prostitution, and human trafficking, which can use victims’ bank accounts to launder their illicit proceeds. The report also noted rises in stealing valuable, but non-precious, metals.

Similar to the United States, the report stated Ireland is attempting to better crack down on anonymous corporate entities that don’t divulge ownership details. It also indicated concerns over the money services business sector, particularly money changers and remitters, because they can allow anonymous transactions that leave no intelligence trail to the larger criminal organization.

Cyber threats in Ireland rise rapidly in recent years

In tandem with other countries becoming more concern about attacks coming in through virtual vulnerabilities, Ireland stated that cybercrime was a quickly rising risk that both the government and banks are starting to take more seriously.

“Research suggests that 44 percent of Irish businesses are impacted by cybercrime, which is almost double the rate in 2012, and that 36 percent of Irish businesses view cybercrime as the greatest future risk,” according to the report.

Ireland’s retail banking sector is also vulnerable to “all stages of the money laundering process” and terror financing as retail banking is a cornerstone of the financial system, according to the report.

In particular, the “number of international transactions creates opportunities for misuse especially where the origin or path of funds is not fully disclosed,” according to the report.