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CASH: Cross-Border Transactions and the Role of the Irish Tax Institute

As cross-border transactions continue to grow in complexity and frequency, it’s essential for tax advisers to stay ahead of the curve when it comes to anti-money laundering (AML) regulations. In this article, we’ll delve into the role of the Irish Tax Institute and explore the importance of Business Risk Assessments and Customer Risk Assessments.

Business Risk Assessment

According to Section 30A(3) of the 2010 Act, tax advisers must document their Business Risk Assessment for all AML-regulated services. This assessment must consider factors such as:

  • The customer’s purpose
  • Level of assets
  • Transaction frequency

The Irish Tax Institute emphasizes the importance of ensuring that this assessment is available to any authorized person from the Competent Authority on request.

Customer Risk Assessment

Section 30B of the 2010 Act requires tax advisers to carry out standalone risk assessments to identify and assess the risks of money laundering and terrorist financing involved in carrying out an AML-regulated service. The Customer Risk Assessment must consider factors such as:

  • Country of origin
  • Business type
  • Customer characteristics

The Irish Tax Institute highlights the importance of considering the following customer characteristics that may indicate a higher risk of money laundering:

  • Significant and unexplained geographic distance between the tax adviser and the location of the customer
  • Frequent and unexplained movement of accounts or engagements to different Designated Persons
  • Requests to associate undue levels of secrecy with a business relationship
  • Situations where the origin of wealth and/or source of funds cannot be easily verified

Country Risk Assessment

The Irish Tax Institute notes that country risk assessment is a critical component of the Customer Risk Assessment. This involves evaluating the level of corruption, criminal activity, and political instability in a particular country to determine its potential for money laundering and terrorist financing.

Some countries may pose a higher risk due to:

  • Sanctions or embargoes issued by reputable sources
  • Lack of adequate AML regulations
  • Funding or support for terrorist activities
  • Significant levels of corruption

Tax advisers must consider these factors when assessing the risk posed by customers from certain countries.

Conclusion

In conclusion, the Irish Tax Institute emphasizes the importance of Business Risk Assessments and Customer Risk Assessments in preventing money laundering and terrorist financing. By considering country risk assessment, customer characteristics, and other relevant factors, tax advisers can develop an effective risk framework that mitigates these risks.

As cross-border transactions continue to grow, it’s essential for tax advisers to stay ahead of the curve when it comes to AML regulations. By working closely with the Irish Tax Institute and following best practices, tax advisers can ensure compliance with AML regulations and protect their customers from money laundering and terrorist financing.