EU AML/CTF Action Plan: An Opportunity for Better Coordination and Regulatory Efforts

As financial institutions and regulatory bodies navigate the complexities of information sharing, regulatory arbitrage, and supervisory fragmentation, the EU’s Anti-Money Laundering (AML) / Counter-Terrorist Financing (CFT) Action Plan offers a welcome opportunity to drive better coordination, high standards, and effective collective effort across Europe.

Raising Awareness of Fraud and Market Abuse

Identifying Key Areas for Awareness and Vigilance

The Central Bank has identified two key areas where awareness and vigilance are essential: fraud and market abuse. The rise of online and telephone scams has led to a surge in fraudulent activity, preying on people’s vulnerabilities and exacerbating the issue.

• Fraud: We recognize that consumers must be equipped with the knowledge and skills to recognize, avoid, and report fraud.
• Market Abuse: Financial markets activity in Ireland is at risk of market abuse, including insider trading, which undermines the efficiency, transparency, and integrity of the markets. Our strengthened market monitoring and detection capabilities are designed to protect the financial system from abusive practices.

Changing Risks in Financial Crime

Evolution of Financial Crime Risks

In a rapidly changing environment, the risks posed by financial crime are evolving quickly. The way in which financial services were provided five years ago has changed, and it will continue to change in the future. This presents opportunities for innovation and growth but also challenges for regulators and firms alike.

• Understanding ML/TF Risks: To mitigate these risks, we emphasize the importance of firms understanding the money laundering (ML) / terrorist financing (TF) risks specific to their business and developing effective AML/CFT risk management frameworks.
• Regulatory Landscape Changes: We also recognize that the regulatory landscape is changing, with new requirements emerging in areas such as financial sanctions.

Enhancing Regulatory Approach

Data-Driven, Intelligence-Led, and Scalable Approach

As part of our strategy, we are enhancing our regulatory and supervisory approach to be more data-driven, intelligence-led, and scalable. This requires us to continuously review our understanding of risks in firms, sectors, and the system as a whole and take proactive steps to mitigate those risks.

Conclusion

While we face significant challenges, we have many reasons to be optimistic about our collective efforts to prevent abuse of the financial system. By working together, sharing information, and coordinating our approach, we can achieve the shared goal of protecting the vulnerable from scams and fraud and mitigating the risks posed by financial crime.