Financial Inclusion and Financial Crime in Ireland: A Growing Concern?
Confidence in Combating Financial Crime
A recent report by LexisNexis Risk Solutions has revealed that Irish financial services firms are confident in their ability to tackle financial crime, with 94% of compliance professionals surveyed displaying high levels of self-assurance in identifying and tracking new types of crime and criminal methodologies. However, despite this confidence, the country’s financial institutions face a growing threat from financial criminals who continue to evolve and adapt their tactics.
The Impact of Financial Crime
Financial crime not only targets account holders’ savings and assets but also provides funding for a wide range of other offenses, including:
- Violent drug gangs
- Murder
- Terrorism
- Human trafficking
According to a study funded by the European Commission, financial crime costs Ireland over €1.7 billion per year.
Combating Financial Crime
Irish financial institutions have spent heavily on bolstering their controls, with large firms investing an average of €23 million in compliance with financial crime regulations. However, despite these efforts, the report suggests that financial criminals are tailoring attacks based on the perceived weakness of target organizations, using typologies they believe they’re least able to detect.
Common Forms of Attack
The most common forms of attack detected by Irish firms include:
- Abuse of offshore structures (38%)
- Money mules (47%)
- Criminal use of third-party advisers (54%)
The Role of Technology in Detecting Financial Crime
Automated solutions play a crucial role in analyzing massive amounts of data to detect patterns of suspicious activity. However, manual controls are generally less effective, and businesses must strike a balance between human analysis and technological solutions.
Regulation in the Fight Against Financial Crime
The EU’s fifth anti-money laundering directive (5MLD) has come into force in UK law earlier this year but only authorized in Ireland in August. The report suggests that Irish firms may be better prepared or at lower risk of attack due to their approach to tackling and detecting financial crime.
Conclusion
While Irish financial institutions have made significant progress in combating financial crime, the threat remains a growing concern. It is essential for these organizations to continue investing in technology, human resources, and regulatory compliance to stay ahead of the evolving tactics of financial criminals.