Global Financial Crime Statistics: Ireland’s Efforts Show Promise, But Vigilance Remains Essential
A recent report by LexisNexis Risk Solutions has highlighted the efforts of Irish financial services firms in tackling financial crime, with a staggering 94% of compliance professionals expressing confidence in their ability to identify and track new types of crime and criminal methodologies. This comes as Ireland faces an estimated annual loss of €1.7 billion due to organized crime, including violent drug gangs and predicate offenses such as murder, terrorism, and human trafficking.
Financial Crime Remains a Relentless Threat
Ireland’s financial institutions have invested heavily in bolstering controls to prevent financial crime, with large firms spending on average €23 million annually on compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations. However, despite these efforts, financial crime remains a relentless and constantly evolving threat.
The Complexity of Financial Crime
The report reveals that Irish firms are being overwhelmed by the sheer volume and complexity of attacks, including:
- Criminal use of third-party advisers
- Money mules
- Abuse of offshore corporate structures
While 93% of institutions expressed confidence in their ability to detect such crimes, over half (54%) were exposed to criminal use of third-party advisers, with a similar proportion expecting this risk to continue.
The Rise of New Threats
The report also highlights the following trends:
- Money mules: detected by 47% of firms, with a third (33%) anticipating a rise in future attacks
- Abuse of offshore structures: detected by 38% of firms and expected to increase by over a quarter (27%)
International Cooperation and Regulation
Financial crime is a global issue, and Ireland’s efforts must be matched by international cooperation and regulation. The EU’s fifth anti-money laundering directive (5MLD) has brought emerging technologies under regulatory scope for the first time, with new requirements for crypto-asset exchanges and digital wallet providers.
Differences in Approach
Ireland’s approach to tackling financial crime differs from that of the UK, which has already implemented 5MLD. The country’s lower labor costs may result in a higher headcount and less reliance on technology, but this could ultimately make manual controls less effective against complex forms of financial crime.
Prioritizing Investment
Experts argue that businesses must invest in people with the right skill set to carry out cognitive risk-based analysis of data, while also utilizing automated solutions to analyze massive amounts of information. As regulators increasingly insist on a blend of human and technological solutions, Ireland’s financial institutions would do well to prioritize investment in technology to ensure their ability to detect crime effectively today and tomorrow.
Conclusion
While Ireland’s efforts to combat financial crime show promise, vigilance remains essential. With the threat of financial crime constantly evolving, it is crucial that Irish financial institutions continue to invest in people, technology, and processes to stay ahead of this complex and ever-changing landscape.