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Financial Institution Risk Assessment Crucial in Ireland, Experts Warn
In a bid to prevent financial crimes such as money laundering and terrorist financing, financial institutions in Ireland must conduct thorough risk assessments to identify potential vulnerabilities. According to industry experts, failure to do so could have severe consequences for the country’s financial stability.
Guidelines and Regulations
The Central Bank of Ireland has published guidelines on anti-money laundering (AML) and countering the financing of terrorism (CFT), which set out the expectations for credit and financial institutions in respect of their AML/CFT obligations. The guidelines also incorporate European Supervisory Authority guidelines and previous sectoral reports.
National Risk Assessment
Ireland’s National Risk Assessment (NRA) is another important source for financial institutions to support and inform their own risk assessments. The NRA assesses the ML/TF threats in Ireland and identifies vulnerabilities in various sectors, including:
- Products and services offered
- Customer base
- Countries of operation
- Delivery channels
European Guidance
European guidance on money laundering and terrorist financing risk is also crucial for Irish financial institutions. The European Banking Authority (EBA) has published final revised guidelines on ML/TF risk factors, which take into account changes to the EU AML/CFT legal framework and address new risks identified by EBA’s implementation reviews.
The European Commission has also issued its Supranational Risk Assessment Report (SNRA), which analyses money laundering and terrorism financing risks and recommends a comprehensive action plan to address them. The report is the third of its kind, with previous reports published in 2017 and 2019.
High-Risk Third Countries
High-risk third countries have been identified by the European Union, including those with strategic AML/CFT deficiencies. Financial institutions must comply with these guidelines to avoid severe penalties.
International Guidance
The Financial Action Task Force (FATF) has also published guidance on adopting a risk-based approach to combat money laundering, the financing of terrorism and proliferation of weapons of mass destruction. The FATF identifies jurisdictions with weak measures to combat ML/TF and publishes lists of high-risk and un-cooperative jurisdictions.
Basel Committee Guidelines
The Basel Committee has also issued guidelines on risk management related to anti-money laundering and terrorist financing, which describe how banks should include these risks within their overall risk management framework.
Conclusion
Conducting thorough risk assessments is crucial for financial institutions in Ireland to prevent financial crimes such as money laundering and terrorist financing. Experts warn that failure to do so could have severe consequences for the country’s financial stability and reputation.