Financial institutions urged to protect firms against money laundering

Financial institutions urged to protect firms against money laundering

Irish financial institutions have been urged to protect firms against drug dealers, human traffickers, terrorists and crime gangs who use the financial system.

The Central Bank of Ireland has published guidelines to help financial firms prevent money laundering and the financing of terrorism.

It is estimated that between 2-5% of global GDP is laundered each year –  between €715 billion and €1.87 trillion.

Speaking at the launch in Dublin, director general of financial conduct Derville Rowland said: “Firms must adopt a risk-based approach to fulfilling their obligations and ensure that their controls, policies and procedures are fit for purpose, up-to-date, tested and kept under constant review and scrutiny.

“At the Central Bank, we believe that effective regulation in this area strengthens the integrity of the financial sector, and contributes to the safety and security of citizens, by preventing drug dealers, and those engaged in human trafficking, terrorist attacks and organised crime, from using the financial system to support these activities.

“Lives can be saved, if such criminal activity is curtailed.

“While compliance can be burdensome at times, it means that firms are playing their part in stopping the regulated financial system being used for criminal means.”

In a report published this year, the Basel AML Index – an independent annual ranking that assesses the risk of money laundering and terrorist financing – found Ireland to be one of the best performing countries in relation to the transparency of public disclosures, the openness of budgets and public accountability.

Ms Rowland also said that the categories of people who can be regarded as politically exposed now include members of the governing bodies of political parties.

“That’s because people who hold – or have held – a high political profile can pose a higher money laundering risk to firms as their position may make them vulnerable to corruption such as accepting bribes or contributions to election campaigns and political parties in return for advantages,” she added.

Firms have been warned to consider if their customers have any political connections or links to sectors that are commonly associated with higher corruption risk, including construction, pharmaceuticals and healthcare, arms trade and defence and public procurement.

The guidelines also urge businesses to be aware if a customer holds a prominent position or enjoys a “high public profile” that might enable them to abuse their position for private gain.

It states: “If they are a senior local or regional public officials with the ability to influence the awarding of public contracts, or decision-making members of high profile sporting bodies, or individuals that are known to influence the government and other senior decision-makers.”

“Financial institutions must know their customers, understand their customer profiles, monitor the way accounts are used and make reports of suspicions to An Garda Síochána, and the Revenue Commissioners where appropriate,” she added.

- Press Association

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