Brian Keegan: Vigilance on fraud can reap rewards
As well as protecting themselves from attack by cybercriminals, companies are obliged to report suspicious transactions to the gardaà and the Revenue.
Criminal is too small a word to describe the attacks on the computer systems of the HSE and the Department of Health in the past 10 days.
While there is something particularly evil about attacking state institutions at the forefront of tackling a pandemic, the episodes serve as a stark reminder of just how sophisticated international crime has become.
Successful crime, if success is the right word, results in gains, but that money is of no use to the criminal unless it can be spent. No enforcement agency can combat all criminal activity, but it is possible to make a good attempt at limiting the way that money can be used.
The choking off of spending opportunities for criminals was boosted in recent days with an extension of the criminal justice legislation, which deals with money-laundering activities.
In some cases, it may be easier for the authorities to curtail criminal activity by focusing on the use or misuse of criminal proceeds, rather than on the criminal activities themselves.
Al Capone didn’t serve jail time for bootlegging; he served it for tax evasion. Ireland’s anti-money-laundering law is rooted in European law and also draws from the work of an international forum, the Financial Action Task Force. This task force devises standards to identify and counter weaknesses in local financial systems that criminals can exploit.
Most of us are aware of the palaver associated with opening a bank account or merely transferring funds. Much of that is down to the existing anti-money-laundering rules that financial institutions must apply.
The new extensions to the rules largely deal with business-to-business arrangements rather than private consumers.
Anyone offering professional tax advice has to watch where the earnings being advised on might have arisen. If you are in the business of real estate, providing virtual currency services or dealing in high-value art, there are additional new checks to follow when dealing with clients.
It’s not that businesses are banned from trading if they are concerned that a transaction may be look shady, although it might sometimes be good professional practice not to proceed. Instead, these businesses are now obliged to notify both the gardaà and Revenue of any transactions that seem to be suspicious.
There are also some new rules for dealing with trusts. In essence, a trust is a form of structure where financial assets can be handled by trustees on behalf of someone else. They are a normal part of commercial life, but trust structures can be used to conceal who has the real benefit from ownership of the assets in the trust — remember that the trustees are managers, not owners. A central register of beneficial ownership will be maintained and is to be managed by Revenue.
Even politicians and public officials are included in the new levels of scrutiny. There are improved measures to monitor who might be open to being bribed or unduly influenced.
The introduction of these rules is a reminder that suspicion has to be part and parcel of how we deal with unsolicited emails and texts, requests for personal information, and offers that are just too good to be true.
This presents real dilemmas for legitimate businesses, which need to put checking procedures in place while not making the process too cumbersome or unattractive for customers to place orders and make payments.Â
There is now a competitive advantage to be gained by having good customer and transaction-checking procedures that don’t drive business away but still fully observe the law.
• Brian Keegan is director of public policy at Chartered Accountants Ireland.
