Trump's rules cutbacks could weaken financial crime enforcement

US president Donald Trump makes an announcement about Apple with Apple CEO Tim Cook in the Oval Office in Washington, earlier this week. Picture: AP Photo/Alex Brandon

Firms in Ireland’s financial services sector fear cutbacks for US regulatory bodies under president Donald Trump’s administration could weaken global financial crime enforcement and lead to “serious vulnerabilities”.

The Compliance Institute polled 110 compliance experts working primarily in Irish financial services organisations nationwide, with 78% of respondents saying looser US anti-money-laundering (AML) rules will either make it more difficult for Irish firms to follow EU rules or could have the potential to do so.

The survey examined the views of compliance professionals around the deregulatory agenda, which Mr Trump has pursued since he was re-elected earlier this year, which, according to his administration, is aimed at “reducing unnecessary, burdensome, and costly federal regulations”.

Included in this deregulatory agenda is a freeze on all new US financial regulations, a recent U-turn on AML rules that helped track illicit finance, and funding cutbacks for key regulatory bodies.

“The Trump administration’s deregulatory agenda has sparked widespread concern across the Irish financial services industry — and not just because it could open the door to global financial crime,” Michael Kavanagh, CEO of the Compliance Institute, said.

“Irish financial services organisations are also alarmed that president Trump’s laxer AML rules could make it more difficult for Irish firms to meet their own AML obligations under EU law, leaving them vulnerable to fines and sanctions as a result.”

The new survey found that four in 10 financial services organisations believe that looser US AML obligations pose a challenge for Irish companies following EU rules as it will make cross-border compliance more difficult.

Almost eight in 10 Irish financial services organisations are concerned that the Trump administration’s reduced funding for US regulatory bodies could weaken global crime enforcement, with almost half (46%) saying that it could create “serious vulnerabilities” and almost a third (32%) believing it could lead to gaps in enforcement.