By Dan Byrne for AMLi
THE Irish Central Bank has made several criticisms regarding the AML practices of the country’s financial institutions.
In their sixth anti-money laundering bulletin this month, the bank highlight inconsistencies in a multitude of areas including transaction monitoring and a lax overreliance on automation.
The importance of good transaction monitoring “has been highlighted in recent years following a number of high-profile European cases,” related to billions of euro in dirty money transfers, the bank said in a statement.
In its investigations, it found some errors in monitoring protocols common across many institutions.
AML risks were not addressed properly, processes were not adapted to each individual organisation, capacity to adapt to new challenges like COVID-19 was lacking, and management had not taken steps to fix weaknesses where they were found, the bank said in summary.
Additionally, the practice of using automation to detect suspicious transactions has also been criticised by the central bank – not because it is against automation, but because firms inadequately assess or control those systems once they are in place.
Automation has received a broad welcome in the AML community for its capacity to turn what could have been days of manual work into minutes of computer work. Indeed, the Central Bank has described it as “necessary” in many instances.
However, it has said that firms sometimes don’t have any input into automation once it is running, rarely review or test their systems, and cannot make changes to their systems where changes may be necessary.
The comments throw further shade on the capacity to accurately screen for laundered cash in a country that was described as a ‘money laundering soft spot’ by renowned financier and political activist Bill Browder.
Ireland was singled out as recently as this month for its financial reputation. Debate in Brussels during the fallout from the FinCEN files laundering scandal saw the country named and shamed by MEPs. In addition, it was fined €2million by the EU in August 2020 for a delay in implementing the bloc’s fifth AML directive – due to have been in force from January.
In light of the Central Bank’s criticisms, Irish firms are being urged to update their systems in several key areas.
It wants transaction monitoring tools “tailored to each firm’s business risk assessment,” so that they can detect what suspicious activity looks like within the niche of a particular firm’s business.
Additionally, it wants firms to avoid placing “absolute reliance” on automated solutions and prepare employees for the prospect of manual monitoring to support it.
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