By Julian Dixon, CEO of anti-money laundering experts Fortytwo Data
The latest reports on the level of money laundering in Ireland offer a perfect opportunity to shine a light on these practices, and the issues both businesses and regulators are facing in compliance and prevention.
That the Irish tech and financial services sector has boomed in the last few years is no secret. It is a huge boost to the economy and to the jobs market, and has helped position Ireland as being at the cutting edge of the global game.
A knock-on effect of this huge surge in activity, however, is a big increase in risk. The 2017 money laundering figures show that more than 24,000 suspicious transactions were reported by Irish banks and financial institutions — a large number in its own right but, at more than double the activity of 2012, a giant leap in just five years.
We’ve already seen this happen in London, which fast became the money laundering capital of Europe. Despite the best efforts of many regulators and authorities, and the majority of businesses who do work hard on compliance, the horse has long since bolted.
In fact, the SFO recently admitted that as much as £150 billion worth of dirty money flows through the UK’s capital every year.
And this is why Ireland needs to remain wary. Being seen as ‘open for business’ is hugely beneficial when it comes to attracting blue chip companies and ambitious, cutting-edge financial service providers, but it will also catch the eye of all would-be money launderers — more activity means more opportunity.
This is only going to grow in the coming years. It is not just banks who need to be compliant with money laundering directives but all companies whose business involves financial transactions — in other words, a vast number.
All transactions need to be screened for potential money laundering offences, which is potentially a very time-consuming process. There are new platforms that integrate AI and machine learning into their detection models, making for a far more efficient system, but many banks and other companies are still reliant on outdated legacy systems that are just not up to the job anymore.
This is more concerning now than ever as the sheer quantity of entities needing to be tested continues to grow.
The 100% increase in red flags may be entirely proportionate with the growth of Ireland’s financial services industry but it is almost certainly still only the tip of the iceberg.
The combination of Brexit-fuelled uncertainty and Ireland’s attractive position as the new kid on the block may leave it vulnerable to being targeted by money launderers who have been using London as their haven in recent years. An EU-connected hub, with a thriving tech and financial sector that is only going to continue to grow, will certainly be appealing to many.
The Irish authorities prosecuted 42 people for money laundering last year, twice as many as they had in 2016.
The next few years are likely to be even busier and it is only a ravenous appetite for technology that will prevent Ireland from becoming a victim of its own success, just as London has been.