Accountancy firms focus a lot on the threat of money laundering, when dealing with clients, but there is another threat that is much more insidious and more difficult to detect and prevent, and that is terrorist financing. The prevention of terrorist financing is known as counter-terrorist financing or ‘CFT’.
Terrorist financing does not necessarily involve the proceeds of crime and in fact the funds used may come from legitimate sources such as salaries, businesses, charities, donations or personal savings. Transactions may appear routine and involve relatively small amounts.
Ireland’s 2026 National Risk Assessment in Ireland (2026 NRA) highlights the importance of this issue for the accountancy sector.
Accounting firms (known in the NRA as Accountancy Service Providers) are assessed as having a significant terrorist financing risk, while Trust and Company Service Providers (TCSPs) supervised by accountancy bodies are assessed as having a moderate risk.
The Financial Action Task Force (FATF) in its July 2025 report noted that terrorist entities are reported as increasingly using professional enablers such as accountants to facilitate their financing networks.
Accountants must remain alert to indicators that may suggest funds are being used to support terrorist individuals, organisations or activities. The warning signs include (in no particular order and please note this is not an exhaustive list):
- Unexplained links to jurisdictions affected by terrorism, conflict or extremism;
- Business activities and relationships involving countries with known terrorism links or persons subject to international sanctions;
- Financial activity that is inconsistent with a client’s stated business activities Unexplained fundraising activities or collections of funds;
- Charities or non-profit organisations operating cross-border, in high-risk regions or in conflict zones (which are often simultaneously areas of humanitarian crisis) lacking adequate oversight or transparency regarding the ultimate beneficiaries of funds;
- Charities or non-profit organisations that lack formal governance, financial management, financial control, and risk management frameworks;
- Corporate structures and complex intermediary relationships that obscure links to terrorist financing and/or sanctioned individuals or entities; and
- Client’s business operating with limited staff despite high transaction volumes.
The presence of one or more of these indicators should prompt further enquiry and consideration as part of the firm’s risk-based approach to AML/CFT compliance when on-boarding new clients or carrying out periodic updating reviews on existing clients.
It’s now also expected that all new clients being onboarded and existing client subject to updated AML reviews undergo sanctions checks under the latest CCAB AML Guidance for the Accountancy Sector updated in July 2026.
See our full range of updated letter of engagement templates, now including a paragraph dealing with the use of artificial intelligence, visit our online store here.
For those of you still in the process of ISQM 1 implementation, please see our ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please call or e-mail John McCarthy FCA or e-mail him at john@jmcc.ie.
We typically tailor ISQM training and brainstorming sessions to suit each firm’s unique requirements.
Publications:
- The ISQM TOOLKIT 2022 is available to purchase here.
- To ensure your letters of engagement and similar templates are up to date visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
