In our last blog we wrote about the fact that the Department of Justice has recently published Ireland’s 2026 AML National Risk Assessment in advance of a FATF inspection expected in 2028. The last such assessment was carried out in 2019.
This week we look at another extract from the document focusing on the accountancy sector.
Vulnerabilities
While accountancy services, when delivered in line with legal obligations, can serve as a strong defence against economic crime, weaknesses in execution, whether accidental, negligent, or complicit, can inadvertently facilitate criminal activity. Financial distress and intimidation may be factors in cases of complicity, and once a client relationship is established, practitioners may find it difficult to disengage, even when concerns arise.
This can be compounded by:
- a reluctance to challenge long-standing clients or
- by a lack of formal disengagement procedures within smaller firms.
Some individuals in Ireland operate outside the regulated sector, using the title ‘accountant’ or ‘financial advisor’ without formal qualifications or oversight. These unregulated providers may unknowingly facilitate illicit activity due to limited awareness of AML/CFT obligations and risk indicators. In addition, Accountants engaged in the misuse of accounting services for illicit purposes often avoid interaction with supervisory authorities and remain disconnected from the regulated sector, further increasing the risk of misuse.
In contrast, regulated Accountants knowingly involved in illicit activity may be well-versed in regulatory requirements and ensure Client Due Diligence (CDD) records and related documentation are maintained to a high standard to create a façade of compliance. While such records may be falsified, their presence can complicate detection efforts and obscure the true nature of the activity.
The report highlights the risk of compartmentalizing services where the fragmentation of services can pose a risk. Criminals may engage different Accountants for distinct functions, such as tax advisory, payroll processing, and bookkeeping, thereby limiting each provider’s visibility of the client’s overall financial activity. This compartmentalization can prevent any single firm from developing a comprehensive understanding of the client’s operations, making it more difficult to identify suspicious patterns or inconsistencies. Smaller Accountants may only be engaged for specific tasks and lack access to broader financial records, impairing their ability to assess risk effectively.
Consequences of these vulnerabilities
Accountants act as gatekeepers to the financial services sector. A substantive ML, TF or PF incident in the sector would have a significant impact on the financial sector and result in reputational damage to Ireland’s financial services sector. As such, the consequence has been rated as significant.
Control Weaknesses
While most Irish Accountants demonstrate good compliance with AML regulations and CDD processes, control weaknesses persist in the form of gaps in awareness, oversight, or inconsistent application of procedures. These lapses are often linked to limited resourcing, particularly in smaller firms, where AML/CFT responsibilities may not be adequately supported by dedicated personnel or systems.
Between 2020 and 2024, the total volume of STRs submitted by Accountants remained consistently low, with submissions ranging from 9 to 33 reports annually.
While this may be indicative of the sector’s strong AML/CFT expertise, it may also be an indication of lower levels of understanding of ML red flags, given the heightened threat in the sector. Supervisory inspections by Designated Accountancy Bodies have not raised concerns about under-reporting, suggesting current volumes may be proportionate to risk; however, the persistently low figures may indicate a potential weakness in detection or escalation processes and should be adequately considered during supervisory activities
All the templates on our website have had a refresh as of June 2026 and the letters of engagement have had a new paragraph added for the potential use of artificial intelligence and machine learning on client assignments along with auto enrolment for payroll assignments. There is a bulk discount (five templates for the price of four) for purchases of five or more templates when purchased in a single transaction.
If you need an up-to-date engagement letter, there is a search bar near the bottom of our home page (www.jmcc.ie) to quickly look up the item you need. More details see 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 our training and brainstorming sessions to suit each firm’s unique requirements.
Publications:
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- The ISQM TOOLKIT 2022 is available to purchase here.
- See our latest Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click 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
