by John McCarthy Consulting Ltd. | Nov 10, 2024 | Blog, News
The Chartered Accountants Ireland issued their AML Supervision Report for 2023/24 recently. The Institute supervises almost 1,700 firms, of which 72% (1,222 firms) are in the RoI.
It is apparent from the report that some of the future emerging risks arising from the 2023/24 AML supervision cycle include:
- Crypto currency – a very limited number of firms have exposure to this risk;
- The increasing prevalence of artificial intelligence – there is so much that is unknown about how AI may be used to facilitate money laundering;
- Money laundering or investment scams associated with green finance;
- The continued potential for post-Covid fraud such as that arising from the Restart/Bounce Back loans and Income Support Schemes continues to exist, and it remains a continuing risk especially for the insolvency profession;
- Issues arising from the Ukraine crisis also remain in focus – although media interest in the ongoing war has waned, there is still the concern of displacement activity relating to sanctioned individuals and entities.
The Report identifies various risk factors to which accountancy firms may be exposed, including but not limited to the following:
- Higher risk services;
- Higher risk clients;
- Exposure to high-risk jurisdictions;
- Complex firm structures; and
- Poor regulatory history.
There will be more extracts from this interesting report in the coming weeks.
For more on engagement and representation letter templates and a variety of CPD webinars on money laundering and other accounting/audit related topics, please go to our website for:
ISQM TOOLKIT, or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard. We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. Please contact John McCarthy FCA by email at john@jmcc.ie.
by John McCarthy Consulting Ltd. | Nov 10, 2024 | Blog, News
As we saw in last week’s blog almost 42,000 companies (14%) and 239 Societies (25%) were non-compliant with their RBO registration requirements at the end of 2023 – the latest date reported on by the Registrar of Beneficial Ownership.
This position is in stark contrast to the numbers of Discrepancy and Non-Compliance Notices (see more below) that are being filed. One would expect such notices to be increasing when the rate of non-compliance is so high, but in fact the rate of these reports fell by up to 67% between 2022 and 2023! This may be only a temporary phenomenon (see more below), but penalties may follow unless the situation improves.
The Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 (the Act) requires ‘designated persons’ (defined in Regulation 20(3)(b) of SI 110 of 2019) such as accountants, law firms, banks and certain other service providers to inspect the RBO register as part of their Customer Due Diligence (CDD) processes before establishing a business relationship with a customer, and to report to the Registrar any:
There are also reporting requirements for what are called ‘relevant persons’ (defined in Regulation 26(1) of SI 110 of 2019) (i.e. regulatory authorities and the Revenue Commissioners, Criminal Assets Bureau and Garda reporting using the DN1 form) but it’s not the purpose of this blog to deal with these.
A ‘discrepancy’ (as defined in legislation) is where:
‘A designated person carrying out customer due diligence on an entity, or otherwise, forms the opinion that there is a discrepancy between the information in the central register (RBO) and the information the entity must hold in its internal register of beneficial ownership, then the designated person shall deliver, in a timely manner, to the Registrar notice of that opinion, specifying the particulars as respects which the foregoing discrepancy exists.’
‘Non-compliance’ (as defined in legislation) is:
‘An official notification to the Registrar stating that, having searched in the RBO Online Portal for the beneficial ownership details of a relevant entity, the person searching has found no beneficial ownership details in the RBO for the particular entity, and is reporting to the Registrar that the entity in question appears to have failed to comply with its obligations under Regulations 20 and 21 of SI 110/2019’
Notices filed in 2023 v 2022
| |
2023 |
2022 |
% change |
|
Discrepancy Notices (DN 2) filed |
2,168 |
3,420 |
-37% |
|
Non-Compliance Notices (NCN) filed |
787 |
2,387 |
-67% |
Potential Cause of the Drop in Reporting
The drop in reporting in both the DN2 and the NCN notices between 2023 and 2022 may be something to do with the lack of access that accountants had to the RBO register after the ECJ decision on November 2022. This problem has since been resolved so one would expect the rate of DN2 and NCN notices to increase in 2024/2025.
For more on engagement and representation letter templates and a variety of CPD webinars on money laundering and other accounting/audit related topics, please go to our website for:
ISQM TOOLKIT, or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard. We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. Please contact John McCarthy FCA by email at john@jmcc.ie.
