by John McCarthy Consulting Ltd. | Jul 3, 2026 | Blog, News
The Department of Justice 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.
Noteworthy is the fact that the AML risk of the accountancy sector has changed from ‘Medium-High’ to ‘Significant’ as follows:
Risk Rating
Key to the chart:
ML = Money Laundering
TF = Terrorist Financing
PF = Proliferation financing
AML Threats for the Accounting Profession
The document explains that accountants are exposed to significant ML and TF risks due to the sector’s accessibility, diversity, and the breadth of services offered.
Criminals may exploit accountants not only to lend legitimacy to illicit transactions, but also to enhance the overall credibility and respectability of illegitimate business activities. The involvement of a qualified and professional accountant can create a veneer of legitimacy that helps obscure the true nature of criminal enterprises.
This can occur through services such as bookkeeping, payroll, tax advice, and the use of accountant’s certificates to support falsified documentation, making illicit operations appear compliant and trustworthy to third parties. The risk is elevated in cases involving cash-intensive businesses, where criminal proceeds can be more easily co-mingled with legitimate income.
When delivered effectively and in line with the ML regulations, accountants play a vital role in safeguarding against economic crime, however, weak or poorly implemented AML controls can be targeted by criminals. In rare but serious instances, there is also a risk of infiltration by criminal organisations, or corruption of staff within legitimate firms. Accountants that provide TCSP services face additional exposure, while those offering audit services play a key role in identifying and preventing economic crime.
There has been no evidence to suggest that Accountants are being exploited for PF purposes, and the sector’s exposure is therefore assessed as low. Nonetheless, continued vigilance is essential, particularly where services intersect with high-risk jurisdictions or involve complex corporate structures.
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:
by John McCarthy Consulting Ltd. | Jul 3, 2026 | Blog, News
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:
by John McCarthy Consulting Ltd. | Nov 1, 2016 | News
‘The specialist nature of the knowledge and services provided by the accountancy service providers makes them vulnerable to being sought out and exploited by those who seek to launder the proceeds of crime or evade tax. It is recognised in international risk-based guidance that accountancy service providers may be sought to assist in the structure and design of transactions intended to conceal the nature and origin of funds.’
So says the first ever National Risk Assessment published jointly in October 2016 by the Department of Justice and Equality (DoJE) and the Department of Finance. The assessment covers the main risk areas of the many sectors in Ireland that are subject to the provisions of the Criminal Justice (Money Laundering and Terrorist Financing) Act, 2010.
The report identifies the fact that very few (80 out of a total of 21,682 AML reports) suspicious transaction reports (known as STRs) were made by the accountancy profession, according to a separate report called the 2015 Annual Report on Money Laundering and Terrorist Financing from the DoJE, given the size of the sector. As a result, (among other risk factors) the sector is assessed as Medium-High risk.
Among the accountancy services identified, by the National Risk Assessment report as vulnerable to the risk of money laundering and terrorist financing are:
- Company and trust formations;
- Insolvency services;
- Providing financial advice;
- Providing tax advice;
- Handling client money;
- Managing client assets and financial accounts;
- Investment business services;
- Auditing financial statements; and
- Company secretarial services.
This first ever National Risk Assessment has been produced ahead of the international inspection of Ireland being carried out by the FATF in December 2016 called the Mutual Evaluation Review. This review can have significant international positive or negative reputational impact potential for Ireland as a financial centre, in a post-Brexit world.
To hear more about how to be on the alert for suspicions of money laundering and terrorist financing under the Criminal Justice (Money Laundering and Terrorist Financing) Act, 2010, come to our next AML course on Monday 28 November 2016.
