Risk and Guidance

It is important for supervisors and designated persons to be aware of risk factors when conducting its risk assessment and to apply an effective risk-based approach. Risk factors can fall under categories including customer, products/services, geography and channels/distribution.

There is a range of sources where guidance on Money Laundering (ML) and Terrorist Financing (TF) risk and applying a risk based approach to supervision and preventive measures can be accessed, some of which is set out below.

Central Bank of Ireland Anti-Money Laundering and Countering the Financing of Terrorism Guidelines for the Financial Sector

The Central Bank of Ireland published Anti-Money Laundering and Countering the Financing of Terrorism Guidelines for the Financial Sector ("the Guidelines") on 6 September 2019, which were revised on 23 June 2021.

The Guidelines set out the expectations of the Central Bank in respect of credit and financial institutions; compliance with their AML/CFT obligations as set out in the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (the CJA 2010), following the transposition of the EU's Fourth Anti-Money Laundering Directive (4AMLD) and the EU's Fifth Anti-Money Laundering Directive(5AMLD) into Irish Law. The Guidelines also incorporate expectations set out in previous Central Bank AML/CFT sectoral reports, AML/CFT bulletins, and relevant European Supervisory Authority Guidelines.

National Money Laundering and Terrorist Financing Risk Assessment

The Department of Finance and the Department of Justice and Equality have published Ireland's first ML/TF National Risk Assessment (NRA).

The NRA is an assessment of the ML/TF threats in Ireland and the vulnerabilities of certain sectors to being used for ML/TF as a result of the products and/or services they offer, their customer base, the countries in which they operate and the delivery/distributions channels they utilize. As such, the NRA is an important source for financial institution's to support and inform their own ML/TF risk assessment. The NRA can be accessed at the following link: gov.ie - National Risk Assessment - Money laundering and Terrorist Financing.

European Guidance on Money Laundering and Terrorist Financing Risk

ML/TF Risk Factor Guidelines

On the 1 March 2021, the European Banking Authority (the EBA) published final revised Guidelines on ML/TF risk factors (the ML/TF Risk Factor Guidelines).

The revisions take into account changes to the EU Anti-Money Laundering and Counter Terrorism Financing (AML/CFT) legal framework and address new ML/TF risks, including those identified by the EBA's implementation reviews. In addition to strengthening financial institution's risk-based approaches to AML/CFT, the revision supports the development of more effective and consistent supervisory approaches where evidence suggested that divergent approaches continue to exist. The Guidelines are central to the EBA's work to lead, coordinate and monitor the fight against ML/TF. The purpose of the Guidelines is to assist firms when carrying out risk assessments and the risk factors to be taken into consideration when applying simplified and enhanced customer due diligence.

European Commission Supranational Risk Assessment Report (SNRA)

On October 27, 2022, the European Commission issued its Supranational Risk Assessment Report (SNRA) to the European Parliament and Counsel regarding the “risk of money laundering (ML) and terrorist financing (TF) affecting the internal market and relating to cross-border activities”. Made up of two documents, the report and a detailed Staff Working Document, the SNRA analyses money laundering and terrorism financing risks and recommends an  comprehensive action plan to address them.

This report marks the third of its kind, with the European Commission publishing its first SNRA in 2017 and the second in 2019 pursuant to the 4^th and 5^th  Anti-money Laundering Directives, respectively. 

View further details regarding the European Commission’s work in this area.

High Risk Third Countries

The European Union has identified high-risk third countries with strategic AML/CFT deficiencies that are set out in Annex to the Commission Delegated Regulation supplementing the 4AMLD.

The Delegated Act is legally binding on member states and must be complied with by designated persons.

FATF Guidance

The Financial Action Task Force (FATF) is the international standard setting body for combating money laundering, the financing of terrorism and proliferation of weapons of mass destruction. It publishes guidance that assists in the identification of ML/TF threats and vulnerabilities that assist supervisors, financial institution's and designated non-financial businesses and professions (DNFBPs) to adopt a risk based approach to supervision and applying preventative measures.

The FATF identifies jurisdictions with weak measures to combat ML/TF in two FATF public documents that are issued three times a year. The latest list of high-risk and un-cooperative jurisdictions can be found at:

FATF High Risk Jurisdictions

Improving Global AML/CFT Compliance - Ongoing Process

The FATF also publishes guidance on adopting a risk-based approach.

Risk-Based Approach for the Life Assurance Sector (2018)

Risk-Based Approach for the Securities Sector (2018)

Guidance for a Risk-Based Approach for Money or Value Transfer Services (2016)

This guidance will assist countries and their competent authorities, as well as the practitioners in the MTVS sector and in the banking sector that have or are considering MTVS providers as customers, to apply the risk-based approach to the development of measures to combat ML/TF for the MTVS sector.

Guidance for a risk-based approach: effective supervision and enforcement by AML/CFT supervisors of the financial sector and law enforcement (2015)

This guidance is intended to assist countries in developing an effective supervisory and enforcement model.

Risk-Based Approach for the Banking Sector (2014)

This guidance assists in the design and implementation of this approach for the banking sector, taking into account national risk assessments and the national legal and regulatory framework.

Basel Committee

Risk management guidelines related to anti-money laundering and terrorist financing issued by the Basel Committee

This guidance describes how banks should include risks related to money laundering and financing of terrorism within their overall risk management framework.