New Technologies Risk AssessmentSeptember 2020
In preparation for Ireland’s AMLD5 readiness, affected firms should have regard to the update to the National Risk Assessment of new and emerging technologies. This document has been undertaken in accordance with Recommendation 15 of the Financial Action Task Force (FATF). The sectors assessed for the purposes of this ‘new technologies’ risk assessment are:
- virtual currencies/assets,
- electronic money
The Department of Finance who publishes these assessments of Ireland’s AML-CTF risks, has given crowdfunding and virtual currencies risk ratings of medium-high, despite new regulations being considered in order to mitigate the associated risks. It is of course the scale of these new technologies and likelihood these are associated with illegal activity that has elevated the risk ratings. For example, as of April 2019, there were an estimated 2.160 different virtual currencies globally. Collectively, these had a total market value of roughly $182 billion (€162 billion).
A recent study by a group of Australian academics has determined that approximately one-quarter of bitcoin users and one-half of bitcoin transactions are associated with illegal activity. Around $72 billion of illegal activity per year involves bitcoin, which is close to the scale of the US and European markets for illegal drugs.
Regarding Terrorist financing risks, these are considered as more likely to arise through the intersection of terrorism and criminality, with organised criminals being assessed as more likely to be aware of, and make use of, this sub-sector. It is assumed that once providers of virtual currencies become obliged entities under AMLD5, the opaqueness of this sector will somewhat dissipate.
to read the full document.