Ireland has over recent years become one of the world’s leading locations for the investment funds industry, contributing to the country’s role as an international financial centre. In 2023, net assets in Irish domiciled funds reached €4.1 trillion, with €5.6 trillion assets under management – making Ireland the third largest fund administration centre globally, the second largest in Europe and the fastest growing major European domicile for investment funds, accounting for nearly 20% of all European fund assets.
Whilst this position brings economic benefits in terms of employment and tax revenue, the European Commission has previously assessed that the sheer volume, complexity and cross-border nature of the funds industry, as well as its exposure to high-risk clients, together make investment funds ‘vulnerable to laundering of proceeds derived from fraud, tax crimes, corruption, and bribery’. Internationally, a number of high-profile corruption cases suggest that money laundering risks are further heightened in funds that pool investments from non-retail sources to invest in alternative assets, such as hedge funds, private equity and venture capital, real estate, other funds or commodities – collectively known as Alternative Investment Funds (AIFs). And although the money laundering threat is increasingly recognised within the industry itself, TI Ireland has for some time been concerned at the Government’s muted response to these risks, which – left unaddressed – could make Ireland more attractive to illicit financial flows from overseas.
In order to better understand these issues within a regional context, TI Ireland commissioned Transparency International’s Anti-Corruption Helpdesk to research the key money laundering and corruption risks of AIFs in Europe. Their report is now available on the TI Helpdesk website or can be downloaded here.