Banks on the Isle of Man encounter a money laundering risk rated as "medium-high"

Poole-Wilson said, although the banking sector had a lot of controls in place, it was recognized that the industry had to be “alert” to “new and emerging types of threat” such as automated payment systems.

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The report outlined that the banking sector held more than £40bn in deposits and processed nearly £80bn in annual payments.

The document proposes enhancing collaboration to reduce the risk of fraud and improving data systems to better understand financial flows.

The piece of work builds on the 2020 National Risk Assessment, and forms part of the broader programme of sector-specific assessments being released later this year and early next year.

“Given the nature of our economy, I think we do have to recognize that we are likely to be exposed to financial crime, which is why it is so important that we conduct risk assessments, understand the risks and take effective measures,” Poole-Wilson said.

However, she said the level of risk was not out of step with other neighboring jurisdictions.

The assessment comes a year before Moneyval inspectors will assess and report on how the island deals with money laundering.

The government has said industry engagement will take place to make sure firms have an understanding of the risk assessments, with meetings and workshops set to be held to strengthen awareness and underline the need to use the findings to update policies.