07 Jul 2020
‘Money laundering is modern-day alchemy. You take cash earned from criminal activity, put it through a system designed to obliterate any trail of its origins, and then bring it out the other end as legitimate income,” said Jeffrey Robinson, author of The Laundrymen, a seminal book on the subject.
Money laundering has a symbiotic relationship with crime, according to Robinson. The financial skulduggery is most successful in countries where there is lax enforcement of money laundering laws coupled with light-touch regulation.
“Dirty money is like water: it always seeks the course of least resistance,” he added. “People involved in laundering money will always look for the softest target, that is countries where their activities can go undetected.”
The true scale of money laundering in Ireland is unknown. Nobody knows how much dirty cash is in circulation in the banking system, or who owns it. The security services believe billions might be involved but have no real idea.
If recent operations by the Criminal Assets Bureau (CAB) are anything to go by, the amount is probably substantial. The bureau last week raided Chinese restaurants that were laundering cash for small-time drug dealers, seizing €1m.
Gardai suggest sums like this are the “tip of the iceberg” of what is actually being laundered into the banking system via myriad, inventive methods. Officers have encountered cases where criminals have financed the opening of barber shops, whose cash receipts show they groom hundreds of men a month, while restaurants are a favoured vehicle for drug dealers, with eateries recording full houses most nights of the week, even when they are mainly empty.
The bureau last year discovered that some drug dealers were even paying relatives to exchange old and damaged notes for new currency at the Central Bank of Ireland to disguise their origins. The new currency was declared as originating from the Central Bank when it was lodged in accounts. Such operations are used to wash hundreds of thousands as opposed to hundreds of millions, however.
Cash laundering by the state’s biggest criminal organisations tends to be more sophisticated and involve offshore companies that buy property in Ireland and abroad, which are then leased out to legitimate companies to generate rental income. The Kinahan cartel has used offshore trust funds to finance property renovations in Dublin. The gang has an estimated €1bn in assets.
“The idea is to spend as much as possible with a view to generating legitimate income that they can pay tax on,” said one garda. “The Kinahan cartel has so many investments around the world, we can no longer decipher what’s illicit cash and what’s genuine profit any more.”
Ireland is increasingly used by foreign intelligence services, Russian kleptocrats and international terrorist organisations to deposit money. Hundreds of millions have been laundered through Irish accounts or deposited in Dublin.
Last year the US authorities alleged $300m (€270m) from a cryptocurrency scam was laundered through accounts held at the Bank of Ireland in Dublin. The scam involved the sale of OneCoin, a worthless cryptocurrency, which was sold to investors around the world in what amounted to a Ponzi scheme.
Russia’s kleptocrats and intelligence services have also used Ireland as a destination for lodging stolen or illicit capital.
Bill Browder, a US financier leading an international campaign to expose corruption in the Kremlin, has claimed Russian officials transferred €3.5m stolen from his company into the Irish banking system. He claims the money was part of a €203m fraud organised by Russian tax officials against his investment company in 2005. The stolen money was allegedly laundered through shell companies in the British Virgin Islands and other offshore tax havens before eventually being deposited in 23 countries, including Switzerland. About €3.5m of the money was reportedly deposited in Ireland.
“The Irish authorities went silent after we provided them with evidence,” said Browder last week. “They didn’t take it seriously. I reported it but nothing happened. We found all the accounts and nothing was done about it.
By John Mooney, The Times, 5 July 2020
Read more at The Times
RiskScreen: Eliminating Financial Crime with Smart Technology
You can claim CPD minutes for this content, by signing up to our CPD WalletFREE CPD Wallet