Billions of euro in “dark money” is passing through the Irish financial services sector, offering opportunities for hostile actors to raise capital for illegal activities including military or hybrid operations, an Oireachtas committee has heard.
The joint finance committee heard from representatives from Transparency International Ireland on Wednesday to discuss “dark money” flowing through the Irish financial sector.
Dark money refers to the proceeds of corruption and other illicit activities, including but not limited to organised crime, fraud, sanctions evasion, tax evasion and hostile state activity.
Transparency International Ireland head of policy and research Alexander Chance said there were “gaps and loopholes” in the oversight of Irish corporate structures which include the use of limited partnerships and special-purpose entities.
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These “offer opportunities for corrupt officials overseas, transnational organised crime groups, sanctions evaders and hostile state actors, either to launder illicit funds or to raise capital to sustain criminal or other illegal activities overseas, including military or hybrid operations”.
“Such activities are antithetical to Ireland’s stated foreign policy priorities to promote democracy, peace and security around the world,” he said. “Yet the State’s response to these vulnerabilities has been underwhelming.”
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Chance said anti-money-laundering supervision “remains fragmented and inconsistent”, with key law-enforcement bodies “significantly under-resourced” despite concerns being raised over several years by various international bodies.
John Devitt, the group’s chief executive, said the volumes of such transactions moving through the Irish system “are more likely in the billions than in the millions”.
“There has historically been a reluctance to talk about these issues for fear of drawing too much attention to them,” he said. “Every government is afraid of scaring the horses, so to speak.
“In a previous life I was a consultant to Enterprise Ireland. I worked as a trade manager, investment manager and trade representative of the Irish consulate in New Zealand.
“This was not something Enterprise Ireland or the IDA wanted to discuss, understandably.”
Chance said the State’s willingness to take “robust action” against illicitly obtained foreign assets remains “unproven”.
“Whilst we welcome having a vibrant financial services sector, it is clear that the scale of international capital flows through Ireland is in no way matched by the capacity of our law-enforcement agencies, regulators and supervisors to police those transactions,” he said.
The International Monetary Fund described Ireland in 2022 as facing “significant and increasing threats from foreign criminal proceeds”. Chance told the committee that warning “has not yet been adequately heeded”.
He added it is “vital to highlight” that dark money is also a “national security issue” as opaque financial channels can be used not only to launder money but also to “exert influence, interfere in democratic processes and undermine the integrity of our institutions”.
