The investigation into the huge money-laundering operation, whose cover was an innocuous bureau de change office in the Border area, has been under way for the past three years.
From late 1996, gardai in the Criminal Assets Bureau (CAB) became aware that cash was being transferred through a bureau de change. The money was being changed into cash in sterling or, increasingly, as the amounts increased in size, in sterling drafts.
The money involved was mainly from drugs and contraband tobacco and from the so-called "carousel" fraud by Border smugglers illegally claiming VAT refunds on imported materials. This included the notorious livestock smuggling operations where cattle could be taken through customs, generating EU grants or VAT refunds and then simply smuggled back across the Border and the process repeated.
The smuggling, drugs and contraband generated huge amounts of cash which the criminals sought to hide in a variety of ways. One system which became widely used by organised criminals in the Republic in recent years was large-scale currency transactions.
To avoid seizure of their cash under the Proceeds of Crime Act of 1996 (set up in conjunction with the Criminal Assets Bureau), the criminals began converting their punts into sterling and then used cash or bank drafts drawn from banks in the North to continue their illicit businesses.
On many occasions the money was being moved back into the drug or contraband-buying system. But as the criminal figures availing of the laundering system grew in prosperity, the sterling was increasingly being siphoned off into legitimate transactions.
Officers from the CAB began following money trails three years ago under the terms of the State's anti-money-laundering legislation in the 1994 Criminal Justice Act. This is the legislation enacted by the Republic as part of a Europe-wide campaign to cut down on cross-Border money-laundering on quite a massive scale.
The operation yesterday marks a culmination of the largest investigation undertaken by officers under the State's anti-money-laundering powers. About 70 gardai and Customs officers were assembled in the conference room of the Dublin Garda Headquarters in Harcourt Square on Monday night to be briefed on the operation.
Yesterday morning gardai, along with a unit from the RUC Financial Investigation Unit - who were backed up by about 70 British soldiers for their operations in south Armagh - embarked on a series of raids in the Border area and in Dundalk.
Business premises, private homes and the offices of legal and financial figures who were suspected of having assisted in the money-laundering operation were raided. Six men and two women, seven of them from one extended family living in the Border area, were arrested and held for questioning under the 1996 Drugs Trafficking Act. Under the Act they can be held for questioning without charge for seven days.
The 1996 Act can be applied in this instance because much of the money which was laundered through the bureau de change system came from the sale of drugs.
The principal drug-dealer involved in the laundering was Paddy Farrell, who became one of the largest drug-dealers in both the Republic and Northern Ireland before his death in September 1997. He was shot dead by his mistress, Ms Lorraine Farrell (no relation), in bizarre circumstances. After shooting Farrell as he lay naked in bed in Ms Farrell's flat in Drogheda, she shot herself dead. It later emerged she had purchased a plot in a cemetery in Drogheda a week earlier.
Although Farrell was a relatively little-known figure outside the Border area, he had built up probably the largest drug-importing operation on this island. He imported large amounts of drugs, particularly cannabis, amphetamines, cocaine and ecstasy, from mainland Europe. The drugs came into Ireland in lorries travelling through ferry ports in the Republic to the Border area where they were distributed and sold either in the Republic or Northern Ireland, or taken to Britain.
Farrell built up a massive business with a turnover estimated by senior Garda sources in tens of millions of pounds by the time of his death. He was one of the largest drug-dealers in the history of the State.
Before his death Farrell was the subject of interest by both local detectives in the Louth-Meath Garda Division and by the officers of the then newly formed Criminal Assets Bureau.
While the State had introduced legislative powers to seize assets for drugs-trafficking and prosecute the offence of money-laundering under the 1996 Act, the impetus for such a wide-ranging and large investigation did not come about until after the murder of the journalist Veronica Guerin, when there was a reorganisation and major investment in terms of finance and personnel to combat racketeering and money-laundering.
The detective superintendent in CAB, Felix McKenna, was promoted to the rank of chief superintendent to head the National Bureau of Fraud Investigation (NBFI). Under his direction the money-laundering unit in the NBFI continued the investigation into the Border activities in conjunction with its RUC counterparts.
