Officials are currently assessing potential weaknesses in Ireland’s regime of sanctions against Russia, which a high ranking civil servant last week said were “unenforceable” in practice.
In comments reported last week by The Irish Times, Brenda McVeigh, head of the Department of Finance’s anti-money laundering unit, said legislation behind EU sanctions did not work.
The civil servant said authorities could be aware of cases where Russian money was moving through funds based in the International Financial Services Centre (IFSC) in Dublin, but “can’t actually do anything about it”.
The official told a panel talk that “our legislation doesn’t work but we are all supposed to keep very quiet about that”.
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Ireland and the rest of the European Union introduced a wide range of sanctions on Russia following the invasion of Ukraine last year, which included measures to freeze assets of sanctioned companies and individuals and stop the movement of Russian money.
In a statement, a department spokesman said a review of Ireland’s sanctions regime had previously been carried out in late 2021, “to identify any potential administrative or legislative improvements which are necessary”.
Following Russia’s invasion of Ukraine further “ongoing analysis” was undertaken to examine how well Ireland enforced sanctions, the spokesman said.
A cross-departmental group was currently assessing this work to ensure sanctions were working “in the most effective and efficient manner,” he said.
The department spokesman said many EU countries had experienced “implementation challenges,” given the substantial increase in the scope and complexity of sanctions targeting Russia.
Since February 2022 some €1.8 billion in assets linked to sanctioned Russian individuals and entities has been frozen in Ireland.
It is understood much of these assets were money held in funds and special purpose vehicles in Dublin’s international services hub.
However, Ms McVeigh questioned Irish authorities’ ability to tackle sanctioned Russian funds moving through Ireland.
The Garda’s financial intelligence unit could receive information about special purpose vehicles, known as Section 110s, suspected of breaching sanctions, but were limited in their response, she said.
“You can sit there and tell us [about] some Section 110 in the funds industry or down in the IFSC, and say ‘I know there is Russian money moving through that particular trust’, they can knock on the door, but they can’t actually do anything about it,” she said.
The financial entity in question could “just slam the door in your face and say ‘I’m away’”, she told a panel talk last week.
In response to the comments, Ged Nash, Labour Party finance spokesman, said the revelations were “extremely damaging for Ireland’s reputation internationally”.
“That Ireland is a soft touch for dirty Russian money should come as no surprise,” he said.
“These concerns are not new, but when a senior official publicly admits that our laws are inadequate and our system of enforcement when it comes to policing the sanctions regime is weak and lacking in resources, it is especially troubling,” he said.
Mr Nash said it was critical that the Government acted to “urgently tighten the system”, on foot of Ms McVeigh’s comments.
