Fighting money-laundering still a challenge for Ireland

Ireland is off a watchlist, but fighting money-laundering is still a challenge, writes Investigative Correspondent Conor Ryan

IRELAND has been removed from a probationary watchlist of countries considered to be soft on money-laundering.

The adoption of a recent legal amendment and greater probity of private members clubs and company trust services has led the international Financial Action Task Force to stop conducting regular progress reviews.

A final report, published last week, said an amendment that passed through the Oireachtas last month and a previous law three years earlier made the policing of money laundering far stronger.

It said while Ireland was not compliant with all aspects of the international code, the FATF had some flexibility to remove the probationary measures.

“Although a certain number of recommendations still cannot be judged as equivalent to a [compliant] rating, progress has been made in relation to them,” said the report.

“Consequently, it is recommended that this would be an appropriate circumstance for the plenary [committee] to exercise its discretion and remove Ireland from the regular follow-up process.”

In 2006, a report by the OECD-sponsored task force criticised Ireland for its anti-money- laundering measures and subjected it to twice-yearly reviews since 2008.

The 10th review was completed last month, and the subsequent report said sufficient progress had been made.

The standing-down of the review team has come despite the low level of convictions in this country for money-laundering offences.

A report published by the Department of Justice’s anti-money- laundering compliance unit revealed that between 2009 and 2011, there were more than 39,000 suspicious transaction reported to gardaí.

However, during the same period, there were only 10 convictions.

Money-laundering is an international crime and information is routinely shared by investigators among across borders.

This means further details on the nature of activities here is available in a summary prepared by the American State Department. Its report was drawn up using briefings from the gardaí.

“The primary sources of funds laundered in Ireland are prostitution, cigarette smuggling, drug trafficking, fuel laundering, domestic tax violations, and welfare fraud,” said the report.

“While money laundering occurs via credit institutions such as banks, money has also been laundered through schemes involving remittance companies, solicitors, accountants, and second-hand car dealerships.”

The State Department was told the trade of high-value goods was a particular concern in this country.

“According to law enforcement officials, money is most commonly laundered through the purchase of high-value goods for cash; the transfer of funds from overseas through Irish credit institutions; the filtering of funds via complex company structures; and the purchase in Ireland of Irish and foreign real property,” it said.

One of the principal measures in the recently-adopted amendment act was the lowering of the threshold for reporting some high-value transactions to €15,000 for transactions that appear to be linked, €2,000 for private members club transactions and to €1,000 in the case of wire transfer funds.

The department said the policing of these offences will be stronger because of the new laws.

In addition, the compliance unit said the sharp difference between the number of suspicious transactions and the level of convictions has been influenced by a number of factors.

It said on average 75% of reports related to revenue offences and were dealt with through the tax system rather than the criminal courts.

Secondly, it said the Director of Public Prosecution’s view has been that money-laundering is a secondary offence to the actual crime it is seeking to conceal.

Therefore, criminals are charged for the crime and not the subsequent laundering of cash.

The compliance unit said: “This does not appear to be the case in other jurisdictions, where suspects are charged with both the predicate offence and the subsequent offence of laundering the proceeds.

“This, of course, produces a higher number of prosecutions/ convictions for money laundering.”

However, the report said the DPP’s bid to prosecute laundering offences was complicated by the old laws and a setback from an appeal judgement in 2002.

The critical ruling, in the case of DPP v McHugh, said that although cash contained traces of trafficked drugs, it could not be proven that it had been deliberately laundered.

In a statement the department also said the low prosecution rates was not the full story and there had been substantial seizures of property by CAB.

These were not considered to be money-laundering assets so they did not appear in the figures.

The department also said that since 2010, the legislation had been improved and this would result in more rigorous prosecutions in the years to come.

This year, Justice Minister Alan Shatter moved to beef up the money-laundering laws with an amendment act that passed through the Oireachtas last month.

This lowered the threshold for reporting some high-value trades to €2,000 and tried to keep pace with European best practice.

However, given the volume of work associated with the Irish presidency of the EU, the Government was unable to introduce all of the changes it intended making.

The department also said it was preparing a 2012 report with European partners which would show good work by Irish businesses to detect and report suspect deals.

“The report records a significant amount of compliance monitoring and enforcement work undertaken by key agencies — the Central Bank, the Law Society, and the department’s anti-money-laundering Compliance Unit.

“Indications are that this work is very effective in the prevention of legitimate businesses being used by criminal elements to launder the proceeds of crime,” it said.

Last week, in an interview with the Irish Examiner, the Detective Chief Superintendent at the CAB, Eugene Corcoran, warned that legitimate but struggling businesses were being targeted by criminals to launder cash.

And, he said, it was harder to chase criminal assets because the gangs involved had got more elaborate in their financial affairs.

“It might have been easier 17 years ago to find criminal means, because criminals were less sophisticated in some ways and didn’t feel a need to disguise it. It’s now quite a complicated process,” he said.

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