We can weed out dirty money and be the EU’s torchbearers
With the EU cracking down on laundering of huge sums, FRANCES FITZGERALD believes Ireland can play a crucial part in crime fight
MONEY laundering is one of the biggest scourges in our society. When ‘dirty money’ is successfully cleaned by criminals this leads to more drugs, crime and violence on our streets. It provides the fuel that drug dealers and criminals need to sustain and expand their operations. Ultimately, it is communities and normal citizens who suffer.
Almost every week now, we hear a new story about a moneylaundering scandal in Ireland or a major seizure by the Criminal Assets Bureau.
It was reported earlier this year that the level of money laundering in Ireland has more than doubled in the space of a year: 524 moneylaundering crimes were recorded last year, up from 234 in 2019. There were just 83 such offences in 2018, and fewer than 50 a year were recorded between 2012 and 2017.
Even though the gardaí are making more and more seizures, huge sums of dirty money go undetected. Profits of organised crime groups are estimated at €110billion per year in the EU. However, as reported by Europol, only about 1% of these profits are confiscated. So we are leaving 99% of the profits at the disposal of crime bosses in Ireland and Europe.
Yesterday the European Commission launched a massive overhaul of its current anti-money laundering regime with the aim of stamping out loopholes and put in place a single rulebook which is applied consistently throughout the EU.
THE EU is unfortunately a prime region for criminals to take advantage of through intricate money-laundering schemes. Criminals have been able to exploit the freedoms of the EU’s Single Market as well as the fragmented legislative landscape which has ultimately allowed for many crossborder loopholes.
Just take a look at the recent scandals: In 2017-2018 it was revealed that €200billion in suspicious transactions were channelled through Danske Bank’s Estonian branch – possibly the largest moneylaundering scandal ever in Europe. In 2018, ING bank in the Netherlands was fined €775million for lax crime prevention, while last year Deutsche Bank was fined $425million for its part in a $10billion Russian money-laundering scheme. This new legislative package will be a massive step forward for the EU and its Single Market. The centrepiece of the package is the proposal for a new EU body with direct supervisory powers which would crack down on patchy enforcement. It is hoped this new agency would give Brussels the teeth it needs to weed out shoddy regulatory practices. If the Commission gets this right, it will put a major dent in criminal operations in Ireland and all other EU member states. But there is still a long way to go. The package will be subject to long negotiations with the European Parliament and the member states. Ireland must be front and centre in this renewed fight against money laundering in Europe. There is no reason why we cannot strive for a gold standard anti-money laundering regime. We already have one of the best systems in the world for confiscating and seizing assets – the Criminal Assets Bureau is widely heralded as a best-practice model when it comes to combating organised crime.
CAB has the ability to confiscate assets without a conviction but in several other member states, criminal assets can only be confiscated after a conviction.
MINISTER for Justice Helen McEntee announced in October 2020 a record €3billion budget for 2021 to modernise the justice sector – with the recruitment of extra gardaí and new investment in digital infrastructure to tackle cyber-crime.
In this context, we have the ambition and we have the platform to become a world leader in detecting dirty money. But we still have work to do.
Just last Friday, as the European Commission was signing off on Ireland’s national recovery plan as part of the EU’s €750billion Covid recovery fund, EU officials also warned that more can be done to improve our anti-money laundering framework.
In the Commission’s latest annual economic recommendations for Ireland, it says that ‘despite efforts to strengthen its anti-money laundering framework, Ireland still faces risks due to its internationally oriented economy, involving significant inflow of foreign direct investment’.
We must take these warnings seriously and work closely with the Commission and other member states to ensure that our regime meets the highest standards. We also must strive to improve transparency around trusts, which has long been flagged as a concern by Brussels.
Ultimately, we must think about the cost of money laundering to our economy and to taxpayers. It has been previously estimated that over €5billion is laundered through Ireland every year. These are conservative estimates when you consider that the UK’s National Economic Crime Centre estimates that money laundering costs the UK more than £100billion (€116billion) a year.
Criminals only need one loophole to exploit the system. Closing off those loopholes is not easy given that we live in a complex and interconnected Single Market. But Europe’s reputation is
suffering through more and more money laundering scandals. The EU needs countries like Ireland to champion the cause.