Dublin, 7 March 2022
Transparency International Ireland (TI Ireland) has called on the government to immediately remove all fees charged for accessing corporate information and to publish open data sets on companies if it is serious about stopping the flow of dirty money through Irish-administered companies, trusts and financial services.
It has also called for an end to the practice of allowing directors to list themselves as ultimate beneficial ownership of companies in the statutory Register of Beneficial Ownership (RBO) where they say they cannot identify the beneficial owners.*
‘The invasion of Ukraine is a brazen attempt to consolidate power, crush political opposition regionally, and to divert domestic attention away from appalling abuses by a kleptocratic authoritarian regime in Russia.
‘As such, it is a direct consequence of systemic corruption and evidence suggests that much of the proceeds of that corruption are being laundered through Ireland’, said John Devitt Chief Executive of Transparency International Ireland.
There are numerous examples of how Ireland is being used as a safe haven for the proceeds of corruption, including those from countries in the former Soviet Union.
For example, in 2015 reports suggested that between US$100 million and US$300 million of corrupt payments were frozen by the High Court that were believed to be the proceeds of organised crime and corruption in the Central Asian republic of Uzbekistan.
A study published in 2017 by Trinity College Dublin academics Professor Jim Stewart and Cillian Doyle suggested that over €118 billion had been moved through special purpose vehicles (SPVs) known as section 110 companies in questionable circumstances on behalf of Russian banks, and major state energy companies. They frequently used opaque trust ownership structures to disguise who the beneficiaries of these activities were.
The Uzbek case and others show that SPVs are unlikely to be the only way that the proceeds of corruption are being laundered through Dublin. The Uzbek corrupt assets were laundered through funds managed by an IFSC-based bank. In 2014, life assurance policies were also used to launder money on behalf of the former dictator of Nigeria, Sani Abacha.
Ireland is also one of the largest fund administration centres in the world, with an estimated total of €4 trillion in net assets in funds domiciled in the country. In 2020, a US Federal Bureau of Investigation (FBI) bulletin noted that “threat actors” — including organised crime and foreign intelligence agencies — ‘use the private placement of funds, including investments offered by hedge funds and private equity firms’ to reintegrate dirty money into the legitimate global financial system.
Over 29,000 suspicious transaction reports from financial institutions and designated professionals were filed with the Irish authorities in 2020 - more than double the level reported a decade ago.
‘Ireland’s financial services sector poses a grave threat to both national and international security if it cannot be adequately policed or monitored. But our corporate enforcement agencies, the Central Bank and An Garda Síochána are grossly ill-equipped to deal with the risk of money laundering on the scale that is being reported. Even the best resourced agencies are unable to tackle this problem on their own.
‘International cooperation amongst law enforcement agencies, investigative journalists and civil society organisations is therefore essential and these networks would benefit greatly from the publication of free and open data sets of on company, trust, property and certain financial vehicle ownership. Currently these registers are managed by the Companies’ Registration Office, the Register of Beneficial Ownership, Land Registry, the Central Bank and Revenue’, added Mr Devitt.
Although an EU Open Data Directive was passed in 2019 which would have made company information freely available across the EU, fees continue to be charged for access to certain records. The lack of access to open data sets – or in some cases, any data at all – makes it difficult for anyone other than An Garda Síochána or Revenue to investigate, according to TI Ireland. The accuracy of certain submissions (for instance returns to the Register of Beneficial Ownership) is not verified by the authorities, which makes public scrutiny all the more important.
‘It is a Catch-22. Huge volumes of information are not available or are hidden behind a paywall, the real owners of some funds can hide behind directors*, while the only people with the powers to freely access the data don’t have the resources to do anything with it. If we are to take one step towards tackling kleptocracy and want to show meaningful solidarity with the people of Ukraine, we must end the practice of allowing anonymous companies list directors as beneficial owners, close any legal loopholes that exempt special purpose vehicles from our public registers and remove fees for accessing company registers now’, said Mr Devitt.
In addition to removing fees for accessing corporate information, TI Ireland is calling for the immediate suspension of the Immigrant Investor (‘Golden Visa’) Programme and a prohibition on the continued sale of dormant shelf companies in Ireland. TI Ireland published 18 recommendations in its ‘Safe Haven? Targeting the Proceeds of Foreign Corruption in Ireland’ report in 2021, including the removal of any special purpose vehicles currently exempt from anti-money laundering requirements and the creation of an independent National Anti-Corruption Bureau.
*This statement was amended on 8 March 2022 by replacing the term ‘trustee’ with that of ‘directors’.