The registration of non-resident companies in Ireland is a source of huge earnings for Irish accountancy firms, company formation groups, solicitors and banks. Any attempt to close off this area of business would have a significant impact on the entire Irish financial services sector.

The companies can earn significant fees from undertaking compliance assignments and auditing the accounts of these non-resident companies or providing banking services to them. It has been estimated that most of the 40,000 companies would have to spend around £1,500 in annual fees, generating revenues of £40-£60 million a year for the firms assisting them. A further £2 million goes to the Exchequer in registration fees.

Most of the main banks say they do provide banking services, such as deposits, for nonresident companies, but insist that such accounts are subject to a high level of scrutiny.

Under 1994 Money Laundering legislation, the banks must establish the identity of the beneficiaries of all accounts and to report any suspicious activity to the Garda. The banks have relationships with many of the groups which establish non-resident companies.

A Bank of Ireland spokesman says it held less than 5 per cent of the 40,000 or so nonresident accounts here. "We do a lot of checking into the background of these non-resident companies before we set up any accounts and are very particular about the type of business we take on. We have closed down a number of them over the years when irregularities are spotted," he says An AIB spokeswoman maintains that the bank adopted a stringent series of checks and balances to ensure that funds deposited came from a legitimate source.

A Bank of Ireland spokesman says: "Once any foreign authority can produce a certified court order then we will fully co-operate with their enquiries."