The Irish Times view on Russian use of Irish financial services: Halting the flow of dirty money

Obvious moral reason for not wanting to have any truck with money associated with the horror now underway in Ukraine

Ireland has developed a hugely successful financial services sector that is deeply embedded in global money flows, and this comes with reputational risks and international obligations.

That Russian banks, oil corporations and oligarchs associated with the regime of Vladimir Putin have been attracted to using Irish banking and funds services by tax and other incentives is a legitimate reason for concern, and even outrage.

Taoiseach Micheál Martin has made clear that Ireland is implementing the latest sanctions announced against Russia, and that these will be applied to any Russian-linked assets resident here that fall within the new strictures. Other Russian assets that lie outside the sanctions will not be affected. Ireland should implement the law and the sanctions robustly and openly. Separately, any changes to our laws in relation to financial services should be introduced in a considered way, so as to avoid unintended consequences.

A key focus of any change to our laws should be the issue of beneficial ownership. There is an obvious moral reason for not wanting to have any truck with money associated with the horror now underway in Ukraine. But Ireland would also be wise to be alert to the dangers to its international reputation that these connections might yet hold. The global financial system contains huge amounts of dirty money, and the Irish financial services sector is unlikely to be an outlier in this. We need to be able to show that we are doing all we can to combat illicit money flows.


A second financial link to Putin's Russia for which Ireland has reason for concern has to do with little-known entities called limited partnerships. Irish limited partnerships are marketed in Russia and across the former Soviet Union as a type of offshore vehicle that is attractive to those who wish to hold assets anonymously. The partnerships are being used by company formation services in traditional offshore locations, who in turn sell them to their clients in Russia and other former Soviet republics where the rule of law is weak and corruption rife.

Limited partnerships have also been used in hugely complicated, and extremely lucrative, international money-laundering structures, in which money in Russia, Ukraine, and central Asia makes its way through the Western banking system before being used to buy Western assets. Ironically, the efforts here and in the UK to deal with the menace that these partnerships constitute is being hampered by the fact that they are very popular with the funds industry.

Ireland has been very successful in attracting foreign investment, has built up a significant financial services sector, and is home to the European headquarters of major tech companies. In all of these areas, we need to publicly fund best-in-class tax and regulatory regimes. The world has the right to expect as much.