Oligarchs, Kinahans and Banks
Gearóid Ó Loingsigh
12 April 2022
The US ambassador to Ireland, Claire Cronin, speaking in Dublin after it was
announced the US government is offering $5m for information on the Kinahans.
The US government has offered a reward for information leading to the arrest and conviction of three members of the Kinahan crime gang. The announcement was lauded by the Irish government with some tough posturing and shape throwing added in for good measure. Whilst the measures are intended to send a message and do create difficulties for those named and the companies that have been sanctioned it is to a large degree, window dressing.
The question of drug money and also Russian oligarchs who are the new target of the Irish government is not new. The Irish government has had ample opportunity to strike a blow against Russian oligarchs and the money laundering of drug money, but failed to do so, as it would affect general economic policy. An academic report from Trinity College claimed that between 2005 and 2017, €118 billion was sent from the IFSC to Russian companies.
"The Irish conduits examined are part of the licit economy in Ireland," the research by Cillian Doyle and Jim Stewart states. "However, the paper shows links between conduits in the study and allegations of illegal/improper activity by Russian-controlled firms. Hence, it is possible that conduits in Ireland, though totally compliant, are misused by cross-border criminal organisations.(1)No action was ever taken by the Irish government as money laundering and financial flows are an intrinsic part of the economy. The war in the Ukraine has afforded the government the opportunity to take measures against Russian companies alone, rather than change the financial instruments that all oligarchs from Britain, USA, France, Germany and other parts all use in Ireland.
In 2021, the CEO of Transparency International wrote an opinion piece for the Sunday Business Post that Ireland was being used to launder dirty money. He cited the case of Gulnara Karimova the daughter of the former head of Uzbekistan who had apparently earned $1 billion in bribes. However, she laundered between $100 and $300 million through funds managed in Dublin.(2) She was not the only one of course. Since the Russian invasion of Ukraine the media have never stopped reminding us of how much Russian money was in Ireland. The problem of what to do about it was resolved by the war. The Irish government can now move against Russian oligarchs and leave the US oligarchs alone. It can also leave drug money untouched, including the Kinahan’s money.
This has been pointed out over the years. In 2016, the Criminal Assets Bureau, warned that Russian gangsters were hiding cash in IFSC funds.
They tend to be disguised in very large investment funds that are routed through here from time to time through international banks in the IFSC, but don't tend to be the subject of requests for assistance (from overseas police forces)…In other words, the only way to tackle this problem is by placing restrictions on international cash flows, investments and other financial products and they have shown they are loathe to do so. Of course, Russian gangsters are not unique. We can be quite sure that gangsters from all over Europe and the US are laundering money through the IFSC. If major multinationals can transfer prices or profits through Ireland well so can drug gangs. Same instruments are available to all.
Very often it can prove quite a difficult task to monitor that because you are dealing with very large funds that are otherwise genuine.(3)
Crime gangs like the Kinahans rely on diverse methods to move their cash, but at some stage they must introduce it into the economic circuits of the world economy. There is a limit to how much can be held as cash. Even investments in art, gold, jewellery and land require some engagement with the banks at some point. In such transactions there are two criminal enterprises involved, on the one hand the Kinahans and gangs like them and on the other hand the financial institutions. Without the ability to launder their profits there are no Kinahans, they are dependent on banks and other bodies.
One of the most notorious banks in terms of money laundering in recent years is the HSBC bank. It has branches all around the world, including, as it turns out, certain areas of Mexico where drug gangs hold sway. The bank laundered at least $881 million from the Sinaloa Cartel. Unlike the Kinahan’ case the US government did not offer rewards leading to the conviction of board members of the bank.
In a controversial decision, prosecutors declined to seek an indictment of the bank but instead allowed it to pay a $1.92 billion settlement and serve five years of probation during which its efforts to prevent money laundering would be monitored by a court appointed watchdog.(4)However, the bank’s criminality did not end there. The bank continued to be very lax in monitoring financial activities, particularly at its Hong Kong branch, including the operation of a Ponzi scheme. The bank continued on its merry way. No one was prosecuted despite the support for proceeding against it from “rank-and-file prosecutors, who had prepared a list of up to 175 criminal charges against the bank that the government ultimately shelved. No one went to prison over the bank’s historic wrongdoing.”(5) It was not a one off. In December 2021, the British Financial Regulator fined the Bank £64 million for serious failings in its anti-money laundering controls.(6) Again no one went to prison.
So, whilst everyone is busy congratulating each other, the same people could easily point the finger at each for the existence of crime gangs like the Kinahans. Without the institutions that finance election campaigns, the companies that buy politicians and decide economic policy in their private meetings, there would be no money laundering. But the elephant is in the room and they will do nothing to touch it. Light regulation for the building industry, banks and those who used to flock to the Fianna Fáil tent at the Galway Races or its Fine Gael equivalent, is the same light regulation on which the illegal drugs industry depends. There are no Kinahans without offshore banking, or the old boy networks that their lawyers and accountants’ access on their behalf and the speculative financial products governments’ promote. And of course, there are no Kinahans or oligarchs, Russian or US, when the authorities decide not to prosecute them. In the 2008 bank bailout we learned there are banks too big to fail, there are also banks that are too big to prosecute, because to do so would expose the nature of finance capital.
(1) Irish Examiner (28/09/2020) Report reveals billions funnelled to Russian firms from shell companies based in Ireland https://www.irishexaminer.com/news/arid-40055846.html
(2) Sunday Business Post (09/03/2021) Comment: Ireland is being used to launder the world’s dirty money and must take action https://www.businesspost.ie/financial-services/comment-ireland-is-being-used-to-launder-the-worlds-dirty-money-and-must-take-action-ba90a064
(3) Independent (17/01/2016) Russian mob hides cash in IFSC funds and land https://www.independent.ie/irish-news/news/russian-mob-hides-cash-in-ifsc-funds-and-land-34370807.html
(4) Woodman, S. (21/09/2020) HSBC moved vast sums of dirty money after paying record laundering fine https://www.icij.org/investigations/fincen-files/hsbc-moved-vast-sums-of-dirty-money-after-paying-record-laundering-fine/
(6) FT (17/12/2021) HSBC
fined £64m for failures on anti-money laundering https://www.ft.com/content/304f7abb-981d-47c1-bf89-4168597b9443