The volume of suspicious transaction reports relating to suspected money laundering and terrorist financing has soared as Gardaí are already struggling to cope with an unprecedented increase in reports of alleged frauds. Reports from services who facilitate cryptocurrency transactions are driving the increase.
Last year, a record 54,000 suspicious transaction reports were made by the financial sector and others, such as virtual money services, fund managers, gambling companies, auctioneers and car dealers.
The reports are made to the Revenue Commissioners, who check for tax evasion, money laundering and other crimes and are also sent to the Garda for examination and investigation.
The volume of reports has more than doubled in the last five years as virtual asset service providers (Vasps) have become more popular.
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These provide electronic services for payments and transfers, as well as asset storage, for consumers and businesses dealing in conventional currencies and cryptocurrencies. They must apply to the Central Bank of Ireland for registration in the Republic.
Reporting of suspect transactions by Vasps is driving the overall surge in all types of transactions being reported to Revenue.
In 2019 there were 24,500 suspect transactions reported by the financial sector to Revenue. That increased to 52,200 in 2023 and to 54,000 last year. As recently as four years ago, banks and the credit unions accounted for almost all the suspect transactions reported in the State, but the situation has changed rapidly.
In 2019 and 2020, no reports of suspicious transactions were made by Vasps and 300 were made in 2021. Reports by Vasps of suspected transactions have increased exponentially since then – to 6,600 in 2022 and 23,800 in 2023.
In that year, 2023, Vasps became the single biggest reporter of suspect financial transactions in the Republic, ahead of all banks and credit unions combined. A breakdown of how many suspicious transactions were reported by Vasps last year was not available.
However, Revenue confirmed the overall number of suspicious transaction reports (STRs) from all sources made last year was 54,000, a record high.
In reply to queries, Revenue said suspicious transaction reports formed “an integral part of the overall risk profile for individual taxpayers”. When suspicious transaction reports were received, they were “examined, matched to taxpayers’ information, and used to identify and subsequently confront noncompliance”.
“Where we identify risks, we undertake the appropriate compliance intervention, matching the nature of the intervention to the nature and scale of the noncompliance or tax evasion involved. We also work closely with the financial intelligence unit of An Garda Síochána and other State agencies concerned with STRs,” Revenue said.
The Banking & Payments Federation Ireland said: “Financial institutions, as well as other regulated entities, have a legal obligation to report any transaction where they have reasonable grounds to suspect money laundering or terrorist financing and BPFI members work very closely with An Garda Síochána to meet these reporting requirements.”
The obligation to make the reports is provided for in the Criminal Justice Money Laundering and Terrorist Financing Act. In 2021, the legislation was amended to widen the range of institutions, including virtual asset service providers, legally obliged to report suspicious transactions, resulting in the huge volume of reports from Vasps.
The increase in suspicious transaction reports comes just weeks after it emerged tens of thousands of reports of suspected frauds, made to the Garda by the banks and other institutions, had not yet been examined. The volume of suspected frauds has grown so large over the last two years that gardaí have been unable to process and, subsequently, assign them for investigation.
The backlog is now so large the Central Statistics Office has said the State’s official crime data, relating to frauds, will be revised upwards. The office paused publication of any further crime data last month as an interim measure.
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