The Dunnes Payments Tribunal, the imminence of the European single currency, and concern about the international drugs trade have come together to put money laundering and off-shore banking high on the political agenda. The Cayman Islands was the centre for the Ansbacher accounts. The Caymans, with a population of just 30,000, has a banking deposit base of $430 billion - the seventh largest deposit base in the world, after the UK, US, France, Germany, Switzerland and Japan.

There are 550 banks on the Cayman Islands, but only 17 of them have a physical presence there. Controls on money laundering on the Caymans apply only to banks which have a physical presence. So just 17 of the 550 banks on the Cayman Islands are regulated as far as money laundering is concerned.

Some believe that as much as half the world's wealth is held in offshore accounts. Off-shore banking, of course, does have legitimate purposes - off-shore holding companies can enable multinational companies to exploit the international capital and money markets more effectively. It helps them to achieve maximum tax effectiveness in a legitimate way. But not all offshore banking has such benign purpose - the Nazis in Germany used banks in Switzerland to hide their ill-gotten wealth.

The laundering of money for criminals has become a highly professional business. Some very well qualified accountants, bankers, and lawyers provide this service to the criminal community.

There is a big market there for them to exploit. While only 3 to 4 per cent of the world's population use illicit drugs, the world trade in illicit drugs (at $400 billion) is equivalent to 8 per cent of total international trade. The world's illicit drugs trade is bigger than trade in iron and steel and about the same size as that in textiles.

The profit margins are enormous. Gross profit margins at retail level for crack cocaine are 300 per cent, and for heroin are 100 per cent.

The heroin trade in Dublin has taken a knock in recent times. New treatment options are cutting demand in a very cost-effective way. The heroin barons themselves have come under unprecedented pressure from the gardai and the Criminal Assets Bureau.

But there are few limits to the ingenuity and entrepreneurial talent of the crime organisations. New drugs can be introduced. Cocaine and crack cocaine, which offer higher profit margins and which, unlike heroin, cannot be treated by methadone, have yet to become common in the deprived areas of Dublin, as they have in similar areas of North America. If this were to happen, the cycle would start all over again.

The drugs trade has become so powerful that it can override sovereign states. The money at the disposal of individual drug barons exceeds that of states like Bolivia, Peru, Colombia, Burma, and Afghanistan.

We have almost reached the point where countries can be bought and sold. Co-operation between guerrillas and drug barons ensures that states cannot enforce the law. Paramilitaries have involved themselves in the drugs trade.

Guerrilla, and so called liberation, movements exist in almost all the countries at the centre of production of drugs in Latin America and in the Golden Triangle of Asia. The atmosphere of political chaos that these movements create suits those in the international drugs trade.

The developed world has responded belatedly to this challenge. Many countries still fail to treat bribery in another country as a crime. The Iran/Contra affair showed how the dividing line between terrorism and foreign policy can become confused.

ONLY a tiny proportion of the profits of drug production remain in the third world countries, where the opium poppy and the coca bush are cultivated. Other more profitable replacement forms of agriculture will take time to develop. They require major investments in roads and transport, which will only come through peace and balanced economic development in Peru, Bolivia, Columbia, Afghanistan and Burma.

The real battle against the drug trade must be fought in the developed world.

One of the ways in which the developed world has chosen to deal with the threat has been by cracking down on the laundering of the profits made from the international drugs trade. Corruption has at last become a preoccupation of the International Monetary Fund (IMF) in deciding which countries it should help with their financial problems.

A financial action task force on money laundering was established at the G7 summit in Paris in 1989. It issued 40 recommendations to member countries in 1990, and these were updated last year.

Ireland is a member of this task force, and has been prompt in implementing its recommendations through the Criminal Justice Act of 1994, and the Criminal Assets Bureau Act of 1996.

These laws make money laundering a criminal offence, require bankers to report on "suspicious transactions", and provide for the freezing and confiscation of the assets of crime. The Financial Action Task Force is doing reviews of progress in each member country, and will report on Ireland soon.

But the criminal fraternity has not been slow in taking counter measures. Banking through the Internet creates a new opportunity for money laundering. The single European currency will encourage people to have bank accounts in other countries of the single currency area. When a bank manager does not know customers personally, money laundering is easier. Smart cards also create a new way of transferring money which will be used for money laundering.

The Irish legislation on money laundering, although quite up-to-date, is not comprehensive. Let me give some examples.

The purchase of a single premium life insurance policy is an increasingly popular way of shifting money. But insurance brokers are not covered by present Irish requirements to report suspicious transactions.

Buying property is another way of laundering money. Estate agents are not covered by our legislation. Equally, lawyers are not included.

The definition of a "suspicious transaction" that must be reported includes money derived from "drugs, or other criminal activity". This is a fairly comprehensive definition - but there is a doubt as to whether tax evasion is included. Some of the most noteworthy Irish public examples of off-shore banking were apparently motivated by tax evasion. Suspicion of tax evasion should be explicitly included as an event requiring the reporting of "suspicious" transactions.

The debate on the Dunnes Payments Tribunal will necessarily involve a great deal of retrospection on things that happened in the past that should not have happened. It is appropriate to attribute blame. But it is also important to develop a constructive programme of action for the future.

The tribunal has already shown us how offshore bank accounts have been used to hide money and evade Irish taxes. As Ireland becomes more prosperous, the number of people here who will be tempted to use such devices will increase. There is a thin line between legitimate tax avoidance by prudent investment overseas, and tax evasion which is illicit. Those who hide what they are doing are more likely to be up to something illicit than those who willingly declare it.

The international financial services community, along with the governments of all states, including tax havens, will be called upon to develop new and transparent rules that put the common good above the needs of a small number of wealthy individuals.

Each state needs to clarify its own laws on corruption. Irish legislation on corruption dates back to an 1809 Act on the "Sale and Brokerage of Offices", an Act of 1889 on Corrupt Practices, and the Prevention of Corruption Act in 1916. We do not appear to have any native Irish law on corruption passed by our own Dail and Seanad!

Our corruption legislation should be updated. Very few people have ever heard of the 1809, 1889 or 1916 laws.

I hope that the Dail, when it meets to discuss the Dunnes Payments Tribunal, will also agree a positive programme of action to tighten up legislation on corruption and on money laundering.