Organised criminals with links to Northern Ireland paramilitary groups are using charities to launder the proceeds of their illegal activities, UK MPs were warned today.
According to evidence submitted by the Northern Ireland Office (NIO) to a House of Commons committee, the bank accounts of charities associated with paramilitaries have been used to cash money collected from extortion and other crime.
The British government is currently preparing legislation to tighten the regulation of charities in the North with the establishment for the first time of a Charity Commission for Northern Ireland.
However members of the Northern Ireland Affairs Committee expressed concern that the measures did not go far enough.
A memorandum by the NIO's Department for Social Development acknowledged the existence of "certain organisations associated publicly with current and former paramilitary groups" which had legitimate charitable purposes.
"All of them deliver against these purposes, to a greater or lesser degree," the memorandum said.
"Anecdotal evidence, however, suggests that some of the resources are used to fund expenditure not wholly compliant with charitable purposes and the proceeds of informal collections do not, in fact, reach the named recipient.
"PSNI (Police Service of Northern Ireland) investigations have highlighted cases where bank accounts in the names of charitable organisations associated with current and former paramilitary groups have been used to encash money collected from extortion and other criminal activities.
"In these cases, persons with strong paramilitary connections undertook the criminal activities."
The memorandum also highlighted the existence in Northern Ireland of "sham" charities set up as sophisticated tax avoidance vehicles, involving sums running into millions of pounds.
Giving evidence to the committee, Dave Wall, the director of the department's voluntary and community unit, acknowledged that the regulation of charities in Northern Ireland was "extremely light" compared to the rest of the UK.
However he said that he believed that the creation of the new Charity Commission would deal with the concerns.
The committee chairman Sir Patrick Cormack said it was essential the new body liaised effectively with the police and other law enforcement agencies.