OFFSHORE accounts have a whiff of the exotic about them. The Cayman Islands and the British Virgin Islands are as famous for their bank accounts as they are for beaches. However, off-shore banking Irish-style is often more routine, involving just crossing the Border and lodging money in a Newry account.
Moving money into offshore accounts has been one of the ways richer Irish residents have used to shield money from the taxman and circumvent exchange control rules, in place until 1992. Up to 1979 money could be held legally in the sterling area, so much of the longer-established offshore deposits date from this time.
How much money was out there? How much is still out there? Who knows? In the run-up to the last tax amnesty, the government of the day estimated that some Pounds 2 billion was salted away by Irish residents in offshore accounts, ripe for repatriation. Tax and banking sources believe this estimate is not unreasonable - many feel the total could be considerably higher - although how much is legitimately held and how much hidden from the taxman is impossible to calculate.
What is clear is that not much of it came back during the 1993 amnesty. In total, around Pounds 1 billion was declared for the amnesty, though the bulk of this was hidden in Irish bank and building society accounts. Rough estimates are that some Pounds 200 million might have returned from offshore at the time. And, remember, a further Pounds 1 billion of income was "washed clean" in the 1988 amnesty, although on this occasion little money is thought to have returned from outside the State.
Even given the large amount of funds held outside the State, the revelation in the tribunal of one group of deposits controlled by the late accountant Des Traynor containing up to Pounds 40 million is striking. The accounts were, as the tribunal said, "effectively off-shore" in that they were controlled from the Cayman Islands by Ansbacher Bank, of which Mr Traynor was chairman. However, the money was held in an account in Guinness & Mahon in Dublin - and later in Irish Intercontinental Bank - which allowed the tribunal to unearth the information.
The Anbacher deposits raise some questions about exchange control rules. Before 1992 Irish residents and companies had to have a legitimate business reason to hold a foreign currency bank account in Ireland, or an account outside the State. (The one exception was a sterling account opened before 1979.)
Opening a foreign currency account without the explicit permission of the Central Bank would have been a breach of exchange control regulations.
It appears the operation of the Ansbacher deposits did breach these rules, as the tribunal was told that the beneficiaries of the money in these accounts were "Irish residents", presumably a sizeable number of rich business people. It is not conceivable that the Central Bank would have given permission for such a movement of funds under the pre-1992 exchange control regime.
The Revenue Commissioners, of course, will also be interested to know if tax was paid on the money. Under the 1993 tax amnesty legislation, the Revenue has the power to get access to bank account information by seeking the approval of an appeals commissioner. So, while the tribunal will not reveal the name of the other account-holders, it is now likely that the Revenue will seek to pursue the information and collect any tax due.
What is unusual about the Ansbacher Deposits is that they ever saw the light of day. Mr Traynor had gone to considerable lengths to keep his clients' identity and, indeed, the existence of the funds secret. Different clients were given different letters and numbers denoting their accounts. It is not yet clear how many accounts Mr Traynor operated.
So far we have been told of accounts ranging from S1 though to S9 with Mr Haughey's money being in the last two, S8 and S9. However, it is understood that a number of other accounts also existed with a range of different letters depicting them.
Ideally, a system of this kind should completely protect his clients' anonymity and ensure complete confidentiality. After all offshore accounts of this kind are used by people all over the world and even the notorious Inland Revenue Service in the United States frequently fails to crack the code. In Ireland and the UK it is even rarer: there has not been even one prosecution under new EU money laundering regulations brought into effect in 1992.
However, the fact that records of the Ansbacher Deposits were held in Dublin allowed their existence to be uncovered. The fact that such records were held at all in Ireland is seen as surprising by tax and banking experts. After all, if all the records were in the Cayman Islands, we might never have heard about them.