The Central Bank never reported breaches of exchange control regulations to the Revenue Commissioners, even when flagrant tax evasion may have been involved, according to reliable sources. The Central Bank took the view that banker confidentiality precluded it from reporting breaches of the law to other, directly responsible state agencies, which might have instituted investigations or prosecutions.
Attempts to secure a comment on these matters from the Central Bank were unsuccessful last night.
From 1979 to 1992, the Central Bank was responsible for regulating the inflow and outflow of funds from the economy under exchange control regulations, and it also had authority to licence and to police banks and financial institutions.
The Central Bank should have been aware that Irish citizens held up to £38 million in the Ansbacher accounts in 1989, because it carried out regular audits on the Guinness & Mahon Bank in Dublin.
But no disciplinary action appears to have been taken in connection with the deposits under exchange controls. It certainly did not report the matter to the Revenue Commissioners.
Under the Exchange Control Act of 1978, the importation or the export of currency or any document that would enable a person to obtain credit or currency abroad was prohibited, except with the permission of the Minister for Finance.
Penalties under the law were originally fixed in 1954 and fines varied from £500 to £5,000 with a maximum term of imprisonment of two years.
It would appear that the policing of this law was left almost entirely to Customs Officers, whose main activity seemed to revolve around the annual exodus to the Cheltenham festival, when cashcarrying punters had their wallets checked.
The Central Bank had the dual role of licensing, regulating and monitoring the banking sector while, at the same time, overseeing exchange controls.
The bank undertook the exchange control function as an agent for the Minister for Finance.
But because it was not given full statutory powers in relation to exchange controls it seems to have been reluctant to investigate dubious accounts without a ministerial direction.
Such a direction was only given on three occasions, over a period of 13 years, by the Minister - in relation to the Greencore scandal; concerning the Johnston Mooney and O'Brien/Telecom site scandal; and, more recently, regarding the Dunnes payments to politicians scandal.
During the past month, the Central Bank has reported on exchange control breaches to the Minister for Finance, Mr McCreevy, in connection with payments made by Ben Dunne to Mr Charles Haughey and Mr Michael Lowry.
Papers were referred to the Director of Public Prosecutions by the Minister for Finance on October 31st and a decision is awaited. The Minister also referred these documents to the newly-established Moriarty Tribunal and to the Revenue Commissioners.
In its report on exchange controls to Mr McCreevy, the Central Bank made no comment on its supervision of Guinness & Mahon in Dublin and, in particular, on whether it questioned the funds deposited in the Ansbacher accounts.
Only two successful prosecutions have ever been taken under exchange control regulations and these were initiated by Customs Officers.
The Revenue Commissioners settled for cash in a few instances and the Central Bank applied various procedural and financial sanctions.
Analysis: page 16