Select Committee on Northern Ireland Affairs Minutes of Evidence

Memorandum submitted by Police Service Northern Ireland


  Northern Ireland remains in a period of political transition. While much has been achieved terrorism has not (yet) gone away and major public order issues remain unresolved. Policing in Northern Ireland must retain the flexibility and capability to protect that society wherever transition may take it and respond to a number of challenges, not least the threat posed by serious and organised crime.

  The control structures which sustain terrorism remain largely intact and can equally be applied to serious and organised crime. This represents a significant threat to the stability of Northern Ireland and potentially hinders the transition to a responsible civil society. Managing the legacy of terrorism requires a multi-agency approach driven by government in order to identify the scale and nature of organised crime in Northern Ireland and to respond to it. The Police Service of Northern Ireland (PSNI) is fully committed to confronting the illegal financial activities of organised crime groups in Northern Ireland, many of which remain closely linked to paramilitary organisations.


  In 1988, following a request for assistance from the Royal Ulster Constabulary (RUC) to the then Secretary of State for Northern Ireland, Rt Hon Tom King MP, the NIO established a specialised unit, the Anti-Racketeering Unit (ARU) with a remit to confront paramilitary fundraising and reduce the flow of funds to terrorist organisations. This unit worked closely with the RUC, who provided the necessary operational support and led on investigative issues. In 1993 the ARU was renamed the Terrorist Finance Unit (TFU). In 1996, following a fundamental review of the functions of the NIO, a joint NIO/RUC working party was formed to consider the work and future of the TFU. On conclusion of this process, responsibility for investigating terrorist finance passed formally to the RUC on the grounds that this would provide greater operational focus for the work of the unit. At the same time, the work of the TFU was expanded to cover other areas including non-terrorist financial crime activity. To reflect these changes, it was renamed the Financial Crime Services Unit (FCSU).

  In 1999, following an internal RUC review, a specialised unit within RUC Special Branch assumed responsibility for intelligence gathering in respect of the financial activities of paramilitary organisations. Other research and analytical functions of the FCSU were retained and enhanced through the establishment of the RUC Analysis Centre which now provides a Service wide analytical service, covering all aspects of policing in Northern Ireland.


  The PSNI is a full and active partner in the government's Organised Crime Task Force (OCTF) and takes the lead on a number of key areas, including the 2001-02 strategic priority areas of drugs, extortion and money laundering. Recently a restructuring of Crime Department saw the appointment of a Detective Superintendent as Organised Crime Co-ordinator to act as a single point of contact for OCTF and partner agencies and to co-ordinate within PSNI resources and activity in respect of serious and organised crime.

  Work is ongoing regarding the development of information flows within and between agencies and the identification of lead agencies. Moreover, work has been undertaken to establish a number of expert groups to address key crime areas, both as an OCTF and PSNI issue.

  The raising of finance by paramilitary organisations is largely being addressed through the OCTF. The rationale for this development is based on the fact that there has, in recent years, been a migration from politically motivated crime to commodity based criminal enterprises. Indeed, paramilitary groups are now routinely operating alongside other criminals in a common cause and their activities more appropriately fall within the remit of organised crime.

  The Analysis Centre has to date played a key role in the work of the OCTF and is responsible for producing the annual assessment of the threat to Northern Ireland Society from serious and organised crime. Enhanced co-ordination of Northern Ireland law enforcement agencies in the investigation of this type of crime is fundamental to effective enforcement activity. This includes sharing of intelligence and good practice; the avoidance of duplication of effort, and the provision of appropriate expertise and support to the OCTF. It is anticipated that as these co-ordination structures develop, the work of the Analysis Centre in this field will increase significantly and there will be a greater requirement for strategic and tactical analysis of organised crime, its links with Great Britain and internationally and the identification of intelligence leads for exploitation in the operational field.


  This report summarises current and historical reporting on paramilitary fundraising. One of the greatest problems facing paramilitary groups in Northern Ireland has been financing their activities and they have traditionally engaged in a wide range of criminal activities to generate funds.

  It is possible that the transition from terrorism to crime has led to a decrease in leadership control of membership. The fact that volunteers' activities now entail money rather than terrorist attacks mean they are likely to want to keep a cut for themselves. It is very difficult to assess how much of the profits go to the individual and how much to the organisation. It is hard to assess the state of each group's finances but likely that groups on ceasefire require considerably less money to function. If volunteers are making money through crime, the organisation is under less obligation to pay their "wages".

  It is also worth noting that the events in the US on 11 September are likely to reduce republican income from North America and elsewhere overseas.

  Following is a list of key crime areas that have been used by paramilitaries to generate finance. This list is not exhaustive but seeks to give an indication of the wide range of acitivies in which the paramilitaries are, or have been, involved.


  It appears that, proportionately, the Northern Ireland figures for armed robbery and hijacking are significantly higher than the United Kingdom average. In 2000-01, 927 armed robberies and 182 hijackings were reported.

  Traditionally armed robbery has been used by terrorists as a way of raising large cash sums. It is likely that larges scale armed robberies raise in excess of £500,000 annually. Paramilitary groups remain heavily involved in this crime.

  Recent years have seen a marked increase in the number of cash-in-transit and ATM robberies in Northern Ireland. 85 per cent of the case in transit market in Northern Ireland is conducted by Securicor, who have reported an alarming increase in attacks on cash in transit and on ATMs. In addition to Securicor robberies, the Post Office has also reported 22 cash in transit robberies this year. This represents a 100 per cent increase on last year's figures.

  17 people have been arrested and charged with similar offences. It is assessed as unlikely that paramilitary organisations have benefited directly from any of these activities.


Benefit Fraud

  There is evidence of organised crime involvement in this area—particularly groups involved in running "multiple identities" and in the manipulation of instruments of payment. 35 per cent of organised crime groups are reported to engage in Benefit fraud.

  There are no benefit frauds unique to paramilitary organisations. Members of Republican and Loyalist paramilitary organisations are known to:

    —  "Do the double" ie work and claim benefit (particularly popular where work can be casual ie construction industry and private taxis).

    —  Claim to have separated thus increasing the amount of benefit to each individual.

    —  Claim in two areas—particularly popular in South Armagh though also done between NI and GB.

    —  Abuse the Motability scheme.

    —  Sell benefit books ie genuine claimant sells benefit book which can be used a few times before it is stopped but tells the SSA that it is lost or stolen and is issued with a new book.

Fuel Smuggling

  HMC & E figures indicate that in 2000, 13 major fuel laundering plants with the capacity to produce in excess of 40 million litres of illegal fuel had been discovered in Northern Ireland. In January 2001, a further two mixing and one laundering plants were dismantled. Analysis shows paramilitary involvement in this area.

  Organised crime has links with fuel smuggling/laundering operations. Significant illegal activity is carried out in South Armagh and other border areas including Londonderry by organised criminal gangs. The financial incentives are such that the trade is increasingly attractive to new groups. The quantities of fuel involved are significant. In 1999-2000, HMC & E seized 1.5 million litres of illicit fuel. In the year to September 2000, over 1.3 million litres of illicit fuel was detected (729,000 litres of which were smuggled, the remainder laundered). Prolific smugglers can expect to generate tens of thousands of pounds per day from their activities.

  There are indications that organised crime "taxes" smugglers—taking a percentage of the profits. There is also evidence that organised criminals influence diesel prices in West Belfast and elsewhere by imposing sanctions on luckless garage owners that seek to set their own prices. The problems are spreading. It is likely that organised crime generates millions of pounds per annum from smuggled fuel.

  Many legitimate businesses, particularly in the border areas have failed due to competition from the Republic of Ireland, where fuel is significantly cheaper. Over 120 outlets in Northern Ireland have been forced to close. Since 1994, legitimate fuel deliveries into Northern Ireland have decreased by over 50 per cent; in the same period the number of vehicles on the road has increased by over 20 per cent.

Alcohol and Tobacco Smuggling

  By the end of October 2000, publicly quoted HMC & E figures reveal that 44 million cigarettes had been seized in Northern Ireland—double the figure for 1999. While this may in part reflect increased enforcement activity it is indicative of a major, and significant, criminal interest in tobacco and alcohol smuggling. The loss of duty runs into tens of millions of pounds annually. Organised crime is involved in regulating the supply of smuggled cigarettes in Belfast and some provincial towns in order to maintain prices (and profits).

  Smuggling of cigarettes from EU countries with low duty rates and smuggling from countries outside EU is prevalent. According to HMC & E, countries of the former Soviet Union (Lithuania, Russia, Ukraine) and South East Asia represent the biggest external cigarette smuggling threat to the United Kingdom[1]. Tobacco is brought in from the continent, where a range of countries are important transit points—often by the container load—and then distributed in smaller quantities as required. It is also the practice for individuals posing as holiday makers, particularly visitors to the Canary Islands, to return with large quantities of excess duty free cigarettes. Hundreds of thousands of cigarettes a week are believed to enter Northern Ireland by this method. There are extensive distribution networks in place, many of which are regulated by paramilitaries.

Betting and Gaming

  Substantial abuse is reported in the following areas:

    —  Suppression of takings.

    —  Off-record premises (takings unrecorded).

    —  Illegal/unregistered bookmakers.

    —  Illegal/unregistered bingo halls.

    —  Non-licensed/illegal gaming and jackpot machines.

  In 1999-2000 HMC & E collected £2.5 million from betting and gaming activities in Northern Ireland. Fraud estimates indicate significant non-compliance and the trend is upwards. There are indications that some ventures may be "legitimately" run—making action by law enforcement very difficult. Five per cent of organised crime groups are reported to be involved in illegal gambling.

  Cash businesses provide significant scope for suppression of income. There are limited resources devoted to tackling the problem and therefore evasion is widespread. 95 per cent of Northern Ireland bookmakers, for example, are locally owned and managed. The quality of audit and control mechanisms is very variable.


  In 1999-2000 substantial abuse of Department of Agriculture payments was reported. The abuse takes the form of the deliberate introduction of disease, tampering with or changing ear tag identification for the purpose of claiming compensation and livestock smuggling. There is limited evidence of organised crime involvement in agricultural fraud:

    —  Suspect herd keepers collaborate to spread disease.

    —  A network of dealers facilitates the smuggling of cattle for profit.

  The vast majority of such activity occurs in South Armagh. Whilst there is no specific intelligence to suggest that republican paramilitaries have orchestrated such fraud, individual members have doubtless benefited from such activity.


  In the period 1 April 2001 to 20 November 2001 police seized the following quantities of drugs:

Class AClass B
Powder grammes: 546,39
Crack grammes: 38.5
Wraps: 0
Ecstasy (MDMA)
Powder grammes: 231.81
Tablets: 100,475.5
Capsules: 2
Tabs: 122
Microdots: 0
Grammes: 59.13
Tablets: 29
Ampoules: 4
Wraps: 17
MLS: 260
Resin grammes: 301,733.88
Herbal grammes: 12,927.75
Oil grammes: 0
Joints: 171
Plants: 87
Powder grammes: 7,433.92
Tablets: 0
Wraps: 19
Tablets: 0


Premises searched
Vehicles searched
Persons searched

  Just under half of the organised crime groups identified by the 2001 Threat Assessment were listed as having drug dealing or trafficking as their predominant crime type. While just over half of these are believed to have paramilitary associations, it is hard to prove paramilitary-directed involvement.

  It is widely held that loyalist paramilitaries are heavily involved in the Class B, and to a lesser extent Class A, drug market, but it is hard to estimate the levels of control exerted by or the profit generated for the organisations. Publicly, the republican movement has taken a strong stand against drugs and has used this as another means of exerting control over the community. Direct Action Against Drugs is held responsible for the deaths of numerous major drug dealers in Northern Ireland since the 1994 ceasefire. However, historically some republican groups have been linked to the illegal drugs market and it is likely that individual members remain involved for personal gain rather than to finance the organisations.

  Analysis of price and purity data would suggest a modest recent increase in heroin availability—and a local trafficking/distribution network able (and willing) to meet local demand. Cocaine offers attractive profits to Northern Ireland traffickers and there is intelligence to indicate growing organised crime interest in cocaine importations. There have been notable small-scale seizures of the highly addictive crack cocaine in 2001. These seizures are likely to be an important indicator that this drug is developing a foothold in the Northern Ireland market. Ecstasy is widely available and there is competition to supply the local market. Lower relative profits from ecstasy make dealing in other Class A drugs—notably cocaine—more attractive to well-established trafficker groups. Cannabis is widely consumed and the drug is prevalent throughout Northern Ireland. Falling prices indicate intense competition amongst local traffickers/middle market dealers and significant (stable or growing) demand. Links to Spain and South Africa are important in feeding the local market. The amphetamine market appears to be stable, with local prices and purity in line with the UK.

  Recent local studies have highlighted the emerging problem of drug-assisted sexual assault. There is an emerging problem with prescription drug misuse based on law enforcement indicators and independent work undertaken. It appears that prescriptions are bought from addicts and the drugs subsequently sold. Selling of prescription drugs over the Internet is a new and emerging trend. Dispensing chemists are a target for robbery gangs intent on stealing prescription drugs that are then sold at a profit.


  Intellectual Property Theft (counterfeit goods) is a major local problem. Since 1 January 2001 police have seized the following:

Approximate value
Music CDs
Playstation games
Video films/DVDs

  In the period 1995-97 RUC counterfeit goods seizures amounted to £1.5 million. This total included one major seizure of goods from Spain.

  Three-quarters of the total comprised low-tech goods (eg perfume, clothing and videos) sourced from Bulgaria, Turkey the Far East and within the European Union. High-tech items comprised 25 per cent of the total—the vast majority of these (electronic) items were traced to South-East Asia. In 1999-2000 there was a marked increase in the number of CDs, videos and computer games (mainly Play station items) seized—the total value of all items being £3.5 million, representing a significant increase on previous years.

  Counterfeit goods are widely distributed via local markets and are a multi-million pound business in Northern Ireland. There is evidence of the use of the Internet to facilitate trade in counterfeit items.

  There have been a number of recent seizures of illegal video reproduction plants in Armagh and Belfast. In Armagh 50 video recorders and thousands of blank and counterfeit video cassettes were seized. Subsequent examination indicates the Armagh and Belfast plants produced thousands of items for the local Northern Ireland market. Intelligence indicates that blank CDs are also imported in extremely large consignments into Northern Ireland.

  It is believed that individuals with paramilitary connections are involved with the smuggling, distribution and manufacture of counterfeit goods and it is possible that some of the money raised is given to illegal organisations. It has been noted that paramilitary memorabilia is occasionally seen on sale at open-air markets which may also be a form of fund raising.


  Over the past four years, there has been a steady increase in the occurrence of counterfeit currency throughout Northern Ireland, with a significant rise this year.

Number of incidents
* To 16 November 2001.

  The most common counterfeit banknotes currently in circulation are:

    —  Bank of England £20—exceptionally good quality with silver foil.

    —  Bank of Ireland £20 (new style)—good quality with gold foil.

    —  Bank of Ireland £20 (old style)—good quality with no foil.

    —  Bank of England £5—poor quality but frequently accepted.

    —  First Trust £20—good quality with clear, well-defined image.

  Intelligence and investigation have linked paramilitary groups to the distribution of counterfeit bank notes.

  The imminent introduction of the Euro in the Republic of Ireland presents new counterfeiting opportunities; it is anticipated that up to 50 per cent of businesses in Northern Ireland will be in a position to trade in Euros.

  Some counterfeit currency still appears to be produced by opportunists who are using home computers etc but the overall trend is a significant improvement in the quality of counterfeit banknotes in circulation. This is most likely due to the increased availability of technology such as colour laser printers, colour copiers, scanners etc.


  A wide range of counterfeit documents was recovered by the RUC in 2000. They include counterfeit driving licences (good quality), letters of authority received by a local bank (good quality), Belfast business training passes (excellent quality) and a number of student identification passes (excellent quality). It is not known to what extent this activity is orchestrated—but there are links to organised crime.

  Intelligence indicates that paramilitary groups are involved in the distribution of counterfeit telephone cards—which are sold at a significant profit.


  As well as being a means of raising finance for terrorist operations, extortion has also been used effectively since the early 1970s to exercise paramilitary control over the community. Extortion probably generates hundreds of thousands of pounds per annum for paramilitary organisations.

  In the period 1 January 1995-31 August 2001, a total of 80 persons were arrested for extortion offences. Detailed analysis suggests that the true extent of Northern Ireland's extortion problem is not reflected in the number of cases successfully prosecuted. It is likely that less than 10 per cent of extortion is reported to police. Over 80 per cent of reported cases of extortion were carried out on behalf of a paramilitary organisation. Collectively, loyalist paramilitary groups were responsible for 76 per cent of reported cases.

  The building trade is the worst affected though fast food outlets, restaurants and licensed premises, car dealerships and other retail outlets have also been affected. The majority of cases reported are in the greater Belfast area.

  Extortion threatens inward investment and increases the cost of doing business. This is reflected in higher prices for the consumer and additional costs to the taxpayer. Extortion destroys families and relationships and businesses—particularly in witness intimidation cases. Extortionists drive people out of business and out of their homes and police are forced to devote scarce resources to the protection of vulnerable individuals.


  Money laundering is a vital activity of all profit generating organised crime operations. The sums of money involved may be very significant[2]. 50 per cent of organised crime groups in Northern Ireland are specifically reported to be involved in money laundering, although it is probable that all profit-generating criminal groups engage in this activity to some extent.

  Traditionally, paramilitary organisation from both sides of the community have used legitimate businesses such as taxi firms and pubs and clubs to launder funds. Other popular laundering methods have been the use of bookmakers and bureaux de change.


  Money lending rackets have traditionally been used by paramilitary organisations to raise funds. The profits are often used to fund prisoner welfare and weapons procurement operations.

November 2001

1   NCIS 2000 UKTA. Back

2   The IMF has estimated that money laundering by criminals worldwide is valued at between two per cent and five per cent of the world's GDP. NCIS 2000. Back

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