Mairead Farrell (Galway West, Sinn Fein) | Oireachtas source

I have two particular questions that I very much want to ask, so I will get them out of the way and then I will let in the other members who are offering. I might just give the two questions in full and then come back as that will probably be the quickest way.

I thank the witnesses for coming before the committee. My first question relates to the Russian entities and the financial sanctions. The Central Bank's recent analysis of direct financial links to Russia by the financial sector here showed that the IFSC-based special purpose vehicles, SPVs, held approximately €37 billion in assets relating to Russian companies. We know that a prominent Russian state-owned company raised funds in the IFSC a number of years ago during an earlier round of sanctions. How will we be able to prevent this from happening again? What we do not want is that we function as some sort of a conduit jurisdiction for these firms. They have connected vehicles registered in the IFSC that are serviced by professional services based here. Their transactions are recorded here and often their bonds are issued here, but generally the servicing banks will be located in the City of London. That is a separate banking system to our own. As the European Banking Authority noted in January of last year, EU law ceased to apply to the British banking system. How has the Central Bank dealt with that? Has Mr. Makhlouf spoken to his counterpart in the Bank of England regarding this and what measures are being taken to ensure that transactions recorded here, and bonds issued here but using the British banking system do not slip through the cracks?

My second question relates to shadow banking. These Russian-connected firms operate within Ireland's shadow banking sector. At the end of 2020, that sector was worth around €3.5 trillion. That is almost nine times our GDP. Considering how inflated our GDP already is, it is an incomprehensible sum. It has tripled in size over the last decade without much comment being passed on it. The Financial Crisis Inquiry Commission was fairly categorical in its assessment of the contributory causes of the global financial crisis over a decade ago, and shadow banking played a key role in that regard. The presence of section 110 organisations has played a key role in Ireland becoming one of the top five jurisdictions in the world for shadow banking assets. I raised this recently with the Taoiseach, who said he had no issue with a cost-benefit analysis of the section 110 regime. In light of the risks shadow banking poses to financial stability, the reputational damage we incur from things like Russian-connected firms and section 110 organisations being used by vulture funds, which is completely inappropriate, and considering that those availing of section 110 make almost no contribution to the Exchequer, would Mr. Makhlouf also accept the need for a cost-benefit analysis of section 110?