Republican paramilitaries were far ahead of loyalists in terms of racketeering and criminality.
The revelation came in secret files released as part of the State Papers by the National Archive.
Irish and British experts examined the level of criminality involved in both republican and loyalist groups. One Irish assessment was that republicans were far ahead of their loyalist rivals in terms of the sophistication of criminal enterprises.
These ranged from protection rackets to thefts, extortion, fraud and the sale of black market goods such as video tapes.
One file from 1993 revealed Irish officials had been told by their British counterparts that a high-tech new computer system would offer enormous advantages in helping crack down on criminality within paramilitary groups.
The Terrorist Finance Unit (TFU) had, Irish officials were assured, “the best computer in the UK” and this was being used to monitor criminal activity by paramilitary groups on both sides of the sectarian divide.
Irish officials were also informed that Britain’s TFU now had a staff of 26 – and would double to more than 50 within months as London moved to tackle the funding sources for terrorist groups.
Another document revealed that Irish civil servants were aware of just how deep the racketeering operations ran for both republicans and loyalists.
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Two loyalist paramilitaries were having a drink in the Crown Bar in 2000 and the subject of racketeering came up.
“Racketeering is just a fact of life in Belfast,” one man said to the other.
However, the conversation was reported back to Irish officials, who noted that the UDP, the political wing of the UDA, had members who were involved in the drugs trade.
Irish officials noted a conversation where the UDP members said their rival, the UVF, was also involved in the drugs trade. In some cases, the involvement was through drug dealers being allowed to operate only if they paid a tax or protection fee to the local paramilitary group. Irish officials noted that while republican groups had been very sophisticated in terms of identifying sources of illegal funding, loyalists had taken note and were copying them.
Among the sources of criminal income identified were gaming machines, taxis, social clubs, robberies, commercial opportunities, fraud, overseas contributions, extortion, the construction industry, smuggling and video piracy.
A number of social clubs had been identified as mere fronts for loyalist terror groups – and had their licence renewals objected to as a result.
The TFU noted that 15 such social clubs were shut down, while another 15 were allowed to remain open.
The latter were subjected to strict monitoring where their income and finances were assessed to ensure nothing was going to paramilitary groups.
Despite this, British experts believed social clubs around Belfast and other parts of Northern Ireland were declaring only about 20pc of their income – with the rest being hidden to cover payments to paramilitaries.
The TFU had particularly targeted republican social clubs amid concerns they were helping finance paramilitary activities to the tune of Stg£3m a year.
Fuel smuggling was a particularly lucrative activity, especially for republican groups who had links to the Republic.
One fuel operation in Armagh received Stg£6m worth of fuel, none of which was distributed in Northern Ireland, with officials believing that the bulk of it had been smuggled across the Border.