A conference on organised crime was told that republican and loyalist terrorist groups were estimated to be raising more than pounds 10m a year through frauds involving social clubs, taxi drivers, the construction industry and video piracy. Republicans accounted for the lion's share.
A closed session of the conference at Bramshill police college, Hampshire, was given details by an official of the Northern Ireland Office of how the anti-racketeering squad of the Royal Ulster Constabulary had tackled terrorist fund-raising operations and how it planned to anticipate and head off new frauds.
Speaking outside the conference, the official, who asked not to be named, said that terrorist groups from both sides of the politicial divide were believed to be moving from video piracy into the rapidly expanding computer games market.
He said: 'Some of the best films have been available from video rental shops in Ulster before they were on general release. The Garda Sichona (Irish police) have been very successful in this respect and have seized pounds 20,000 machines which duplicate videos on an industrial scale. The next logical step from this is to move into the expanding computer games market.
'The terrorists become more sophisticated and as we tackle them in one area, they move into the next obvious means of raising money.'
One success for the anti-racketeering squad has been in tackling the pounds 1m to pounds 2m a year raised for terrorist organisations through the province's 600 social clubs - some voluntarily, some under duress. Eighteen clubs have been closed down and a further 25 put under close scrutiny and required to submit their accounts for examination every month.
The squad was also targeting the estimated pounds 500,000 a year which terrorist organisations earn from Ulster's 400 black cabs - drivers contribute either voluntarily or after extortion - and the tax-related frauds associated with the construction industry. Many companies involved in construction are believed to increase their prices to cover the sums they are obliged to pay terrorist organisations.
The official said the increasing sophistication of IRA fund-raising activities was underlined by money trails which 'led all around the world and back again'. It was clear that the IRA was being advised by professionals such as accountants.
Increased involvement in racketeering meant that terrorist leaders were operating as organised professional criminals, irrespective of the ends to which the money was being put, the official said. Some of the money went into their pockets rather than that of their organisations.
Measures against racketeering should not be confined simply to arresting people with a view to prosecution, he said. 'That is simply the icing on the cake. We have to find ways of disrupting and curtailing their activities as well.'