Bagging the EU’s new financial crime watchdog is likely to be a tougher task now than it was in 2017, as the Government grapples with a dire housing crisis and a trickier approval process in Brussels.

Six years ago, Dublin narrowly lost out to Paris in a race to secure the EU’s banking regulator post-Brexit, after dropping its bid to lure the medicines agency away from London.

This time around, the Government is again facing off against the French capital, as well as major financial centres Frankfurt and Luxembourg and six other countries: Spain, Belgium, Austria, Italy, Latvia and Lithuania.

Not only will Finance Minister Michael McGrath have to convince his 26 EU counterparts that Dublin is the best place to house the bloc’s new anti-money laundering agency (AMLA), he will also have to win round MEPs, who are extremely critical of Ireland’s record on dealing with tax evasion and enforcing data protection.

It is the first time the EU’s 705 MEPs have had a say in where a new agency is located, following a court case last year.

Dutch MEP Paul Tang, one of the lead MEPs on the laws underpinning the new agency, has previously called on Ireland to tackle “phantom investment” by companies parking their money here to avoid paying taxes.

Fianna Fáil MEP Billy Kelleher, who sits on the European Parliament’s economic affairs committee, said Ireland has made “significant progress” on eliminating tax loopholes and shell companies in the last number of years.

Dutch MEP Paul Tang has previously called on Ireland to tackle ‘phantom investment’

“There is a strong view now that there is integrity in our system,” he said. “We should never be shy in putting Ireland forward for new agencies. It does bring a certain prestige.”

He said there was “quite intense lobbying” for the seat from a number of countries, with France last week holding a launch event in Brussels to promote its own bid.

In a statement last December, Paris – which hosts the European Banking Authority, along with international organisations including the IMF and OECD – highlighted its “real estate offering” and rail and air links to the rest of Europe.

Boris Rhein, the minister-president of the state of Hesse, pointed to Frankfurt’s “dense network” of expertise – Frankfurt is home to the European Central Bank and a plethora of international lenders – while Frankfurt’s deputy mayor, Stephanie Wüst, boasted of the city’s “affordable housing for families, high-quality healthcare and wide range of international schools”.

Luxembourg is home to the European Court of Justice, the European Stability Mechanism (the eurozone’s bailout fund) and the European Investment Bank.

Boris Rhein, the minister-president of the state of Hesse, pointed to Frankfurt’s 'dense network' of expertise. Photo: Boris Roessler/picture alliance via Getty Images

Finance Minister Michael McGrath said Ireland’s significant financial services sector, highly skilled labour force and strong relations with its EU partners make the country an “ideal location” for the new authority.

He did not mention housing.

The private rental market is “chronically starved of homes” according to property website daft.ie, with the Simon Community charity saying it is no longer an option for those on housing assistance payments. The Government this week survived a second confidence motion over the lifting of its evictions ban, but also heard that US multinationals see housing as their number one challenge to investment and expansion in Ireland.

Staff at the new EU agency are now set to number 500, up from the 250 initially proposed, with many likely to be brought in from abroad, according to Stephen Rae, publisher of news service AML Intelligence and former group editor of this newspaper.

But he said that Dublin has a lot to offer in terms of commercial office space and said the Government has “a really good chance” of winning.

“We just lost the European Medicines Agency and European Banking Authority by a short length,” he said, referring to Ireland’s 2017 bids. “There is an element that Ireland is owed a European agency. It would be quite a prize. But it’s going to be a fight.”

The agency is part of a major overhaul of the EU’s financial rulebook, first proposed in 2021

The new agency will be responsible for directly supervising a small number of the bloc’s riskiest financial firms – with the power to order on-site inspections and issue fines – and coordinating the work of national authorities, such as the Garda Financial Intelligence Unit and the Criminal Assets Bureau.

The agency is part of a major overhaul of the EU’s financial rulebook, first proposed in 2021, which would shed more light on beneficial ownership of assets, see the EU directly supervise the riskiest financial firms, and bring crypto traders, crowdfunding platforms, fintechs and golden visa schemes into the supervisory net.

Ireland’s bid comes just weeks after it closed a controversial golden visa scheme – the Immigrant Investor Programme – that was dominated by Chinese millionaires.

The EU had previously said it wanted the agency up and running by the beginning of 2024, but the package of rules setting it up has yet to be voted into law by MEPs and EU governments. It is not set to be fully operational until 2026.

Ireland’s EU commissioner, Mairéad McGuinness – who is responsible for financial services – has no say in where the agency is located. “It’s good that there is an interest in this,” she said recently.