Gathering operational intelligence, tackling the Irish fifth column and countering Axis propaganda declined in importance once the war left Ireland behind at the end of 1941. But Ireland presented another challenge that preoccupied the British intelligence community until the final stages of the Second World War: preventing espionage and leakage of information. This was a priority for many reasons. The central tenet of British security policy was to deny the enemy all information of military importance from the United Kingdom – neutral Ireland was a potential spying post because of its geographical position. In addition, southern Ireland was itself a source of valuable information: for example, for forecasting the weather, or for planning an invasion of the country. After 1940 the importance of counter-intelligence went beyond this. As well as denying information, Britain deceived the enemy by supplying false information. It did this by capturing German agents in Britain, ‘turning’ them and allowing them to operate under British direction – the highly successful Double-Cross (or XX) System. For this operation to remain undetected, two conditions were necessary. First, all German agents sent to Britain had to be quickly apprehended. Second, Germany had to be starved of all other information on the British war effort, so that it would not receive contradictory reports. This raised the stakes of counterespionage in Ireland. Some of the German spies sent to Ireland had the mission of contacting double-cross agents in Britain, which would have jeopardised the latter's position; besides, information leaked via Ireland might contradict the reports of double-cross agents in Britain, thereby causing Berlin to suspect their bona fides. As a result, it was vital to make Ireland as impenetrable to German espionage as Britain itself.

The panic about the fifth column during the summer of 1940 was accompanied by a presumption that Germany must have numerous espionage agents in Britain. However, the capture and interrogation of the unimpressive German pre-invasion agents landed in Britain between September and November did much to reassure MI5, as did the material from decrypted continental Abwehr radio traffic that became available in December 1940. Gradually the British intelligence community realised that the domestic espionage threat was slight.