The Tottenham Hotspur boss was "feigning ignorance" about his illegal dealings for six years before his arrest, prosecutors claimed.
Redknapp was said to have told police "I don't fiddle" as he and co-defendant Mandaric gave contradicting explanations for the £189,000 "bung".
The Londoner - who is tipped to lead the England team - had earlier told News of the World reporter Rob Beasley that Mandaric "don't know what he is f****** talking about".
While Redknapp claimed payments in to the Monaco account surrounded transfer profit bonuses, Mandaric claimed the money was a loan "outside of football", the court heard.
Prosecutor John Black QC read out a string of interview transcripts on the second day of Redknapp and Mandaric's tax evasion trial.
In a 2009 telephone conversation Redknapp told Mr Beasley he had "the best accountants in England", claiming the Inland Revenue was fully aware of his dealings in Monaco.
Mr Beasley spoke to Redknapp on the eve of Tottenham taking on Manchester United in the Carling Cup final and two days after calling Mandaric, the former Portsmouth FC chairman.
When Mr Beasley offered Mandaric's explanation that the money was an investment, the Tottenham Hotspur manager replied: "He don't know what he is f****** talking about. What is he talking about? It is a bonus."
Explaining that the payments surrounded profit made on the sale of Peter Crouch from Portsmouth to Aston Villa, Redknapp added: "If it was something dodgy I would have gone over there and brought it back in a briefcase."
When Mr Beasley asked him whether he had paid any tax in the UK on it, Redknapp replied: "Haven't been asked to, Rob."
Redknapp said "there ain't nothing crooked in it" as the telephone conversation went on, the court heard.
"Don't say bung," Redknapp said. "It's nothing to do with a bung. It's paid by the chairman.
"How can it be a bung when the chairman of the football club paid me?"
He added: "What's a bung? It's a f****** sick word."
Redknapp told Mr Beasley that if the journalist reported in the paper that the manager was taking bungs, he would 'sue the b*******' off him.
Mandaric told Mr Beasley two days earlier: "This is the money for my investment... a way to help Harry for the investment... we had become friends."
He added: "Rob, as I told you, it was nothing wrong. It was something I did for my friend... away from football."
Redknapp declared his Monaco account to inspectors less than two weeks before joining Spurs, the prosecution alleged.
He said later during police interviews that he thought the Monaco account set up in his dog Rosie's name was dormant and he did not know Mandaric had put any money in.
"He's probably lost it," Redknapp told officers. "I could show you people who I have lent money to in investments.
"It would blow your brains away, the money I have squandered but then I do trust people, that's the way I live my life."
Redknapp was said to have told a detective: "I said to him many, many times 'Milan, I don't want to end up with a tax bill'.
"I was told I wasn't liable for income tax on so many occasions."
Redknapp added: "For the sake of that amount of money or any amount of money, I don't fiddle.
"I pay my tax since I have been in football my entire life. I pay every penny."
But prosecutors claim he only mentioned the Monaco account after he was questioned during the Premier League-led Quest investigation in 2006.
Mr Black said: "The existence of the bank account was not registered to Revenue and Customs for a period of six years, two months... after Mr Redknapp was first arrested and questioned in the course of this investigation."
Referring to the Quest inquiry, Mr Black added: "It's clear that it was only at this time that Mr Redknapp brought to the attention the existence of the Monaco bank account, feigning almost total ignorance of its existence, its operation and its contents."
Both Redknapp and Mandaric deny two counts of cheating the public revenue when he was manager of Portsmouth Football Club.
The first charge of cheating the public revenue alleges that between April 1 2002 and November 28 2007 Mandaric paid 145,000 US dollars (£93,100) into the account.
The second charge for the same offence relates to a sum of 150,000 US dollars (£96,300) allegedly paid between May 1 2004 and November 28 2007.
Redknapp, 64, who underwent minor heart surgery last year to unblock his arteries, is the most successful English manager in the modern game, having led Portsmouth to FA Cup success and Spurs to last season's Uefa Champions League quarter-finals.
Serbian Mandaric, 73, is now chairman of Sheffield Wednesday, having previously worked at Leicester City.
The trial at Southwark Crown Court was adjourned until Wednesday when the Crown's opening continues.
