Green’s Dictionary of Slang

1. (also lakesy) mad, eccentric; as n., a mad person [barmy adj.].

1930		(con. 1910–20s) D. Mackenzie Hell’s Kitchen 119: Lakes of Killarney ... insane.
1934		P. Allingham Cheapjack 40: ‘Thirty years on the road with a mug-faker and I come to Southend and graft to a bunch of grinnin’ Lakes o’ Killarneys.’ It was a pathetic tale, I thought [...] [he] mournfully assured me that he was ‘going stone lakes’.
1935		Thieves Slang ms list from District Police Training Centre, Ryton-on-Dunsmore, Warwicks 6: Lakes of Killarney (or lakes): Insane or simple minded.
1959		J. Gosling Ghost Squad 24: Thieves’ argot, spoken properly, is a foreign language which needs to be learned [...] Among the words and phrases derived from rhyming slang are: [...] ‘He's Lakes’, equals ‘He's Lakes of Killarney’ (barmy, or mad).
1960		J. Franklyn Dict. of Rhy. Sl.
1977		D. Powis Signs of Crime 191: Lakes (of Killarney) Insane (barmy).
1980		(con. 1930s) Barltrop & Wolveridge Muvver Tongue 28: I learned it when I was eleven; my father said that one of the neighbours was ‘Lakes of Killarney’.

2. two-faced, untrustworthy [carney adj. (1)].

1992

R. Puxley Cockney Rabbit.