Oireachtas Joint and Select Committees
Wednesday, 1 May 2013
Joint Oireachtas Committee on Justice, Defence and Equality
Proposed EU Directive on Counterfeiting: Motion
Acting Chairman (Deputy Alan Farrell):
I welcome the Minister for Justice and Equality, Deputy Shatter. The purpose of today's meeting is to discuss the proposals for a directive of the European Parliament and of the Council on the protection of the euro and other currencies against counterfeiting by criminal law and replacing Council Framework Decision 2000/383/JHA. The briefing has been circulated to members.
The format of the meeting is that the Minister will give his briefing which will be followed by a question and answer session.
I invite the Minister to brief the committee.
I would like to thank the members of the joint committee for making the time available today to discuss the motion, which relates to a proposal for a new Directive on the protection of the euro and other currencies against counterfeiting. The proposed Directive is a criminal law measure under Article 83(1) of the Treaty on the Functioning of the European Union. The objective of this new measure is to strengthen and harmonise European law on counterfeiting of the euro and other currencies and it is intended that the Directive will replace the existing Council Framework Decision 2000/383/JHA on this subject, which came into effect around the time of the introduction of the euro, and has been in force for nearly 12 years, at this stage.
The proposal, as currently drafted, will require EU member states to provide that counterfeiting of the euro and other currencies will be a criminal offence. The proposal envisages minimum penalties in respect of certain offences, addresses territorial jurisdiction and requires the availability of special investigative tools.
The legal basis for the proposal is in Title V of Part 3 of the Treaty on the Functioning of the European Union. Therefore, Protocol 21 applies. The protocol provides Ireland and the UK with the option of participating in such measures. I am here today as part of the process of seeking the prior approval of both Houses of the Oireachtas to exercise, on behalf of Ireland, the option to take part in the adoption and application of the proposed Counterfeiting Directive. Such approval is a requirement of Article 29.4.7o (iii) of the Constitution.
We have three months from the date the proposal was presented to notify the Council of our wish to take part in its adoption and application. The three month period in respect of this proposal expires on 12 May 2013. Ireland could apply to adopt and participate in the Directive after the three month opt in period, however, such an application would be subject to conditions which the EU Commission may set. In any case, the joint committee will be aware that Ireland declared its intention to opt in to measures in the area of freedom, security and justice to the maximum extent possible. I am of the view that, in general, it is best to opt in to proposals at the earliest opportunity, so that we can be in a position to influence the development of the proposal through actively participating during the negotiation process. If we do not participate, we cannot contribute to the final architecture of what is proposed.
As regards the origins of the current proposal, this measure was first presented by the Commission on 7 February 2013. In their proposal, they refer to the euro continuing to be a target of organised crime groups active in the forgery of money, which has caused financial loss of upwards of €500 million since the introduction of the euro in 2002. European Central Bank data also point to a rise in the number of counterfeit notes circulating recently, and an increase of more than 10% in the quantity of such notes recovered. The Commission has expressed concerns regarding the distribution within the EU of counterfeits produced elsewhere. In light of its detailed analysis of the issues, the Commission concluded that it would be of value to propose a new Directive to strengthen and harmonise the law on counterfeiting in order to protect the euro and other currencies.
I chaired a meeting of the Justice and Home Affairs Council which discussed this measure on the 8 March 2013. The Vice-President of the Commission, Madame Reding, made a very cogent argument for the adoption of this measure. There was strong support from my colleagues in other member states for the objectives of this proposal.
I would like, if I may, to give you a brief overview of the Commission’s proposal. The proposed directive looks to establish minimum rules in relation to the main counterfeiting offences, as well as aiding and abetting counterfeiting. It provides for penalties of imprisonment including minimum penalties in certain cases. It would also introduce requirements to ensure the availability of effective investigative tools and requirements on checking banknotes and sending suspect counterfeits for analysis. There are also certain requirements to assert jurisdiction over offences occurring outside the EU where the offender or the counterfeit currency is discovered to be in a member state. Many of these requirements exist already in the framework decision of 2000.
Perhaps the most significant and contentious aspect of this new proposal is that relating to minimum sentencing for counterfeiting offences. Article 5 provides for mandatory minimum sentences of at least six months for certain counterfeiting offences, as well as maximum penalties of at least eight years for key offences. As members will know, in Ireland our approach to sentencing generally is for the Oireachtas to set a maximum sentence in statute while leaving discretion in the individual case to the judge sitting in the relevant court. Mandatory minimum sentences and presumptive mandatory minimum sentences are exceptionally provided in respect of a small number of serious offences. These include murder, treason, drug trafficking and certain offences involving firearms. In such cases a high minimum of ten years or life imprisonment is set. The approach in the Commission’s proposal is to set a relatively low minimum sentence of six months.
I have been advised by the Office of the Attorney General that while transposition of the proposed directive would provide constitutional cover for such a system of minimum sentences, it would not fit smoothly into our sentencing structure.
At the March Justice and Home Affairs Council, the majority of member states who spoke on this issue, including Germany, France the Netherlands and the UK, indicated strong concerns about the inclusion of minimum sentences in the measure. The opposition of member states is based on number of reasons; some member states are simply opposed to minimum sentences and do not provide for them in domestic law, however, even some of those member states who do provide minimum sentences domestically are opposed to their being set in European Union law. It is a question of proportionality and subsidiarity. Given the level of opposition to minimum penalties, it is unlikely that this element of the proposal will be retained in the final instrument, or survive the negotiation process that is undertaken to bring about the fine instrument. Similar mandatory minimum sentence provisions contained in the Commission’s proposal for a directive on fraud against the financial interests of the Union will not form part of the general approach which I hope to see agreed at the June Council of Justice and Home Affairs Ministers.
The proposal also provides in Article 8 for an extension of jurisdiction for those member states whose currency is the euro. In this regard, our legislation already provides for significant extra-territorial jurisdiction in respect of counterfeiting offences. Under the Criminal Justice (Theft and Fraud Offences) Act 2001, section 38 provides that specified counterfeiting offences committed outside the State attract the same penalties as equivalent offences committed inside the State.
A new provision in the proposal requires member states to ensure that investigative tools which are provided for in national law for organised crime or other serious crime cases can be also used in cases of counterfeiting of currency. Such tools could include monitoring of bank accounts and other investigations, while having regard to the principle of proportionality and the nature and seriousness of the particular offences under investigation. This aspect of the proposal will be the subject of very careful consideration by the Council working group debating this measure. Member states are eager to ensure this provision would be proportionate to the aims of the directive, and that there would be sufficient discretion for member states to accommodate domestic thresholds applicable to sensitive measures such as surveillance.
The measure also contains a further technical requirement making it mandatory to transmit samples of counterfeit coins to the country's own national analysis centres for analysis during judicial proceedings, to help with the identification and detection of further counterfeits, as provided in Article 10. The Central Bank provides technical assistance with classification of suspected counterfeit seizures. There is close co-operation between the Garda Síochána and the Central Bank on the transmission of samples as matters stand already. This includes regular contact with the National Analysis Centre located in the Central Bank, Europol, the ECB and the EU Commission. In 2012 these endeavours resulted in 72 arrests and 91 charges specific to crimes involving money counterfeiting.
The Central Bank advises that the National Analysis Centre has not experienced issues in regard to the submission of suspected counterfeits during criminal proceedings.
Most of the elements of the proposed directive are already provided for in Part 5 of the Criminal Justice (Theft and Fraud Offences) Act 2001. That Act covers the making, passing, custody, control, import and export of counterfeits as well as the making or control of implements for making counterfeits. It also covers offences occurring outside the State, as previously mentioned, and provides for measures to detect counterfeiting. Our initial analysis indicates that we will not have to make any changes, or at least any significant ones, to our existing legislation. We will keep the question of how to transpose the proposal under review as it is modified during the negotiation process.
Counterfeiting is by no means a new crime, and this is reflected in the terms of the International Convention for the Suppression of Counterfeiting Currency, to which Ireland became a party in 1934, and which is the foundation for the existing laws against counterfeiting. That convention, ratified by most countries in the world, aims to address the serious damage which systematic counterfeiting of the currency of one State in the territory of another might cause to the financial stability of the first state. Its objective is to improve the existing international machinery to tackle counterfeiting. It sets out principles to which national legislation should conform, principles for co-operation between authorities in the different countries with a view to suppression of this offence. Now, many years later, we are continuing to tackle the offence of counterfeiting, albeit in a very different landscape. Nevertheless the core issues remain the same, as reflected in the proposal before us. They are: the need for co-operation between countries, harmonisation of laws, and, as regards those member states having the euro as their currency, broad provisions covering territorial jurisdiction in order that counterfeiting can be dealt with as effectively as possible in this era of globalisation, rapid currency transfers and ease of mobility for criminals operating in multiple jurisdictions.
The euro continues to be a target for organised crime groups. Combating serious financial and economic crimes having a cross-border dimension is a particular feature in the Lisbon treaty, and it is clear that counterfeiting, in particular, needs to be tackled in a unified co-operative way.
It is important that we should be in a position to play an active role at an early stage in the negotiation process of this proposal. It is particularly appropriate that we do so when we hold the Presidency. The proposal has been already discussed by the Justice and Home Affairs Ministers Council and by the working party under the direction of the Irish Presidency. We are consulting with our Lithuanian successors to the Presidency - Lithuania will take on the Presidency on 1 July - on how best to advance work on the dossier so that agreement on a Council general approach might be reached at the October meeting of Justice and Home Affairs Ministers.
Subject to some of the concerns already raised by member states, there is strong support for the broad thrust of this measure. It will be an important part of the European Union’s legal armoury in the fight against serious transnational crime. Accordingly, I hope that members of the committee can support the exercise of Ireland’s opt-in to the proposal. I look forward to hearing the observations of the members of the committee on this measure. I will be happy to take their questions. All of that speech and information could be translated into two sentences, namely, that counterfeiting is a bad thing and that we should all co-operate to ensure those who engage in it are brought to justice.
I welcome the Minister. I agree with him that counterfeiting is a major issue and we would all be opposed to it. I have three brief questions for the Minister. He said that organised crime groups have caused a financial loss of up to €500 million since 2002. Does that figure of €500 million cover all of the European Union? Does he have figures or statistics for the loss caused by counterfeiting in Ireland?
My second question relates to article 5 which provides for mandatory minimum sentences of at least six months for certain counterfeiting offences and of up to eight years for key offences. My initial reaction to that article 5 provision was that a sentence of six months for such an offence, particularly by organised gangs, seems very low. I would like the Minister to respond to that point.
My third question relates to the more serious offences of murder, treason, drug trafficking and certain offences involving firearms, for which a minimum sentence of ten years will apply. Many members of the public not only in Ireland but across the European Union are concerned about the position where people who commit very serious crimes are released back into society having served a sentence of eight to ten years. Many people would have a concern about that in terms of regard for human life and would the Minister share my concern?
The Minister said that the euro continues to be a target for organised crime groups. Are there many of these groups operating within the European Union? Could he also indicate if there are many such groups operating in Ireland?
I will take those questions in a different order from that which the Deputy asked them. He raised a question about violent crimes, particularly murder. Murder in this country will result in an automatic life sentence. There was a time about 30 years ago when the average life sentence in this country worked out as serving a jail sentence of about eight or nine years, except in particular circumstances. There were exceptions to that but that is the way it averaged out. The average life sentence now is between 16 to 17 years. There are a number of people in our prisons who have been there for a good deal longer than that. Whether persons get released effectively under some form of supervision substantially may depend on whether they pose a continuing threat to the public, whether they have participated in prison in various arrangements that may be in place, whether that be psychiatric assistance or otherwise, and the nature of their behaviour during their term of imprisonment. There is a range of issues involved. I do not have in my mind what is the average sentence served across the European Union for the offence of murder but it is between 16 and 17 years in this jurisdiction. I do not have that statistic and I am not going to invent one. I know there are some similarities between other countries and this jurisdiction. In the context of a recent case in which I was engaged where a prisoner was transferred from this State to another state, once one has served a sentence for murder and has been in prison for 20 years, one is entitled to apply for release, but the relevant Minister for justice told me that no one had yet been successful in such an application. There are quite substantial variances across the European Union. That might be an issue this committee might be interested in following up and getting the various statistics from the different European countries to get some insight into that. I do not have that background information.
On the Deputy's question of direct relevance to this matter. The figure of €500 million I mentioned is in the context of the moneys that have been found across the European Union. According to recent figures from the European Central Bank, during the second half of 2012, a total of €280,000 counterfeit euro banknotes were withdrawn from circulation. The average amount of genuine banknotes in circulation during that period was €14.9 billion. That provides an insight, in that while this is a problem it is small scale compared to the numbers.
On a positive note, there was an increase of more than 10% in the counterfeit currency recovered during the second half of 2012. For those of the members interested in this, the most popular denomination of euro notes being counterfeited are apparently the €20 note and €50 note, which account for 80% of the total.
In the context of convictions for counterfeiting in this State between 2005 and 2011, the numbers vary. In 2005 there were 23 convictions, in 2006 there were 11, in 2007 there were 21, in 2008 there were 50, in 2009 there were 4, in 2010 there were 44, and in 2011 there were 49. Those figures will give the Deputy some insight into the statistics on convictions.
I am looking at other statistics that may be of interest to Deputies and Senators. We have statistics from the European Anti-Fraud Office, OLAF, to give the committee an idea of the number of counterfeit notes recovered. In the second half of 2009 some 447,000 were recovered; in the first half of 2010 some 387,000 were recovered; in the second half of 2010 some 364,000 were recovered; in the first half of 2011 some 296,000 were recovered; in the second half of 2011 some 310,000 were recovered; in the first half of 2012 some 251,000 were recovered; and in the second half of 2012 some 280,000 were recovered. While that is a small proportion of the overall number in circulation, it is clearly a focused industry in which individuals seek to benefit from counterfeiting. Clearly. it is important that there be a concerted European Union approach to it.
A six month minimum sentence was mentioned. I think that was in the context of an application in respect of a very minor instance of counterfeiting; nevertheless, one would still serve a minimum sentence. The higher end sentence was eight years. It was clear from the conversation at European Union level with Ministers that there was a distinct lack of enthusiasm for imposing a six month minimum sentence for two reasons. First, it would not send the best message because people might have focused on the minimum rather than the maximum sentence and thought they could get away with large-scale counterfeiting and not suffer serious consequences. Second, the State and many others have maximum sentences but rarely impose minimum sentences; if they do, it is in cases of murder or some of the other offences I have mentioned. It would be regarded as disproportionate to single out counterfeiting for a minimum sentence when there are other examples of people acquiring money by unlawful means, in respect of which there is no prescribed minimum sentence. The general approach is that it is better to have a maximum sentence and leave it to the discretion of the individual judge dealing with the matter to determine, given the circumstances of a particular case, what is the appropriate sentence.
I thank the Minister for his contribution and response to Deputy Finian McGrath's questions which addressed some of the issues I had in mind. I agree with the Minister that counterfeiting is bad and there is no disguising this fact. I wish to ask about the technical side of the directive to be agreed and its transposition. What is the process involved? Obviously, the directive has emanated from the European Commission in the normal way. What are the stages that have to be followed? I am interested to hear about what happens when it comes to negotiating on the directive and reflecting the Minister's concerns and those of other member states on the minimum sentence issue. For Ireland to have the discretion not to provide for a minimum sentence in its laws, is that a measure that will have to be negotiated on and agreed to or, the directive having been agreed, will we still have some wriggle room? In the business of transposition of directives a degree of discretion is permitted within the confines of what is required to take account of local sensitivities. Is it a question of sorting this out during the international negotiations stage or is it something we can tweak at a later point? I assume that would apply, in particular, to issues such as surveillance which might be a sensitive matter as noted by the Minister.
I will describe the way these things work in practical terms. There are what I would describe as "headline" meetings at which Ministers discuss at European Council level a proposal from the Commission. During the course of these meetings individual Ministers may raise issues about a particular article of a directive or regulation. If there is general agreement on the principle of the initiative that is worth progressing, it goes to a working group. The country that holds the Presidency of the European Union provides the chair of the working group. In the context of this measure, the working group would have been chaired by a member of my Department. At the meetings there are representatives of each of the member states and there is a first reading and engagement on each of the articles proposed to ascertain whether the substance and the content can be agreed to and whether there is consensus on them. If there is a major issue which presents a difficulty, it may come back for discussion at the Council of Ministers. Once the terms of the measure are agreed to on the ministerial side, there is formal engagement with the European Parliament and the relevant committee. Normally there is informal engagement with the European Parliament at an earlier stage also.
There are two parliamentary committees - the JURI and the LIBE - one of which appoints a principal rapporteur. If the rapporteur comes from one political grouping in the European Parliament, shadow rapporteurs are appointed by the other parliamentary groupings to engage with the main rapporteur. A process is undertaken between the Parliament, the state that holds the Presidency and the Commission - a trialogue - to work through issues which present a difficulty. Ultimately, the Parliament and the Council of Ministers must agree on the final content of a measure. In simple terms, that is the way the process works. During the course of the Presidency I would have been present at various meetings of either the LIBE or the JURI. I have engaged personally with the rapporteurs appointed to deal with particular measures at plenary meetings before assuming the Presidency and since. On occasion there has been the odd telephone call to try to iron out difficulties about measures in order that they can be progressed.
The way the measure is going there is very little chance the six month minimum sentence provision will survive in the Commission's proposal. Ultimately, if the directive is accepted - we have opted into it - the final arrangements will be agreed to and we will be required to reflect them in domestic law. Certain basic matters contained in the directive will have to be accurately reflected in domestic law; one cannot adopt anà la carte approach to it. Much of what happens is achieved by consensus. However, there may be division within the European Parliament. Some Members of Parliament may be opposed to a particular measure and there may be a vote on it, as not every measure goes through the Parliament by consensus. Ultimately, however, there is agreement between the Parliament, the Council and the Commission on how a measure will be structured at the end of the process.
This is not a particularly complex measure. Unless something unexpected happens, it should be adopted before the end of the Lithuanian Presidency. I would be surprised if it took any longer to implement it. In 2014 the Parliament will be substantially focused on the forthcoming parliamentary elections.
If this measure is to be successfully transposed, the legislative process should take not any longer than this. However, issues do occasionally arise at the European Parliament when completing matters that may be extraneous to the measure before it. If, for example, it is having a row with the Council of Ministers about some completely unconnected measure, it may decide to put other measures in cold storage until the row is satisfactorily resolved. Therefore, I cannot guarantee the timeframe.
I am trying to think this through in the abstract. The Minister has said he does not anticipate significant changes to the Criminal Justice (Theft and Fraud Offences) Act. Given that part of this will involve identification of criminal offences, how can that be the case? Can there be a situation where there is a conflict between two possible offences? Surely one offence cannot stand while the other exists, to borrow a phrase from Harry Potter.
As it is a directive, normally one has to translate it into domestic law. Much of what is included in this measure is already reflected in the 2000 framework and domestic legislation. We have substantially covered much of what is included in the directive. That is why it would be distinctly odd for us not to be a party to it.
I thank the Senator for his questions and the Minister for his answers. I thank the Minister and his officials, Mr. Munro and Ms Harrington, for their attendance.
The joint committee will go into private session to deal with some minor housekeeping issues. Is that agreed? Agreed.