Alan Shatter (Dublin South, Fine Gael)
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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.