Charles Flanagan (Laois-Offaly, Fine Gael)

I welcome the Bill and thank the Minister for his somewhat detailed overview of it. I look forward to teasing out the Bill in greater detail on Committee Stage.

Progress on this matter has been tortuously slow. It is four years since the European Council passed the third EU money laundering directive. This directive was due to be transposed into Irish law by way of legislation in this House by 15 December 2007. The manner in which other EU countries have engaged in the transposing process highlights the delay here. For example, Denmark transposed the directive into its domestic law in 2006. Five other member states succeeded in transposing it in 2007, including our near neighbour and fellow common-law country, the United Kingdom. It is not fair to suggest difficulties were imposed on this Legislature because of our common-law jurisdiction unlike most mainland European countries. Some 13 members states transposed the directive in 2008. In the winter of 2009 we are, unfortunately and regrettably, part of a tiny handful of countries only now proceeding to transpose this directive into our law.

It is fair and reasonable to say that this House is owed an explanation for the inordinate delay in this regard. Our neighbour, the United Kingdom, transposed the directive within two years. Why has it taken us more than twice that length of time to do so? The Taoiseach has frequently spoken of the need for Ireland to be at the heart of Europe, in particular when trying to convince voters to support the Lisbon treaty. Yet, the Government's commitment to the European project has been shown to be sorely lacking when it comes to transposition of this and other directives.

The European Commission was compelled to refer Ireland to the European Court of Justice in regard to our failure to transpose this directive despite repeated requests from the Commission to comply. Unsurprisingly, we lost the case in the European Court of Justice and Ireland was ordered to meet the full costs involved. The European Court of Justice found the Irish Government had failed to provide a legal basis for financial institutions to monitor transactions carried out by so-called "politically vulnerable persons".

On 1 October this year, a second judgment was obtained by the European Commission in respect of Ireland's failure to transpose implementing directive 2006/70, which lays down implementing measures in respect of the third money laundering directive. Only last month, the European Commission announced it has decided to issue a formal letter of notice to Ireland under Article 288 of the EC treaty for failure to execute the judgment of the European Court of Justice in respect of this third money laundering directive. We do not yet know what fine will be imposed. However, we do know the position in terms of our liability in respect of costs of the action. It would appear that the matter of measuring of the fine will result in a further level of embarrassment to this State, brought about by the failure of Government to process this action in a timely manner.

Our failure to transpose this directive has left us not alone humiliated in the European context but subject to international disapproval, in particular from the United States of America. In this regard, the US State Department believes that a number of people based in this jurisdiction have close links to the financing of international terrorism. Hence, a greater and more urgent need for us to transpose this anti-money laundering directive. Last year, Interpol issued an arrest warrant for an Irish national described by the US Government as a central fund-raiser for al-Qaeda in Europe. The international police network issued a warrant in respect of Ibrahim Buisir on foot of a Libyan arrest warrant. This was the first time Interpol had issued a global arrest warrant against an Irish national in respect of alleged Islamic terrorist related activities. The US Treasury Department has identified Buisir, who has lived at addresses in south Dublin, as having directed a European al-Qaeda cell that provided support to operations in Europe by arranging travel and accommodation.

It is clear that we need robust anti-money laundering legislation. Indeed, we know from the situation between ourselves and Northern Ireland of the huge commercial activity that is the racketeering, smuggling, money and diesel laundering which is part and parcel of financing terrorist organisations. Unfortunately, we are witnessing a re-emergence of this by dissident Republicans who finance their terror in this jurisdiction and beyond in this manner. We need the most robust anti-money laundering legislation possible. In this regard, it is to be welcomed that the EU directive provides a framework of common action against terrorism and terrorist associates.

Last year, I received correspondence from an Irish-based financial services provider warning that his company was being damaged by the Government's failure to transpose this directive. That failure had given rise to a situation whereby business is suffering. The businessman stated that the failure of the Government to transpose the directive and the failure of this House to enact this legislation was presenting significant operational difficulties within global financial service firms. These firms are unable to implement the uniform global anti-money laundering programmes demanded by their lead regulatory authorities, such as the Federal Reserve, because Ireland has not adopted the risk-based approach. He went on to state that these operational difficulties are, in turn, causing issues with clients of the company who, as a consequence, may decide to move their business away from Ireland to competitor jurisdictions that have implemented the risk-based approach, including the United Kingdom, the Channel Islands or Luxembourg.

Needless to say, this would have a serious adverse effect on the Exchequer. Ireland's reputation as a well regulated financial services centre is further damaged by our ongoing failure to transpose this directive. I hope the Minister will give a full account to the House in this matter. He has not done so this morning but I ask him to come to committee and give a full explanation of why Ireland risked its international reputation, being dragged before the European Court of Justice, damaging Irish-based financial services companies and potentially facilitating international terrorists, as was the concern not only of the EU but also of the US State Department. The way in which this directive has been handled by the Government is a disgrace.

I welcome the consolidation of the anti-money-laundering legislation in this new Bill. It is more satisfactory than embedding such measures in existing legislation such as the Criminal Justice Act 1994, now that the legislative framework has broadened so substantially. However, some practitioners have complained that the Bill is overly long and unduly cumbersome and will make compliance somewhat difficult. I do not believe that is in the best interests of trade, business or commerce. I ask the Minister to examine opportunities that may simplify aspects of this Bill for Committee Stage.

The central purpose of the Bill is to place requirements on certain designated bodies such as banks, lawyers, accountants, real estate agents and dealers in high-value goods to identify customers and report suspicious transactions to the Garda Síochána and the Revenue Commissioners, and to institute specific procedures to provide to the fullest possible extent for the prevention of money laundering and terrorist financing. It further provides that categories of designated bodies in respect of which there is no supervisory or competent authority - such as tax advisers who are not accountants or solicitors and dealers in high-value goods who may receive cash receipts in excess of €15,000 - will be monitored for the purposes of compliance with the legislation by the Department of Justice, Equality and Law Reform. The latter category includes operators such as car dealers, boat dealers, jewellers and art dealers. We will require some clarification as to how estate agents or yacht owners will be made aware of their new obligations under this legislation when it is enacted, if not later this year then early next year.

There are practical consequences that will require some detailed explanation and clarification. For example, how will the Department of Justice, Equality and Law Reform monitor the compliance of categories of designated bodies in respect of which there are no supervisory or competent authorities, such as tax advisers who may not be qualified as accountants, actuaries or solicitors, or dealers in high-value goods, as I mentioned earlier? It is a broad designation and an appropriate framework is necessary to ensure not only that obligations are met but that those concerned are aware of them. Has the Minister examined comparable systems in other jurisdictions? There will be practical consequences of the obligations the Bill will place on other designated bodies and individuals.

One issue of particular concern is the absence of certain bodies among the designated bodies under the Bill, although I heard the Minister make reference to the fact that he will introduce some amendments on Committee Stage, which I welcome. I do not see any reference to investment intermediaries, although I may have missed it in the 120 or so sections of the Bill. These are authorised under the Investment Intermediaries Act 1995. If these are not designated under the Bill, it places them outside the scope of the legislation. Given the large scale of investment fund administration business in this country, this may have to be clarified. If, as I suspect, it is an omission, it is a serious one which requires remedying. I would have thought all investment intermediaries would be listed as designated bodies. I welcome the clarification the Minister has given in respect of An Post. Post offices, which do engage in financial transactions, are to be designated, albeit at a later stage.

I understand the Financial Regulator has made a number of comments on the Bill. I wonder if the concerns expressed by the regulator have been considered and acted upon. This is an issue we can discuss again on Committee Stage. These concerns were germane to the legislation and I hope there were appropriate meetings between officials of the Department of Justice, Equality and Law Reform and the Office of the Financial Regulator.

I welcome the inclusion of private gaming clubs in the Bill. The Minister is on record as referring to the "mushrooming" of such clubs in recent years. We should receive a briefing from the Minister on these clubs; how many are in existence and what types of business are being undertaken there? Does the Minister have concerns about their operation, given that they largely operate in an unregulated environment? What action does the Government propose to take with regard to regulating the sector? We have had a number of reports, and reviews have been commissioned and undertaken, but eventually we must decide on a course of action. In this regard we do not appear to have any knowledge of current Government policy or proposals, if any. In view of the fact that we are enacting this Bill and these clubs are specifically included in the Bill, it is incumbent upon us to engage in a form of regulation that will be both transparent and properly regulated.

The sources of ill-gotten gains are referred to in the Bill. The World Bank has stated that ill-gotten gains are obtained from a wide range of criminal activities, including political corruption, illegal sales of weaponry, and the illicit trafficking and exploitation of human beings. Ireland is unfortunately not immune to any of the criminal activities I mention.

I refer briefly to the illegal sale of weapons. The Minister has taken steps in respect of law-abiding, licence-holding gun owners, and that legislation was enacted early in the summer. However, as we see on a weekly basis in terms of gangland shootings and murders, criminals seem to have little trouble procuring illegally held weapons. Not enough is being done to prevent criminals from acquiring dangerous weapons. This is an area that needs urgent attention. These weapons are being acquired in this jurisdiction after being brought in with illegal consignments of drugs and other contraband on a regular basis. It is an issue that requires an EU-wide approach. I am pleased to be in regular contact with my colleague, the Dublin MEP Gay Mitchell, who has undertaken a number of visits to Eastern European states and raised the issue with members of the European Parliament from particular jurisdictions, including the Czech Republic. Gangsters can afford weapons thanks to the vast sums of money they make from their drug empires. Our Criminal Assets Bureau does great work in its attempt to seize the proceeds of crime but one hopes this Bill will facilitate identifying criminal activity earlier in the chain. From that point of view it is welcome.

The obligations of dealers in high-value goods should be very bad news for criminals who, notoriously, love to spend their money on items of prestige, such as black SUVs with the blacked out windows. As the Acting Chairman may be aware, Irish gangsters are especially fond of owning properties in countries such as Spain and Bulgaria. I hope the attempts by the European Union to prevent money laundering will stymie the efforts of these gangsters to spread their ill-gotten wealth, not only in this country but in other European jurisdictions.

I shall refer briefly to human trafficking. The World Bank commented on the vast sums of money made from human trafficking. Only this week my colleague, Deputy Denis Naughten, introduced a very important motion to the Dáil which, regrettably, was defeated for no other reason than narrow, party-partisan political grounds. This motion noted that, at minimum, 102 women and girls have been clearly identified in a recent report as having been sex-trafficked in 2007 and 2008. Eleven of these were children when they arrived in this jurisdiction. None of these women knew they were destined for the Irish sex trade. Up to 97% of the 1,000 women involved in indoor prostitution in Ireland at any given time are from overseas. They are migrant women. Victims of trafficking are identified by this Government as illegal immigrants first, and consequently are detained and imprisoned. Unfortunately and regrettably, they are identified as victims second.

Several European countries have successfully tackled human trafficking and forced prostitution by introducing legislation that criminalises the buying of sex services. The UK is introducing legislation to reduce prostitution and human trafficking which will impact directly on the Republic. Clearly, criminals are making a great deal of money out of human trafficking in this country. I am hopeful the implementation of the third EU anti-money laundering directive will go some way towards addressing this very serious problem.

I ask the Minister to reconsider the proposals made in the Dáil this week in respect of human trafficking. They include a number of practical proposals, such as moving the focus on human trafficking from the Garda National Immigration Bureau to the Garda Organised Crime Unit, and establishing a high level group to examine our prostitution laws with a view towards preventing the proliferation of sex trafficking in this jurisdiction. We cannot rely on the European Union to solve all our crime problems so a degree of open-mindedness on the part of the Minister for Justice, Equality and Law Reform in respect of proposals from this and other sides of the House would be not alone appropriate but essential if we are to deal with this issue.

I welcome the initiative to transpose this important EU directive, however belated it is. It is essential that we in this country live up to our responsibilities, both nationally through our people at home and internationally to prevent criminals from enjoying the proceeds of crime. It is a matter of regret there has been such a delay in this transposition, thereby undoubtedly harming our reputation within the European Union as well as making life difficult for those engaged in the financial services industry, particularly at a time of economic downturn when business is suffering. There are specific difficulties, some of which I have referred to and others to which the Minister referred by his flagging of amendments on Committee Stage. I am hopeful we can deal with any specific technical details or problems on Committee Stage. The Bill is complex, lengthy and technical. Perhaps parts of it might be examined to ensure its application could be in a less technical and more practical form. I would welcome that. I look forward to Committee Stage of the debate which may take place before Christmas or early in the new year.

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