Alan Shatter (Dublin South, Fine Gael)

I thank Deputy McGrath for publishing this Bill, availing of the Friday facility for Private Members' Bills and for providing the opportunity to discuss this matter. Much has been said thus far about cash for gold. Deputy Calleary referred to scrap metal, which subject the Bill also covers. The Bill goes substantially beyond dealing with the so-called cash-for-gold stores although its stated intention is to deal with the distinct areas of cash-for-gold and scrap metal trading.

While the Bill does provide a useful opportunity to discuss the issues, it does not provide a useful basis on which legislation in this area could proceed. In particular, irrespective of the claims made for it, it would not provide the Garda with effective powers in this area. In practice, it would neither help the Garda nor deter those involved in nefarious trading.

I am, of course, aware that the marked expansion in trade by persons offering to buy gold, with cash, cheque or otherwise, and precious metal has given rise to concerns that the trade has had an impact on crime, particularly burglaries. Deputy McGrath's speech focused in particular on burglaries without giving any evidence to indicate that burglaries that have occurred are a consequence of the establishment, in any shape or form, of cash-for-gold stores.

The increase in cash-for-gold trade is clearly fuelled by the high prices that gold and other precious metals now command. It is an international phenomenon resulting from global economic circumstances and people's concerns about the values of various currencies. The scrap metal trade similarly has given rise to concerns that this trade is somewhat different as there is a level of regulation in this area under waste management legislation.

The informal purchase of gold, jewellery or scrap metal is not specifically regulated in criminal legislation; however, the circumstances under which such items are bought or sold may indicate the commission of certain offences - for example, handling stolen property or possession of stolen property under sections 17 and 18 of the Criminal Justice (Theft and Fraud Offences) Act 2001. Listening to Deputy McGrath, one would believe these criminal offences did not exist. The Garda Commissioner has reported that the provisions are adequate to deal with the criminal aspects of cash for gold transactions.

These matters have been kept under close scrutiny by the relevant authorities, including An Garda Síochána and my Department. A number of relevant reviews of the matters covered by the Bill are at an advanced stage and the conclusions arising will allow for the necessary comprehensive assessment of the matters and the development of any necessary measures. I will return to the Government initiatives in hand in a few moments when I have explained the difficulties I have with the Bill.

I have spent some time considering seriously the provisions of Deputy McGrath's Bill. Whereas I am sure that it presents an earnest attempt to deal with the issues he has discussed, the Government is opposing it for a broad range of reasons, primarily because its provisions would not be effective. There is a requirement to examine carefully the resource implications of any proposed roles envisaged for An Garda Síochána in any new regulatory matters and specifically the question of whether it is appropriate for An Garda Síochána to become a trade regulatory body.

There is also the point that the legislation Deputy McGrath is attempting to introduce could affect adversely jewellery and antique businesses throughout the country. Any measures that I may decide upon must not interfere unfairly with normal trade and legitimate businesses. There must be a targeted, proportionate and balanced response by the Government to ensure that opportunities for criminals to obtain cash for stolen metal goods are eliminated while not affecting legitimate trade because of the criminal actions of a few. The objective of any actions decided upon must be to ensure such businesses are not unknowingly open to abuse by criminal elements. The criminal law elements in this Bill would not give any additional meaningful power to the Garda. There are a number of critical matters that the Bill does not provide for and which could be regarded as fundamental. I will make references to some of these shortfalls very briefly.

No provision is made for power of entry, power to demand the name, address and identification of business owners, managers or employees or other persons associated with the premises. No provision is made for power to examine, copy or take away documents. No provision is made to direct that products found at the place may not be sold or moved or to secure for later inspection any place or part of any place in which a precious metal is found. No provision is made to search or cause to search any person present or to seize any machinery associated with the preparation, handling, storage, transport or sale of precious metal.

In addition, no provision is made for offences of obstruction, failing or refusing to comply with a request or requirement of a member of An Garda Síochána, failure or refusal to answer a question or to provide false or misleading information. No provision is made for the power of arrest and all the offences are summary and, therefore, neither arrestable nor detainable. The fact the Bill deals only with minor offences means it does not recognise the seriousness of what is at issue. No recognition is given by the Bill to existing provisions contained in the Pawnbrokers Act 1964 as amended.

The regulatory framework proposed is deeply flawed and would not work. The definitions under section 2 do not appear to be expansive enough and may not adequately provide for all types of metal. I have particular difficulties with section 5 which would require metal dealers to register with An Garda Síochána. As already stated, there is a requirement to carefully examine the resource implications of any proposed roles envisaged for An Garda Síochána in any new regulatory matters. It is not practical to tie up valuable Garda time and resources with registration issues more appropriate to another body.

The requirement to keep records for two years is inadequate, particularly where there may be a complex Garda investigation. A more appropriate period would be five years, which is the norm in other areas, but account would also need to be taken of whether there is an ongoing business relationship which could require a longer period of retention.

Section 3(1), which covers the recording of transactions for precious metals, does not provide for penalties for not applying the requirements. Provision should also be made for monitoring transactions as part of an ongoing business relationship. Overall the diligence measures require substantial development.

There are several existing structures that provide models that could be examined. One area I will further examine is the existing provisions for pawnbrokers contained in the 1964 Pawnbrokers Act as amended. This legislation provides for the regulation of the activities of pawnbrokers including record-keeping requirements relating to pledges of gold, silver and precious metals. The Deputy's Bill seems oblivious to the current provisions contained in that Act and their application.

In my Department a system of monitoring compliance has been developed for monitoring compliance of designated persons with their obligations under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010. Under that Act, any person trading in goods who accepts payments in cash of at least €15,000, whether in one transaction or in a series of transactions that are, or appear to be, linked to each other, is considered to be a designated person.

This category includes businesses such as jewellers, dealers in precious stones, or any other business that trades in luxury goods. For ease of reference, these are referred to as high-value-goods dealers. The Act places several obligations on designated persons and businesses, including high-value-goods dealers, to guard against their businesses being used for money laundering or terrorist-financing purposes.

The principal obligations for designated persons can be broadly grouped under the three headings customer due diligence, suspicious transaction reporting and internal policies and procedures which include training and record-keeping. Customer due diligence requires designated persons at specified times and in particular circumstances to identify and verify the customer's identity, be alert to suspicious activity and monitor ongoing business relationship. Suspicious transaction reporting requires designated persons to report suspicions of money laundering or terrorist financing to An Garda Síochána and the Revenue Commissioners. There are also provisions prohibiting tipping off a customer that a report has been made. The required internal policies and procedure include compliance policies, training, record-keeping of customer due diligence and transactions, risk assessment of the threat of money laundering or terrorist financing.

My Department is examining the criminal justice aspects of the cash-for-gold trade and this report will assist me in defining precisely the measures that are needed. The Garda Commissioner has indicated no identifiable increase in crime as a result of the increase of cash-for-gold trading.

See this speech in context