Finian McGrath (Dublin North Central, Independent) | Oireachtas source

I thank the Leas-Cheann Comhairle for the opportunity of speaking on this new legislation. I welcome this important and urgent debate, as it is highly relevant to the modern world and, in particular, to the major crisis that exists both in Ireland and across the European Union, as well as internationally. In recent days, Members have seen the horrific effects on innocent people in Boston, as well as the slaughter of ten innocent children in Afghanistan two weeks ago. It is important to focus first on the victims of these heinous crimes. Blowing people to bits in Boston, Afghanistan, the West Bank, Omagh, Dublin or Monaghan should never be an option and should never be acceptable in any democratic society, nationally or internationally. The bottom line is it is completely unacceptable and Members should agree with this core principle. This is known all too well in this country and I commend all those who started our own peace process, faced up to the reality and used their skills in conflict resolution. Members should never forget and all should be vigilant to prevent it happening in the future. One should never take the peace process in Ireland for granted and all Members of the Oireachtas should be on their guard in respect of this issue.

As for the legislation before Members, I was absolutely shocked and horrified when I saw some of the figures illustrating the scale of the problem. Due to the underground nature of money laundering, it is not possible to give exact figures in respect of the extent of the activity. However, according to a report produced relatively recently, that is, in 2011, by the United Nations Office on Drugs and Crime, in 2009 criminals and drug traffickers in particular may have laundered approximately $1.6 trillion or 2.7% of global GDP. This figure of $1.6 trillion internationally is a lot of money on which many countries could survive, particularly during the current economic crisis. Moreover, the figure is consistent with the 2% to 5% range previously established by the International Monetary Fund to estimate the scale of money laundering. It is important to consider the scale of the crisis internationally. When one then turns to the details of money laundering, it is the process whereby the proceeds of crime are disguised to conceal their illicit origins. The financing of terrorism is the provision of financial support to those who engage in, encourage or plan terrorism, because this all costs money. According to the World Bank, money launderers send illicit funds through legal channels to conceal their criminal origins, while those who finance terrorism transfer funds that may be legal or illicit in origin in such a way as to conceal the source and ultimate use, which is to support terrorism. The Financial Action Task Force, which is an intergovernmental body established in 1989 by the G7 group of countries to combat money-laundering, explains the concept of money-laundering in the following terms. When a criminal activity generates substantial profits, the individual or group involved must find a way to control the funds without attracting attention to the underlying activity or to those involved. Criminals do this by disguising the sources, changing the form and moving the funds from place to place, where they are less likely to attract attention. Again, I will focus on the details in respect of this aspect of the legislation.

It is important to get the facts right before having the balance and discussion. When one discusses the issue of money laundering, one must also keep a close eye on its close link, that is, to white-collar crime, because many so-called "respectable" individuals and businesses are directly involved in such activity. This is not acceptable and a justice system is required that ensures those involved in white-collar crime are prosecuted, charged and hounded. In addition, one must also accept the reality that people and states are involved in these issues. I saw an interesting programme this week broadcast by RTE, which dealt with Liberia, an extremely damaged country in Africa and the ongoing scandal there regarding diamonds. It showed how all the diamonds are being shipped out legally, while people are living in muck and dirt without toilets or water. Moreover, massive wealth is being generated there in this regard. Consequently, I believe there also is a political dimension to this debate, which is it is not simply or exclusively about the illegal stuff, as some of the activities that are taking place in states or internationally are unacceptable, full stop.

It reminds me of the time in the 1980s when the merits of the Criminal Assets Bureau were being debated and I commend all those who were directly involved in it. I also will use this opportunity to pay tribute to my old colleague and friend, the late Tony Gregory, who was one of those who initially pushed for its establishment during the heroin crisis in the north inner city during the 1980s. He wanted the money confiscated from the drug gangs and drug lords to be pumped back into the disadvantaged communities. Tony was ahead of his time and most people who take an objective view on this issue would commend him and praise them. Consequently, it is fitting that Members honour him today in this debate when discussing these issues. I will go one step further in this regard. At present, a beautiful new bridge is under construction near the centre of the city and I propose it be named the Gregory Bridge, after Tony Gregory and in his honour. Moreover, this is related to the issue under discussion.

In addition, casinos must also be closely monitored when it comes to money-laundering. Nationally and internationally, there are casinos into which much of this money is dumped. Similarly, there are bookkeepers, bookmakers and others who have similar links and Members must be very careful of such groups. I am familiar with this issue from my experience of dealing with issues in my own constituency, where the drug gangs run parts of the city. Sadly, I refer to the amount of money that is made, the amount of money that is ripped off and the massive intimidation that takes place in communities. Members must stand up for those who are suffering at the hands of such people. Their money must be confiscated and I emphasise this money must be put into the most disadvantaged areas. One cannot have a situation in which drug gangs, drug leaders and people like that are amassing amounts of money, are getting involved in shootings and killings from which people walk scot free, as well as intimidating entire communities. This is the sad reality for many people in the Ireland of 2013.

A small point, which I regularly raise in this Chamber and for which I am regularly hammered and criticised, concerns the debate on cigarettes. There is a very significant trade in illegal cigarettes. I have met shopkeepers and people with small and medium-sized businesses on the front line who tell me that by not taking action regarding illegal cigarettes, €600 million per year is being lost in tax revenue. I note that this week the figure of €300 million is being discussed in the context of the Croke Park II deal and the amount of revenue that must be found by the end of July.

Revenue has lost through the illegal trade in cigarettes in the region of €600 million. Imagine the massive work and impact that would have if the Revenue Commissioners could bring that money in to provide services for people. This is a criminal activity which is directly involved with money laundering and it finances people with whom most people in this House would have absolutely nothing to do.

The overall aim of the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2013 is to strengthen and clarify the measures to deter, detect and disrupt money laundering and terrorist financing. The important words are "deter, detect and disrupt". That is the core of the legislation. The Bill seeks to make amendments to the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 and so to make Ireland's anti-money laundering legislation more robust. I welcome that. We need to tighten up. We need to up our game and this Government needs to wake up and smell the coffee. The Minister for Justice and Equality needs to deal with the real issues and stop getting into trouble and rows with judges and other people when he should be focusing on the issues affecting the people in this country. This Bill is introduced in light of the experience of the operation of the Act over the past two years and to enhance Ireland's compliance with the Financial Action Task Force, FATF, following the FATF's evaluation of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010. I also welcome that work.

The FATF is an inter-governmental body established by the G7 countries in 1989 in order to combat money laundering. It is regarded as a leading forum for international efforts to combat money laundering. It has issued a series of recommendations which aim to give guidance on the standards for combating money laundering and terrorist financing. The FATF recommendations have been amended several times, most recently in February 2012. I will address these when dealing with my amendments on Committee Stage. Three anti-money laundering directives have been introduced in order to reflect these recommendations with a fourth directive proposed to implement the new changes. It is important that we focus on this.

We have a very strong self-interest in this legislation because of the reputational risks for Ireland as an international financial services centre. This has also been identified as a result of failure to comply with the anti-money laundering, AML, measures. Many of us are proud of our International Financial Services Centre, IFSC, but we must be vigilant lest the wrong elements exploit it and we must have regulation to ensure that straight money, not hot money, goes through the system. That is very important to prevent damage to the integrity of the financial services industry here. Many people who work in the IFSC, have concerns about that. We regularly hear moaning and whinging about the need for tight regulation. We must keep an eye on this and on the dodgy characters, the money launderers and those who are shipping the money in and out of accounts.

I read a figure over the weekend for offshore bank accounts in the region of €45 million. The Revenue Commissioners took in that sum but I would say there is much more money out there. Meanwhile we have rows here in the Dáil about the mobility allowance and all sorts of allowances that cost €10 million or €8 million or €13 million. Then one reads about the loss of €600 million through the sale of illegal cigarettes. Small businesses have told us about this at committee meetings. We have heard the facts, we have looked at the statistics. I harp on about smoking but when I buy 20 cigarettes I pay a considerable amount of the cost in tax. I have no problem doing that but I do have a problem with those who are involved in cigarette smuggling and illegal sales who are costing this State €600 million in lost revenue. We should wake up and do something about this problem.

It is important to consider the main changes in the FATF recommendations, which state:

Combatting the financing of the proliferation of weapons of mass destruction through the consistent implementation of targeted financial sanctions when these are called for by the UN Security Council. Improved transparency to make it harder for criminals to conceal their identities or hide their assets behind legal persons or arrangements. Stronger requirements when dealing with politically exposed persons, PEPs.

A politically exposed person is one who has been entrusted with a prominent political function. I like that angle. There are many politically exposed persons in this Chamber every day but this has a special meaning in this legislation. FATF also proposes "Expanding the scope of money laundering predicate offences by including tax crimes".

There is something wrong with our justice system when people who are blatantly breaking the law get away Scot free but a small business man who used a scam to import garlic from China is sentenced to six years in prison. Rapists, murderers and child abusers get three or four years but a man who put his hands up and paid back the tax he owed was sentenced to six years. Thankfully on appeal the judgment was reversed and he was released. He should have been given community service. That kind of sentence is off the wall and is not part of a proper justice system because there are other more serious issues to deal with.

The FATF further says we need "More effective international cooperation including exchange of information between relevant authorities, conduct of joint investigations, and tracing, freezing and confiscation of illegal assets". International co-operation is very important. Sometimes this does not happen. Some people are precious about some of those directly involved in crime but we need to be consistent on this.

Section 2 of the Bill proposes to amend section 24 of the 2010 Act and the definition of "occasional transaction" under that provision so that wire transfers of funds of up to €1,000 or more are included in the definition of customer due diligence, CDD. These measures will also apply to beneficial owners of such funds. Further, the monetary threshold is reduced from €15,000 to €2,000 for private members' gaming clubs for the application of customer due diligence measures. Section 8 proposes an amendment to section 54 (3) of the 2010 Act in order to insert an explicit reference to the requirements for policies and procedures on keeping the CDD data and information up to date and also on the additional proposed enhanced CDD measures to be taken in accordance with section 39.

The proposed requirements for policies, procedures and measures to be taken prevent the risk of money laundering or terrorist financing which may arise from technological developments and the way in which services arising from such developments are delivered. This is a new angle. While the people employed by the Garda Síochána are of good quality and those in the Revenue Commissioners are top quality we need to ensure that they have the technological skills necessary to prevent the changes in the criminal world. Criminals use technology to get ahead of the law and order services and we need to be very vigilant about this.

As this is a criminal justice Bill no regulatory impact analysis has been carried out. I am concerned about this. It has therefore not been possible to secure specific information for the potential cost to businesses which may arise as a result of the implementation of the proposed measures in the Bill. I have concerns about this aspect of the Bill. While it is a criminal justice Bill we must be vigilant about it.

Regarding the implications for businesses of compliance with the 2010 Act, information about credit and financial institutions suggests that failure to comply with the requirements under the Act may result in greater financial implications for firms, compared with the costs of introducing these measures. Indicative of this is the settlement agreement reached by the Central Bank of Ireland, the designated authority to monitor credit and financial institutions under the 2010 Act, in June 2012 with a global banking and life company based in the IFSC. The firm was fined €65,000 for failure to demonstrate that it had instructed any of its staff or directors, with one exception, on the law in regard to money laundering and terrorist financing following the introduction of the 2010 Act. In a further case agreement was reached by the Central Bank in 2010 with the Community Credit Union Limited.

In a significant case in the UK, the FSA fined Coutts banking group Stg£8.7 million in March 2012 for failing to take reasonable care to establish and maintain effective anti-money laundering systems and controls relating to high risks including politically exposed persons, PEPs. In a further high profile case, HSBC incurred significant penalties in the US due to its failure to maintain an effective anti-money laundering programme. Under the agreement reached with the US Justice Department, which included a deferred criminal prosecution, something I welcome, the bank must rectify the problems identified, forfeit $1.256 billion and pay $665 million in civil penalties. The bank also faces a fine from the FSA in the UK. Those are significant financial penalties and I raise them because I get sick to the teeth when services for the disabled and for poor, weak, vulnerable and disadvantaged people are cut by €8 million and so on. These penalties will not cause people engaged in the financial services industry a problem.

The Government is in a hole following the rejection of the Cork Park II agreement and needs to find €300 million. Rather than hammering low paid public sector staff, it should be creative. If the Government parties need a sheriff to come in, sort the issues out and get them out of a hole, why not bring in the former Senator, Joe O'Toole? He would talk to the Government and union representatives and come up with a solution. The Minister of State is aware that he would be well able to do it.

See this speech in context