Catherine Murphy (Kildare North, Social Democrats) | Oireachtas source

The Social Democrats are supporting this Bill in principle because it is obviously important. There is a historical context to the Bill and its predecessor, and it is important that we draw attention to this. There was delay on the part of the State in implementing the fourth anti-money laundering directive and that had a consequence. Ireland was fined €2 million, but it was also significant that we delayed. Ireland and Romania were the last two countries in the EU to transpose the directive. Both nations were responsible for EU law not being ensured at all times. The State's failure was described at the time as posing a risk to the integrity of the functioning of the EU financial system, making it vulnerable to money laundering and terrorist financing and affecting investors and citizens. It is vital that we act expeditiously to close compliance gaps. We must make sure there is no delay. Much of what happens in this area is reactive anyway and that is all the more reason to make sure that we act promptly.

Moving to consider the Bill, the law is, in many instances, playing catch-up with criminality and terrorist financing. The movement of money is not now solely restricted to concealing or redirecting hard cash but is much more sophisticated and we must, in many ways, try to get as far ahead of it as possible. Cryptocurrency is something that many of us will never come into contact with but it is fair to be rightly sceptical of it. It is an intangible form of currency but has a high value to a certain cohort of people. The proposed legislation seeks to put regulation on cryptocurrency. This is a welcome step. Why should cryptocurrency be subject to a lower standard of checks and balances than any other recognised currency or item of value?

Beneficial ownership of companies is another important element. The Social Democrats have, since our foundation, advocated for allowing free and open access to searches on the Company Registration Office, the Land Registry and the Central Register of Beneficial Ownership of Companies. In mid-2019, I asked the Minister for Finance, Deputy Donohoe, about the State's obligation under the fifth anti-money laundering directive to establish such a register by January 2020. The central register was to be operated by the Company Registration Office and was scheduled to begin accepting filings from 22 June 2019. When I asked, I was informed that details were not available regarding the number of beneficial owners that had been identified at that stage, or the number that would ultimately be identified. That was in mid-2019. Can the Minister update the House on those points if he has not already done so?

There are things that have cropped up over time. For example, I have tabled parliamentary questions about the National Asset Management Agency Act 2009, as it relates to cases which might be taken, because some people would be obviously excluded from ownership or purchase of assets under section 172(3). I asked that question in February 2019 and only two cases had arisen in the ten-year period since the legislation was enacted. One was closed without any prosecution and the other had gone to the Garda. The Committee of Public Accounts dealt with the matter and there was a gap in the definition of "beneficial owner". That is the kind of thing that we need to be able to see readily. If I remember rightly, a director of a company was not necessarily the owner and was not precluded under the definition in the Act. We need to be able to see the information for there to be adequate scrutiny. That is an example of a real case, rather than talking about these matters academically.

Money mules have been referred to and on Monday night, RTÉ and Virgin Media reported on figures from Banking and Payments Federation Ireland suggesting that more than €12 million had been channelled through Irish bank accounts as part of a complex scam that, essentially, targeted young people. Those young people were perhaps naive and did not understand the consequences and impact of their participation in those transactions. So far in 2020, there have been approximately 1,000 instances of money mule transactions, totalling some €12 million, and 98% of the bank accounts involved are linked to people between the ages of 18 and 24. The survey was useful, in that it showed that people were using their own bank accounts, as has already been referred to. The Garda finds that easy to detect because those involved are in plain sight. Those people are acting as money mules, and we do not want young people to have their lives destroyed by having criminal convictions.

It was very useful that there was media attention on that.

I want to deviate slightly to raise the matter of Wirecard, a German financial services provider and payments processor that collapsed in June after revealing that almost €2 billion previously reported as cash did not exist. The debate we are having today is focused on holding financial institutions to account and protecting customers from being used for criminal gain or being scammed outright. I mention Wirecard in the context of the hugely popular and convenient services that Revolut offers, including contactless payments, bill splitting and instant electronic fund transfers. A lot of people find it very useful and more and more people are using it. Revolut is authorised by in the UK by the Financial Conduct Authority under the electronic money regulations 2011 and is passporting its services into Ireland on a freedom of services basis. Can the Minister of State provide some clarity on the way this arrangement will work post Brexit? It is not immediately clear what will happen. It may well have been taken care of in legislation already. We are due to deal with some legislation in the context of Brexit in the near future. If it is not dealt with in that, the Minister might deal with it in another way.

Section 5 of the Bill relates to the services I have referenced and attempts to amend section 33 of the 2010 Act. It is described as a technical amendment. I want to tease out something regarding the diligence of the prescribed person. Section 5 (a)(ii) proposes the inclusion of the words "at any time where the designated person is obliged by virtue of any enactment or rule of law, including the European Union (Administrative Cooperation in the Field of Taxation) Regulations 2012 (S.I. No. 549 of 2012), to contact a customer for the purposes of reviewing any relevant information relating to the beneficial owner connected with the customer" in the 2010 Act. The amendments continue in that manner through the sub-paragraph. It appears that many things are being taken at face value. Uploaded photographs of identification are accepted to open accounts. The onus rests on the designated person's own risk-based approach. Will the Act be prescriptive in regard to the types of documentation that can be used to verify accounts? To my knowledge, it is not that obvious at the moment. It may be just a detail, but it may cause some problems if that is not properly defined.

I want to ask about a regulatory impact assessment. We are required to transpose this directive into law and it is only right and proper that we do that, but doing that has to mean something. A regulatory impact assessment would, for example, give us some understanding of how that would impact on the enforcement of what we are putting into law and whether we have sufficient means of enforcement or upskilling of the people who are required to enforce this piece of legislation.

When the Minister of State is wrapping up, he might come back to the question of what additional resources have been or will be put in place. He might outline what those requirements are understood to be and how they were considered. We often pass legislation and it is in place in theory, but this needs to work in practice. For that to happen, the legislation cannot just be policy or law. Something further is required to make sure the law is there in a meaningful way. It must not just be on the Statute Book; we need to ensure it can be properly enforced.

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