Jim Walsh (Fianna Fail)

——but she could be reminded that most economists and objective reporters across the globe recognise that what we are encountering is a global recession almost on a par with what happened in 1929 which gave rise to the Great Depression in the 1930s. Obviously, one hopes we will avoid a similar recession. When the history books are written, we will see its genesis was in the sub-prime market in particular and over leveraging, which was a significant part of what happened in the United States and certainly was a significant issue here in that it gave rise to the property bubble and the consequent banking crisis with which the Government is challenged to come to terms.

Senator Bacik has a point when she says white collar crime is an area on which greater emphasis should be laid. We have had many debates in these Houses, and comments in the news media also, about people who are incarcerated for offences involving small monetary amounts or values while, on the other hand, very significant scams go almost with impunity. It is not just an Irish phenomenon. It applies elsewhere as well but it is something with which these Houses and the Executive must come to terms.

The Madoff case in the US involved amounts in the order of $50 billion or $60 billion. Those amounts of money are almost inconceivable to most people. That fraud could be perpetrated at that level and go undetected for so long must bring into question the legal, monitoring and detection systems in place, not to mention the regulatory systems.

If we consider what has gone wrong in the banks on this side of the world, be it here, in Britain or Europe generally, it would be fair to say the pursuit of policies which may or may not have been illegal and in many cases probably were not illegal, would be regarded as perhaps irresponsible but in many cases would have been unethical. There is a need for us to inject into the whole commercial and business area a greater adherence to good corporate governance and in particular good ethical standards. As humans we all fall short of meeting ethical standards from time to time but the State and the mechanisms we have in place should be a constant reminder and a strong incentive to encourage us to pursue this.

This is the third EU money laundering directive. We had one in 1991 and in 2001 and they have been transposed into law. There has been some delay in committing this directive to the Statute Book. I am aware that a wide process of consultation has been undertaken; that is always welcome in the case of any legislation but particularly so in the case of legislation of this nature. It is also important that we are not seen to be dragging our feet in implementing directives, particularly ones of this nature. I am aware it involves more than just banks but others who deal with financial services such as accountants, lawyers and various other bodies. I see gaming clubs are also involved in the whole process. Consultation is continuing and I hope it will ultimately enhance this legislation when enacted.

The State responded to recognising the value of following the money trail after the sad and unfortunate murder of Veronica Guerin, on foot of which it created the Criminal Assets Bureau which has been effective. Whether it has been as effective as it could be is a question for another day but we must recognise that it has had some success as a result of pursuing the trail of money and funds, which reflects the objective of the legislation.

Money laundering has been practised for a long time. Given the trans-frontier nature of crime, whereby borders are not recognised by criminals, it is essential that there be co-operation and that the initiative be taken at EU level. We are including in a legislative framework directives that will apply right across the European Union.

It is important that jurisdictions that emphasise totally the privacy of the banking world and specialise in having strong banking industries co-operate with others. Many were surprised when the issue of the Cayman Islands surfaced. It was but one of a number of jurisdictions in which trusts had been entered into, often with the purpose of evading tax rather than engaging in other criminal activities. We now see that there is a heavy emphasis on the criminal side.

The fruits of crime, including drug dealing, are considerable. Where there are such incentives for people to engage in illegal activities, it is imperative that states join together to tackle the problem. The adage that crime does not pay may be challenged to some extent in reality; therefore, responsible countries must bring to heel those which have had a code of secrecy associated with bank accounts. Switzerland comes to mind in this regard. If the proposed regime is to be effective, it must be regulated and policed properly and effectively.

If anything is to be learned from the global difficulties we have been encountering, it is that the almost laissez-faire approach to regulation must be tackled. I was especially critical of this approach in Ireland. It is not just the Financial Regulator that was at fault, although it probably had primary responsibility, because the Central Bank and the Department of Finance were also involved. The same problem arose in the United States. It seems to be an international phenomenon which cannot be allowed to continue. Those who are paid good salaries to do jobs and have responsibility must deliver. Such a job is not a promotional step with an enhanced salary to enhance one's pension on retirement but a very responsible one given by the State. The duties involved must be exercised. The same applies to the legislation before us. The duties in this regard involve the policing and enforcement of the directives and the legislation we are putting on the Statute Book. If we succeed in this regard, we will ultimately meet the objective set out in the EU directive that the State is endorsing.