Seanad debates

Monday, 1 February 2021

Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2020: Second Stage

 

11:00 am

Photo of Michael McDowellMichael McDowell (Independent) | Oireachtas source

This legislation is somewhat overdue. As Senator Gallagher notes, the delay in introducing it has resulted in a €2 million penalty being imposed on the State. Further enforcement action is in the pipeline, which is unfortunate. On the other hand, as the Bill is before us now, we must deal with it on its merits.

I wish to indicate at this stage that I have no major problems with the Bill as long as its provisions will be reasonably enforced. The problem with money laundering legislation to date is that it is not being reasonably enforced in some respects. Senator Buttimer and I have discussed the politically exposed persons provisions on occasion. I qualify on two grounds to be a politically exposed person. The first is that I am a former Minister and the second arises because I am a Member of the Seanad. All of us are politically exposed persons in that respect.

As a result of a campaign of enforcement by the Central Bank, the various financial institutions began to get their act together recently in a very concerted manner. I found myself being asked by one institution, which afforded me a mortgage 18 years ago to finance the building of a holiday home, to explain the source of all my wealth. Some of the forms we are asked to complete go far beyond what is reasonable. They ask us to produce copies of tax returns across the period of accumulation of wealth and copies of wills under we may have inherited money. Bearing in mind that I have for approximately 12 years conducted business with a bank which sees everything going into and out of my account, it asks me the odd time where certain moneys came from. Paying the mortgage means money leaves that account via direct debit to a second institution. I have a Visa card and Mastercard, and I have been asked by the providers of those services to fill out forms explaining where I have got my money from, etc.

Worse than that is the completely unreasonable request that my spouse and children should also be subject to this, if the banks knows who my spouse and children are, because they are politically exposed persons within the meaning of the legislation. To ask of any of us that our spouses should be required to prove the source of their wealth in order to keep a current bank account or whatever open is entirely unreasonable. If it is going to be required, there must be some degree of proportionality as to the capacity of people to gather together all these records, especially when they are in the 18th year of a 20-year mortgage, for example.The threat was that they would discontinue my mortgage. I said, "That's fine, I'll take it if you like". However, it is absurd, especially if there is one lead bank in respect of an individual who knows where the money is coming from and who does keep on eye on where the money comes in and out of and other institutions are being dealt with on the basis of direct debits. It is absurd that the direct debit institutions, which really are derivative, should be asked to implement a massive amount of research to find out where the money is coming from in terms of another bank in Ireland.

The fourth directive, which was passed, provided, in recital 35, that identification of account holders and depositors could be effectively taken on trust from another financial institution without prejudice to the obligation of the derivative institution to report any suspicious transactions. The "know your client" provisions that are currently being imposed by the banks, I believe at the behest of the Central Bank, are entirely unreasonable. No provision is made for what is proportionate. What is to happen if one of my children simply disregards the obligation to account for his or her money over the years? How does that really impinge on whether I am a suspect for money laundering? I believe it is overkill.

I note that express trusts are to be made the subject of a central registry here. That will be a fairly significant imposition in terms of notifying somebody in authority on a central basis, setting up a register and keeping the register up to date and the like for express trusts. There are many express trusts – family trusts, education trusts for children with disability and all the rest of it. There are all sorts of issues where express trusts may come into existence. It may be easy in continental Europe to provide for registration of these trusts because perhaps they require to be formalised in a centralised way, by formal deeds or whatever in a sense in which they are not in the common law countries of which Ireland is the last remaining survivor in the European Union.

I intend on Committee Stage to introduce some legislation to protect politically exposed persons, including Oireachtas Members, from disproportionate, intrusive and repetitive examination of every credit card they ever had as a condition of keeping the credit card in existence. It is nonsense. It does not serve any useful purpose and it creates quite a lot of difficulties for banks, Oireachtas Members, their spouses and dependants. I know the Minister of State said that he wanted Ireland’s standards to be the highest but it is not a high standard to require my sons to explain their wealth. That is nonsense. It has nothing to do with whether I am somebody who is going to launder money and it is absurd that that should be part of our law.

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