James Browne (Wexford, Fianna Fail) | Oireachtas source

That is possible. The account with the latter institution, even though I use it to this day, was opened when I was a student at Waterford Institute of Technology, so perhaps it still has those details for that account. I might check that.I have a concern, as I previously expressed, about a chilling effect on people going into politics. It is a concern not only at a national level but also at a local level. At the most recent local elections, none of Fianna Fáil, Fine Gael, Sinn Féin and the Labour Party had a contested convention in County Wexford. That would have been unheard of 20 or 30 years ago because people would have been climbing over each other. There is a problem developing in this country of people not going into politics. We should encourage people to go into politics.

The first point I will raise is that Ireland has very limited discretion under the directive. The fourth directive, implemented by the 2018 Act, broadened the application of the politically exposed person, PEP, regime to include PEPs from Ireland. What is considered a PEP is set out in detail in the directive, and while there is provision that the exact functions will be clarified by guidance, some categories are set out unambiguously, such as the members of the national parliament, members of political party executives and so on. We may well have views that it extends too far when applied in an Irish context, but these are international standards that are conceived broadly. Article 3 within the directive includes members of parliament as prominent public functions. Article 3 also provides that "family members" includes children and spouses of such members. Article 20 provides that enhanced due diligence is required in respect of PEPs, and article 23 provides that due diligence in respect of PEPs shall also apply to family members. The directive has been quite specific on this matter. We cannot, therefore, simply exclude or modify the application of the directive in respect of Members of the Oireachtas or the other categories that are required, and once a person falls under the definition, his or her family members are also automatically brought within its scope. Unfortunately, we cannot decide to change that in this case.

That does not mean that exactly the same measures must be applied in all cases. However, sources of wealth must be identified and senior management approval is required. That is also provided for in article 20 of the directive and we do not have discretion in that matter.

The rationale that has been put forward for the very wide application, despite the real inconvenience that it causes ordinary citizens, especially the children of a politician or senior civil servant, is that the nature of the anti-money laundering, AML, regime more broadly requires the policy decision to apply on an international level. The inconvenience is, therefore, warranted by the objectives of tackling money laundering and political corruption. If there were significant national discretion to disapply these measures, those countries to which they most need to apply would probably be the first to disallow their application.

I have no doubt that it is true to say that most people in politics are not at high risk, and that is particularly true of their children and spouses. However, we have seen examples of assets being transferred between family members under questionable circumstances. It is sometimes the most obvious means of circumventing enhanced due diligence, and one of the many issues that both the EU and the Financial Action Task Force are moving to address is the capacity to address money laundering on an international basis.

The application of enhanced due diligence to domestic PEPs is still a relatively new development. The 2018 Act brought domestic PEPs into the enhanced due diligence requirements for the first time. It is clear from our discussions that practical issues are arising in many cases. That being said, I remain to be convinced that the issue is with the legislation itself. It is perhaps more to do with the application by the Central Bank or financial institutions under its guidance.

As Senators are aware, the AML regime operates at multiple levels. The directive and the Act are at the top level. The regulation of banks and other financial institutions in how they implement the provisions sits with the Central Bank of Ireland, which also provides guidance to the firms it regulates. I understand the Central Bank of Ireland conducted a formal public consultation on the guidance that it provides under this regime. However, the ultimate responsibility for identifying a PEP sits with a designated person, for example, a bank. One is obliged to gather sufficient information to support identification and to apply appropriate measures thereafter.

In my view, the legislation takes a reasonable and measured approach in section 37. It appears to me that the issue is with how the legislation and the guidance are applied by individual banks in individual cases rather than with the Act itself. That being said, I acknowledge the point of the amendment and share the concerns of the Senators. I am also particularly conscious that the obligations on PEPs run wider than financial services and it is not only for the Central Bank to address these issues. Other designated persons and competent authorities are involved and I want to see a consistent and proportionate application of these requirements across the board. I have taken in the Senators' concerns and intend to look at inserting a subsection (13) to section 37 of the 2010 Act which will provide for the Minister, with the consent of the Minister for Finance, to issue guidance to all competent authorities where it is necessary to promote consistent, effective and proportionate application of the section.The hope is that guidance would not be issued and it certainly would not be issued in the short or medium term. We expect competent authorities and designated persons to develop an appropriate and reasonable approach without top-down guidance. However, the provision would be there should it ultimately be needed by the Minister and if it were required, having seen how the regime develops.

There is a balance to be struck. I cannot in good faith put an amendment down that implies we could disapply measures like determining sources of funds or that we could decide that enhanced diligence is not needed where it is clearly required by the directive. Similarly, the Minister for Justice is not the appropriate person to be issuing detailed operational instructions to financial services firms. These are matters for the Central Bank. That is not her intention. However, I also do not envisage an extended delay in respect of this issue. We are consulting the Department of Finance, the Attorney General and the Office of the Parliamentary Counsel on this drafting. I expect to be in a position to have a final decision by Report Stage in the Seanad.

As regards the prominent public function guidance, Senator McDowell raised the issue of POs, An Bord Pleanála and even reports by people at other levels. Under section 10, prominent public function guidance is due to be issued after the commencement of the section. There will be strong guidance as to who should or should not be included within that.

Senator Bacik referred to the Magnitsky Act. The Department of Justice is seriously considering Deputy Howlin's and the Labour Party's proposal in that respect and it is with the Attorney General. It is a very important proposal and should be facilitated.