Thursday, 11 March 2010
Criminal Justice (Money Laundering and Terrorist Financing) Bill 2009: Committee Stage.
I move amendment No. 1:
In page 11, between lines 10 and 11, to insert the following subsection:
"(4) The Minister shall within three months after the commencement of this Act publish a five-year anti-money laundering and counter-terrorist financing strategy illustrating how the objects of the Act are to be pursued, such a strategy to be evaluated and revised at the end of the five year period.".
The amendment arises from my contribution on Second Stage. I was struck by the British model for implementing the third directive through the Money Laundering Regulations 2007. The British Government also published an anti-money laundering and counter-terrorist financing strategy document setting out the challenges to be met in fulfilling the obligations of the directive in the next five years. This is an interesting idea and one from which we could usefully borrow. I accept it is not necessary to place on statute such a requirement and it may be more flexible not to do so. I tabled the amendment because I raised the matter on Second Stage and I am interested in the Minister's view on it.
I concur with the point made by Senator Bacik. I draw a parallel between this legislation and a Bill passed in the House around 18 months ago on the establishment of a national transport authority. The latter Bill included a clause prescribing that the new organisation publish a strategy to ensure the objectives set out in the legislation were implemented. Senators frequently raise the long delay which occasionally arises between the passing of legislation and its commencement. The proposal in the amendment could bridge this gap and ensure the important objectives of the Bill are better implemented.
): Strategy documents are needed from time to time on various issues. For instance, I recently launched the first five year national strategy document on sexual, gender based and domestic violence. The document was produced to ensure coherence between the responses of the relevant agencies and non-governmental bodies. It did not require the introduction of new legislation and was unconnected to existing legislation. It related instead to the response of different Departments and the different aspects of the issue.
The legislation before us affects a number of other regulators and authorities, for example, the Financial Regulator, which will set out their own strategies in this area. Under the strategy adopted by the Department, we have established an anti-money laundering compliance unit, which will have supervisory and monitoring responsibilities on money laundering aspects in respect of sectors where there are no other supervisory bodies. I assure the Senators it is my intention to ensure the strategy relevant to anti-money laundering controls in the sectors for which this unit of my Department will have responsibility will be reflected in the next departmental strategy statement, which will be published in 2011 to cover the years from 2011 to 2013. It seems these measures in effect meet the objectives of the amendment considered here, albeit that the strategy statement and policing plan adopted concerning the Garda Síochána cover periods less than five years as suggested in the amendment. Proposing to place a commitment such as that set out in the amendment would create an overly rigid procedure. It might be the case, for example, that having published a five-year plan as envisaged by the amendment, such a plan would not be changed within a five-year period to take account of new developments, even if such a change was called for. The types of crime covered in this Bill - money laundering and terrorist financing - are, regrettably, increasingly sophisticated forms of criminal activity. To an increasing degree, new forms of technological development are employed in the commission of these offences and, therefore, law enforcement agencies must be ready to change strategies and policies on these kind of offences at shorter notice than is envisaged by this proposal, and perhaps at far more frequent intervals than even five years. I do not propose to accept the amendment. Some people have said this legislation is long awaited, which tends to suggest we do not already have legislation in this area, but we do. We have robust legislation in this area because it has been changed regularly in recent years.
I thank the Minister for that full reply. While we all welcome the Bill and share its objectives, we are simply trying to make it more effective. On Second Stage, I spoke of the many challenges we face in dealing with white collar crime. The Minister has mentioned some of those, in particular the rapidly changing nature of this sort of crime, which is increasingly sophisticated. Given the need for multi-agency and cross-departmental approaches to deal with this sort of crime, involving the Financial Regulator, the Department of Finance and the criminal justice authorities, some sort of co-ordinated plan would be welcome. I accept this may be an overly rigid model to use, so I will not press the amendment at this stage. On Report Stage, however, I would like to hear more detail on the way in which a more multi-agency approach might be taken by the Department.
Amendment, by leave, withdrawn.
Section 3 agreed to.
Sections 4 to 23, inclusive, agreed to.
Government amendment No. 2:
In page 20, subsection (1), between lines 6 and 7, to insert the following:
" "barrister" means a practising barrister;".
The reason for including a definition that "barrister" means a practising barrister, and "solicitor" means a practising solicitor, is to clarify that the persons intended to be captured in the relevant provisions of the Bill are persons actually practising in their respective professions. For instance, I have a practising certificate but I am not a practising solicitor at the moment. In effect, I get an exemption from such a certificate because I am not practising. It would be somewhat unusual to capture somebody like me, but there could be other cases where people would be qualified as solicitors but may not necessarily be practising as such. It is important to make that distinction.
The amendment to section 40 deals with reliance on a relevant third party to carry out customer due diligence or to replace the references to the Law Society in subsections (1)()(iv) and (vi) with "solicitor". The reason for this is that the current reference to a member of the Law Society would have the effect of including persons who are members, but not practising solicitors, and persons who could be relied upon under the third party provisions. The appropriate and correct reference in these cases for a person who can be relied upon for third party purposes is to be a solicitor.
I welcome these amendments. In fact, I was proposing to raise on Committee Stage the issue of how the competent authority under section 60 would deal with persons who were not practitioners, given the competent authority would be the professional body. I am glad therefore to see this issue has been dealt with.
I also think it is an important point. I welcome the amendment because I have already raised the matter in the House. In Dublin, a number of people are registered as attorneys-at-law. In one instance, where a serious professional negligence issue arose, the Law Society told a particular client, who came to me as a constituent, that they had no recourse whatsoever. There are two if not three such people involved, which is a lacuna the Minister might examine at some time. One is either a practising solicitor or a practising barrister. As the Minister said, in some instances, there are people who have not practised for some time. I have not actively practised for a number of years, although I hold my practising certificate. That situation has arisen, particularly concerning American, Australian or European clients. Not 100 miles from the door of Leinster House, there is a sign stating "Attorneys-at-law", and they are portraying themselves as solicitors or barristers. I am not sure if any of my colleagues have received that complaint, but it is a serious misrepresentation which should be examined. The Irish word aturnae means solicitor, in effect, but there are people who hold themselves out as attorneys-at-law, yet they are neither barristers nor solicitors. This is an important amendment in that regard. I hope the Minister will examine the situation whereby people purport to be attorneys but, in effect, they are neither solicitors nor barristers.
Amendment agreed to.
Government amendment No. 3:
In page 22, subsection (1), between lines 31 and 32, to insert the following:
" "occasional transaction", in relation to a customer of a designated person, means a single transaction, or a series of transactions that are or appear to be linked to each other, where—
(a) the designated person does not have a business relationship with the customer, and
(b) the total amount of money paid by the customer in the single transaction or series is greater than €15,000;".
The first amendment is essentially technical in nature. It proposes to include a definition of "occasional transaction" in section 24, which deals with definitions. The reason for including the definition is that this term is used in a number of sections throughout the Bill, including the proposed amendment to section 55, which will be discussed later. It is therefore more appropriate and useful to define the term in section 24, rather than state it separately each time it applies to a section.
The second amendment is related as it deletes the current text in section 33(1)(), which describes an occasional transaction and instead inserts the term "occasional transaction" where it is proposed to insert it as a definition.
I commend the amendments to the House.
The amendment appears to make eminent sense, but I have a question for the Minister as to why the figure of €15,000 is being included in the Bill. It is unusual to see an actual figure included in this legislation. I think it would have made sense to give the Minister the ability to state what the figure is and then perhaps revise it over time in line with his or his Department's experience of how the legislation is working.
It is cited because this is the amount specified in the EU directive. If we had to change it later, we would have to do so by primary legislation, but we are following what the directive says. The legislation is designed to implement what the directive states.
Amendment agreed to.
Why is it that "insolvency practitioners" are not included in this definitional section? I understand there was an understanding by the Chartered Accountants Institute that they would have been included but they did not appear in the Bill. I understand that not all insolvency practitioners are accountants or solicitors and would not necessarily be covered. I am taking up Senator O'Donovan's point. I note a reference to notaries which are separate from barristers and solicitors and yet there is no reference to or definition of "insolvency practitioners". We have to be careful, as Senator O'Donovan said, about definitions of people who hold themselves out as practitioners.
We are looking at that issue in the context of Report Stage. We would think that the definition already included in respect of practising solicitors and barristers would apply but we will look at it in the context of Report Stage.
Question put and agreed to.
Sections 25 to 32, inclusive, agreed to.
Government amendment No. 5:
In page 30, subsection (1), lines 8 to 16, to delete paragraph (b ) and substitute the following:
"(b ) prior to carrying out an occasional transaction with, for or on behalf of the customer or assisting the customer to carry out an occasional transaction,".
Amendment agreed to.
Government amendment No. 6:
In page 33, subsection (8)(a ), line 3, after "service" to insert "or carry out the transaction".
Section 33 (8)( ) provides that if a designated person is unable to apply the measures specified in subsections (2) or (4), that is, identification and verification customer due diligence measures, due to the failure of the customer to provide the required documentation or information, the designated person cannot provide the service sought for so long as the failure remains unrectified. The purpose of this amendment is to insert "transaction" into this provision so as to clarify that it will apply to a transaction or a service, as appropriate. The reason for this is that the carrying out of a transaction with a customer and nothing more does not involve a service, whereas the carrying out of a transaction for or on behalf of a customer or assisting a customer to carry out a transaction involves the provision of a service.
Amendment agreed to.
Section 33, as amended, agreed to.
Sections 34 to 36, inclusive, agreed to.
I move amendment No. 7:
In page 38, subsection (10), between lines 14 and 15, to insert the following:
" "cohabitant" in relation to a person means a person cohabiting with the first-mentioned person as man and wife or in an equivalent same sex relationship;".
I am agreeing it although they are very different amendments but they relate to the same section and to definitions so I am happy to discuss them together. Amendment No. 7 relates to the definition of "cohabitant". As there is no definition currently in the legislation we felt the section might be unduly vague. We have inserted in the definition that "cohabitant" means a person cohabiting as man and wife or in an equivalent same sex relationship. Clearly the Civil Partnership Bill, once enacted, would have implications but I think that is already envisaged in the wording of section 37. I think it covers the spouse or a person considered to be equivalent to a spouse. Presumably that would cover civil partners once that legislation has been enacted.
Amendment No. 8 deals with an issue I raised on Second Stage. I thought that the "politically exposed person" definition might be somewhat vague. I can see and thoroughly support the objective of including persons who are politically exposed who are elected to public office and so on. Of course, they should be included. I am not in any way trying to water it down but could it be interpreted in such a way as to include people who have been entrusted once with some prominent public function, for example, a role on a board of a prominent public NGO but they are not actually working for the State? Is that a prominent public function? I suspect it is. If somebody who is the chairperson of a children's rights alliance group or a group of that nature - that is plucked from the air - he or she might somehow be brought into the net. I was concerned that would not be the case but I do not think that is the intention. I propose a definition that I hope will cover all the people we want to cover. I am not necessarily wedded to this particular wording but I consider that "people elected to public office, appointed to a public board or position of authority or otherwise entrusted with a prominent public function involving the exercise of some authority or decision-making power", would be more specific. I would be grateful for the Minister's view.
With regard to the amendment No. 7, the term "cohabitant" is not a requirement of the EU money laundering directive. The use of the term and its meaning, which I had initially intended to include in the Bill, was discussed at length on Committee Stage in the other House. On further reflection, I decided not to proceed with including this term within the current Bill.
Senators will be aware that the term "cohabitant" is being defined in the Civil Partnership Bill. I would prefer not to interfere with the provisions of the Civil Partnership Bill in this legislation, particularly as there is no specific requirement arising from the money laundering directive to refer to cohabitants. I will give consideration at a later date to an amendment in the Civil Partnership Bill to have the term apply to the relevant section of the money laundering Bill, if it is considered necessary. The Civil Partnership Bill is clearly the more appropriate place to deal with this particular definition.
The proposed amendment No. 8 relates to the concept of the "politically exposed person". The definition of "politically exposed person" as it is currently set out in the Bill is based very closely on the requires set out in the third EU money laundering directive and in the subsequent and associated implementing directive. Politically exposed persons are understood to be persons entrusted with prominent public functions, their immediate family members or those known to be their close associates. When determining those who are covered by this designation it is essential to take into account the social, political and economic differences between countries.
The current draft of this provision is carefully attuned to the requirements of both directives. The implementing directive was agreed a year later than the main third EU money laundering directive. It clarified, in Article 2, in some detail what is meant by a "politically exposed person". It is this detailed clarification of the politically exposed person which is reflected in the current draft of the Bill. The directive obliges us to transpose this requirement. It is not a concept which can be omitted from the legislation if we are to transpose the directive correctly. I would prefer not to make any change to the provision as it stands because it very much along the lines of what was in the implementing directive.
The directive defines natural persons who are or have been entrusted with prominent public functions. They shall include the following: a head of state, head of government, minister or deputy or assistant minister; a member of a parliament; a member of a supreme court, constitutional court or other high level judicial body whose decisions are not subject to further appeal, except in exceptional circumstances; a member of a court of auditors or of the board of a central bank; an ambassador, chargé d'affaires or high ranking officer in the armed forces; members of administrative management or supervisory bodies of State-owned companies and obviously spouse, partners, children, parents etc. I do not think that somebody who is chair of the children's alliance or whatever would be included.
I have two questions in response to what the Minister has said and, in particular, his reference to a specified official which is a welcome and important part of the Bill. In regard to the reference to the armed forces, why is it necessary to specify that it should be a high-ranking officer? Could it not just be any member of the armed forces? How does one define who is a high-ranking officer? The reference to "specified official" is good. It refers to the fact that it could be an official of an institution of the European Communities or an international body. Is it not necessary to define an "international body"?
We are transposing what is already in the main directive and the implementation directive. A certain bar is put in place by that directive, and it would be wrong to lower that bar because we could then be bringing in myriad other people with no relevance to this type of legislation. The concept of politically exposed persons is used to allow the legislation to take account of those who are former politicians or high-ranking officials and who are in some way evading justice. There are other laws that would take care of lower ranking officials or members of the armed forces. As I said, the aim is to replicate what is in the directive. We do not see any point in going further than this. With regard to the definition of an international body, I would have thought it would be up to the court to decide if there were no definition in the directive or the legislation.
The institute of chartered accountants, Chartered Accountants Ireland, raised with us the inclusion of the word "agent" in section 41 despite the fact that under section 44, there is a defence for an employee but none for an agent. I have no desire to water down the provisions of the Bill, but I am responding to a query put to me by the institute about the position of agents who are employees in all but name. There is a sort of halfway house of people who might technically be agents but are really more or less employees. Should these be covered by the section 44(2) defence, given that they are included in section 41 as potential designated persons? I raise this merely as a query.
This is related to the conversation we had with Senator O'Donovan about solicitors and people presenting themselves as solicitors although they are not. The inclusion of the word "agent" in section 41 is intended to capture quite a number of people who might not necessarily be captured under the definition of "accountant". Accountancy bodies have made such representations and we will consider the issues they have raised between now and Report Stage. I would be reluctant to make a change in this regard because we are trying to include as many as possible of the myriad people involved in this sector. That is the reason the word "agent" is included under the section. It is, in effect, a catch-all to try to include as many people as possible to ensure the terms of the legislation apply as widely as possible.
Would the definition include banks or lending institutions, or limited companies or associations? I often wonder about the relationship between a customer and a bank. Throwing my mind back to the famous tax amnesty, although I will not go into the rights and wrongs of the situation, I recall that the banks carried out a unilateral disclosure with a settlement, which was not always in the best interests of their customers. They made a sweetheart deal, as we now know. I am wondering whether lending institutions, co-operative societies, credit unions and so on are covered under the section.
I thank the Minister for saying he would consider this again before Report Stage. I would be grateful if he would do so. I accept his explanation that "agent" is a catch-all word, but the problem is that there are people who are ostensibly agents but are really, in all but name, employees.
I move amendment No. 11:
In page 42, subsection (1), lines 34 and 35, to delete "and the Revenue Commissioners".
I mentioned this on Second Stage because it seemed unnecessary to require duplicate reporting obligations to both the Garda and the Revenue Commissioners, given that one would hope for liaison between the two State agencies. I must point out again that I am not seeking to water down the Bill. I fully support the need for reporting requirements and the objectives of section 42, but I simply wish to ensure we avoid bureaucratic overload for those seeking to act in full compliance with the legislation. Should it not be sufficient to contact the Garda with such information, knowing it will pass it on, if necessary, to the Revenue Commissioners?
In addition, there is the possibility, when reports are sent to two agencies, that a report might fall between two stools, with each agency thinking the other is doing something about it. It does seem there is an issue with regard to reporting. It may be that dual reporting is required under the directive although, I must say, I have not looked.
Reporting is also required under the existing Criminal Justice (Theft and Fraud Offences) Act 2001. I mentioned on Second Stage a particular hobby horse of mine, that is, the need to ensure better codification of our criminal law. Given that we already have such an Act in place as well as other money laundering legislation, it is a pity there is not more coherence among the different Acts. Thus, there is already some duplication of reporting requirements under section 59 of the 2001 Act. This places further obligations on people. I am not opposing these obligations in any way - it is important that we have them - but I wonder whether it would be more practical simply to require a report to the Garda.
The purpose of this amendment is not to exclude the Revenue Commissioners from receiving suspicious transaction reports. The representative bodies are suggesting, as Senator Bacik said, that reporting should be done to one agency only. Both the Garda and the Revenue Commissioners, in the context of this legislation, feel it is important that there be an obligation to report to both of them. The suggestion that reports might fall between two stools is not realistic because of the fairly good connection between the Revenue Commissioners and the Garda in such areas. They already work on a multi-agency basis in this regard. Senator Bacik's original point was about the necessity of having a multi-agency approach. I can understand that representations would be made by a representative body in this respect because, obviously, they would wish to minimise bureaucracy. However, we as legislators have an obligation to ensure the legislation is comprehensive.
Under existing provisions of the Criminal Justice Act 1994 with regard to the reporting of suspicious transactions, designated persons are obliged to report both to the Garda and to the Revenue Commissioners. Section 42 does not in fact change this obligation. The system has worked particularly well. The reporting requirements to the Revenue Commissioners have proved a significant tool in combating tax evasion. I understand that about €40 million in additional taxes has been recovered in cases in which the information in a suspicious transaction report has been significant in bringing a case to the attention of the authorities or to a conclusion. Such reports have also assisted in a number of criminal prosecutions.
Senator Bacik raised a matter regarding section 59 of the Criminal Justice (Theft and Fraud Offences) Act 2001. The number of reports received by the Garda is very low, at approximately 100 annually, compared to a figure of approximately 14,500 annually on suspicious transactions. There is a distinct reportage requirement under this legislation.
I am interested in those figures which tell a story that might be worth pursuing. I accept what the Minister said and do not intend to seek in any way to have the provisions watered down. There is a concern that for too long we have allowed tax evasion offences and white collar crime to be dealt with and tackled in a different manner to theft offences. I accept circumstances have changed, which is good, but in the past the Revenue Commissioners were more inclined to settle with parties, whereas the Garda pursued individuals through the criminal courts. That was the issue underlying my amendment but I take the Minister's point on the reporting requirements specified.
I move amendment No. 12:
In page 49, subsection (1), line 24, after "Chapter 3" to insert the following:
", as the Minister shall prescribe by way of regulation,".
This amendment arises from an issue I raised on Second Stage on the requirements specified under section 55. I see the Minister has dealt with the issue in amendment No. 13 which spells out in much more detail the particular documents and records required to be retained. I look forward to hearing what he has to say but I wanted to ensure this could be done. I accept there is a provision in the Bill which allows the Minister to make regulations.
Amendment, by leave, withdrawn.
(c) in the case of a record referred to in subsection (3) evidencing the carrying out of a particular transaction by the designated person with, for or on behalf of the customer (other than a record to which paragraph (d) applies), the date on which the particular transaction is completed or discontinued,
Following further consideration of these provisions, I have decided to make a number of amendments to the record-keeping provisions, the purpose which is to clarify and amend. Article 30 of the third money laundering directive states records must be kept for at least five years. However, this does not preclude a member state from applying a longer period. The Bill provides for a period of not less than six years and the amendment will change this to five years. Some domestic legislation on record-keeping provides for a period of five years and some for six. I have decided, following further consideration of the matter, that it would be more appropriate to apply a five-year threshold which is being applied in most member states.
The amendments also deal with the time period for which records relating to transactions and services will be kept. It is five years from the date on which the transaction or service is completed or discontinued, whether a business relationship applies. In this respect it is important to note a business relationship is a business, professional or commercial relationship between a person and a customer that the person expects to be ongoing. This is defined in section 24.
There can be relevant transaction and service records for a customer that do not fit these criteria. An example is an occasional transaction, a matter already discussed in amendments Nos. 3 and 5. Subsection (4), paragraphs () and (), provides that records relating to transactions must be kept for five years from the date on which the transaction or series of transactions is completed or discontinued. This means that, whether the transaction takes place in the context of a business relationship or is a once-off or occasional transaction, the period is the same; it is five years from the date on which the transaction or series of transactions is completed or discontinued.
The same principle applies to subsection (4)() with regard to a service. The reason for providing for these separately was touched on in the discussion on amendment No. 6, as there is a difference in the terms. The proposed text of subsections (5) and (6) arises from the fact that section 32 of the Criminal Justice Act 1994 is being repealed in this Bill. As Senators will appreciate, the current money laundering record-keeping requirements are contained in subsection (9) and these provisions will ensure record-keeping requirements will still apply.
Amendment No. 14 changes the subsection references in what is currently known as subsection (5) to reflect the other amendments and the additional subsections involved.
I move amendment No. 15:
In page 58, subsection (1), line 45, after "oath" to insert "or affirmation".
This is a very simple and straightforward amendment which is not strictly necessary. It simply seeks to insert the words "or affirmation" after "oath". I know the law allows affirmations as well as oaths and the Minister may say it is not strictly necessary - if I can pre-empt what he will say - by virtue of the Oaths Act 1888 and the Interpretation Act 2005. However, it would be welcome clarification and improvement of the Bill. As a more general principle, the Labour Party has consistently mentioned the need to say, "oath or affirmation." It would not add very much by way of word count to the text of the legislation but it would present a more inclusive message that persons would not have to swear an oath but may swear an affirmation instead.
I nearly know the note off by heart at this stage because the Labour Party constantly refers to the issue. The Interpretation Act 2005 already creates the template for the definition of terms commonly used across legislation. This is in preference to changing on a piecemeal basis parts of legislation, leaving one piece with a different definition to another. I cannot accept the amendment.
I move amendment No. 16:
In page 78, subsection (2), line 44, after "purpose," to insert "as giving rise to civil or criminal liability or".
We welcome and support section 112, which relates to whistleblowers. However, we are of the view that it is inadequate because it only covers protection against an action for breach of confidence and does not provide an immunity from liability for such disclosures. Amendment No. 16 seeks to rectify what we perceive to be an omission in this regard. The Minister outlined on Committee Stage in the Dáil his view that this amendment is unnecessary. It is our contention that it would assist in stating the position more clearly for potential whistleblowers.
This amendment was tabled on Committee Stage in the Dáil and proposes to amend section 112, which provides protection to a person who discloses, in good faith, a suspicion relating to possible money laundering or terrorist financing in the circumstances set out in the section. I appreciate that the intention behind the amendment is to ensure that persons acting in good faith will be fully protected. However, we are of the view that it is not required. Civil or criminal liability could not arise unless there is a breach of an enactment or rule of law. The section specifically states that in the circumstances set out it will not constitute such a breach. The inclusion of any express reference to liability is, therefore, not required.
Again, I knew what the Minister would say in respect of this amendment. We are of the opinion it would clarify the position further for potential whistleblowers. However, I will not press the matter at this stage.
Amendment, by leave, withdrawn.
Section 112 agreed to.
Sections 113 to 122, inclusive, agreed to.
Schedules 1 and 2 agreed to.
Title agreed to.
Bill reported with amendments.
As already indicated, I am considering a number of possible amendments for Report Stage. Certain representative groups - such as the Irish Taxation Institute, the Incorporated Law Society and those representing the accountancy profession in general - have raised various issues. We will be examining those issues and returning to deal with them on Report Stage.