John Bruton
Question:10 Mr. J. Bruton asked the Taoiseach the plans, if any, his Department has for the future of the International Financial Services Centre. [9264/98]
Ceisteanna—Questions. - International Financial Services Centre.
As I stated in my reply on this matter last December, after my appointment as Taoiseach I met the financial services industry representatives on the IFSC Clearing House Group and senior ministerial colleagues to discuss the future development of the IFSC. Following these meetings I asked the clearing house group to develop a strategy for the IFSC which would consolidate its successes of the past ten or 11 years and provide a platform for development into the next millennium. The clearing house group has met several times since then and is in the process of developing such a strategy.
A series of working groups which operate under the aegis of the clearing house group continue to develop policies which are directed at furthering the competitiveness of specific industry sectors within the IFSC.
What action is being taken on the use of bogus Irish companies for fraudulent activity? Has that revelation done damage to the IFSC? Is the Taoiseach aware of the increasing worry in the US and elsewhere about the way in which Internet communications can be interfered with and money diverted out of people's bank accounts into somebody else's bank account? Is he aware that German hackers were able to get into an American bank and take credit out of depositors accounts? Is he aware also, with the onset of economic and monetary union, many people here will be banking in euros with the bank elsewhere and banking over the Internet and that the security of the Internet is a crucial financial issue requiring top level attention from the Government? The Department of Justice needs assistance in bringing forward legislation on this matter urgently.
The regulation of Irish registered non-resident companies is in no way involved with the IFSC companies to which a strict regime of certification applies. There is no evidence to suggest that IFSC companies are operating at less than the highest standards. Nonetheless, I recognise that a perception of wrongdoing, however ill founded, seriously damages the reputation of the centre, as a centre where reputable companies are properly regulated. It has been recognised for some time that there is a problem in relation to the manner in which some of the Irish registered non-resident companies have been conducting their affairs. A sub group of the IFSC banking and treasury group, operating under the aegis of the clearing house group, is considering a number of proposals. It has done substantial work in the past few months in this area and is considering it under the headings of taxation, company law and the money laundering provisions of the Criminal Justice Act. These proposals and others were recently detailed in a reply to the House by the relevant Minister. The Government is committed to finalising and implementing a comprehensive solution to this problem as quickly as possible. If not dealt with comprehensively, in time it would damage the centre.
Will the Taoiseach answer the second part of my question? Will he address the problem in regard to the money laundering legislation? Is it not the case that it places a requirement on banks to report suspicious transactions? When we enter EMU, the likelihood that a bank manager will know his customers will decrease because people will bank in other jurisdictions. Irish people will be able to place their money on deposit in euros in Italy or Germany. It will be much harder to operate money laundering legislation. Has this been dealt with at European level? When is it proposed to extend the reporting requirements of the money laundering legislation to other financial operatives, such as estate agents, who could frequently be used as vehicles for laundering money?
On the Deputy's last question, that matter is under discussion. I am not briefed on what stage it is at precisely. On the various companies and the work of the IFSC groups, whatever legislative or regulatory changes are required following the reports of the various sub-groups in the areas I mentioned, going back through the clearing house, will be taken. They may be more regulatory than legislative.
In reply to the Deputy's earlier question about the possibility of wrongdoing as regards transactions on the Internet, there have been a number of reports of this. There is an examination under way in the Department of Justice, Equality and Law Reform to see what legislative changes are required. However, this also needs to be done in the financial area. I am not aware of the decisions made by the Department on those matters but I can get the information for the Deputy.