Written Answers - Central Bank Confidentiality Requirements.
Brendan Howlin
Question:
28
Mr. Howlin
asked the
Minister for Finance
if his Department has contacted the European Monetary Institute in order to seek its view on the interpretation of the prohibition on disclosure imposed on the Central Bank.
[9523/98]
I have previously informed the House on a number of occasions that the Central Bank of Ireland is subject to strict confidentiality requirements. These are set out in section 16 of the 1989 Central Bank Act and subsequent amendements. Section 16 introduced provisions, related to the disclosure of information by the bank's staff, similar to those already existing for public servants in relation to the prevention of corruption.
Basically, the section provides that the Governor, a director, officer or servant of the bank may not disclose information related to the business of any person or body, whether corporate or incorporate, which came to his knowledge by virtue of his office of employment, or the bank's activities in respect of the protection of the integrity of the currency or the control of credit unless such disclosure is to enable the bank to carry out its functions under the Central Bank Acts. Provision is made for the disclosure of information as required by a court in connection with criminal proceedings. In addition, the bank, under section 49(2) of the Investment Intermediaries Act, 1995, may disclose to the gardaí, where it has reasonable cause to believe that a criminal offence has been committed, any information to enable further investigation of the alleged offence. Further, under the provisions of the Criminal Justice Act, 1994, the bank is obliged to report to the gardaí a suspicion that any entity it supervises has committed or is committing the offence of money laundering, or certain related offences; money laundering embraces tax evasion.
Penalty for contravention of the provisions of section 16 are: on summary conviction, a fine not exceeding £1,000 and/or a term of imprisonment not exceeding 12 months, or on conviction on indictment, a fine not exceeding £25,000 and/or a term of imprisonment not exceeding five years.
These secrecy provisions are vital in the maintenance of the financial sector's confidence in the bank and, in turn, the public's confidence in the operation of the financial sector.
Irish law on confidentiality in financial supervision implements European Union law which requires a high standard of professional secrecy. Article 12, as amended, of the First Council Directive on the co-ordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of credit institutions requires the State to ensure that the Central Bank maintains very strict confidentiality. The Office of the Attorney General has been consulted on this issue and has advised that rules of law emanating from the Directive and Ireland's obligations under the Treaty would prevent adoption of a provision which would widen the existing catergories of exceptionsvis-à-vis the Central Bank of Ireland. Therefore, any legislation purporting to extend the present categories of exceptions to the bank's confidentiality regime would, prima facie, be ultra vires the Directive and the EU Treaty.
Confidentiality is a core element of effective financial regulation and as such is deeply embedded in the body, not only of EU law but of international law generally.
As regards the Deputy's query, the EMI would not be the appropriate authority to consult, in the first instance, on issues related to the interpretation of EU Directives in the financial services field. As I have already indicated on a number of occasions, these directives are in line with best international practice in the field of financial supervision. In Ireland advice as to the interpretation and transpostion of EU law is, in the first instance, sought from the Office of the Attorney General. Any proposals to amend these directives would, primarily, be a matter for the European Commission in its capacity as preserver of the Treaty and promoter of EU law.
The terms of reference of the Moriarty Tribunal include a remit to make whatever broad recommendations the tribunal considers necessary or expedient for enhancing the role and performance of the Central Bank as regulator of the banks and of the financial services sector generally. Also, I have established a working group of representatives from my Department, the Department of the Taoiseach, the Department of Enterprise, Trade and Employment, the Central Bank, the Office of the Director of Consumer Affairs and the Office of the Attorney General to examine banking and consumer issues. The remits of both the tribunal and the working group cover the question of Central Bank confidentiality and I will, consider any recommendations they make. If these suggest that clarification on the interpretation of the confidentiality requirements of the relevant EU Directives is necessary, this will be sought. Any draft legislative provisions which might then emanate from these examinations will, where appropriate, be referred for consultation to the EMI in accordance with Article 109f(6) of the Treaty on European Union.
