Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2018: Second Stage

I move: "That the Bill be now read a Second Time."

The purpose of this important legislation is to transpose in large part the fourth EU money laundering directive. It will also bring Irish law into line with the recommendations of the Financial Action Task Force, FATF, an international standard-setting body.

We know that by targeting the proceeds of crime we can remove the incentive for the commission of acts of serious and organised crime, such as human trafficking, drug trafficking and fraud. That is why we make it a crime to help to disguise or transfer the origin of illegal gains. That is why we have set up bodies like the Criminal Assets Bureau to freeze moneys obtained through criminal activity. We know that these measures are very effective.

Internationally it is recognised that preventive measures also play an important role. In the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 and before that in the Criminal Justice Act 1994, we have required gatekeepers such as banks and other businesses, which can be used for money laundering or terrorist financing, to take certain actions. They are required to know their customers. They are required to monitor their transactions for suspicious activity. When they see something suspicious, they must report it.

Money laundering and terrorist financing are cross-border phenomena. We have a globalised, open economy and criminals will exploit this to move proceeds from one country to another. For this reason the European Union has long had legislation in this area. Internationally, the recommendations of the Financial Action Task Force are applied by 35 member jurisdictions. The FATF monitors and evaluates compliance by those members.

The EU legislation and the FATF recommendations are frequently updated to reflect new trends and ensure they are still relevant. It is the fourth directive, Directive 2015/849, that is being transposed by the Bill. The Bill amends the 2010 Act to bring it in line with the new directive. I emphasise that robust and extensive anti-money laundering laws are already in place in Ireland. The existing 2010 Act runs to 122 sections, with 82 of those sections concerning designated persons and their obligations. This legislative framework is supported by a strong operational capability. A range of bodies are active in combatting money laundering and terrorist financing, including An Garda Síochána, the Criminal Assets Bureau, the Central Bank and my Department.

The anti-money laundering steering committee brings together relevant Departments and agencies to co-ordinate the national response to risks relating to money laundering and terrorist financing. In its most recent evaluation report for Ireland, the FATF found that Ireland has a generally sound and substantially effective legal and institutional anti-money laundering framework. This new legislation will update and enhance that framework and will address many of the remaining gaps identified in the evaluation.

As well as ensuring that Ireland fulfils its EU and international obligations, the Government is committed to tackling white-collar crime in all its forms. The Bill forms part of the package of measures announced last November on which I, together with the Ministers for Finance, and Business, Enterprise and Innovation, are working to combat white-collar crime.

The Minister for Finance and his officials share responsibility for the transposition of this directive. As well as its role in preventing crime, anti-money laundering legislation is aimed at protecting the integrity of the financial system.

The Department of Finance has been working closely with my officials on this Bill and is drawing up its own legislation to transpose provisions of the directive on beneficial ownership of trusts and bodies corporate.

Before turning to the individual provisions of the Bill, which is complex and multifaceted, I would like to give a general overview of its content. The main change brought about by the Bill is a more pronounced switch to a risk-based approach. This means, first, that the businesses concerned, which the legislation calls designated persons, must assess the risks of money laundering and terrorist financing involved in carrying out their business. They must have policies and procedures in place to mitigate these risks. They must determine the risk attaching to each customer or transaction, on a case-by-case basis, taking into account relevant factors. They must then carry out whatever due diligence measures are warranted by that level of risk. This represents a more targeted and, therefore, more effective application of measures by the designated person.

The proposed law also recognises the reality that many businesses today operate in group structures across borders and it makes a number of amendments in this regard. The Bill expands on requirements on Irish companies to ensure that their subsidiaries overseas apply high anti-money laundering standards. If a group implements policies and procedures properly, its subsidiaries are not subject to some restrictions that normally apply in respect of high-risk third countries.

The amendments made by the Bill also extend the scope of existing obligations in other ways. For example, some measures which previously only applied to banks will now apply to other financial institutions. There are extra measures that must be applied to the beneficiaries of life assurance policies. Measures applying to politically exposed persons will now apply to those resident in Ireland, as well as those resident outside the jurisdiction.

Of great importance in the global fight against money laundering and terrorist financing is the role of the financial intelligence unit. The financial intelligence unit in Ireland is part of An Garda Síochána. It is responsible for receiving suspicious transaction reports from designated persons and analysing them, so it can be used to combat crime. The directive expands the remit of the financial intelligence units and requires them to have access to all of the information they need to carry out their functions. Taking into account the transnational nature of money laundering, it emphasises co-operation and information sharing between the financial intelligence units of different member states. All of this is provided for in the Bill.

Turning to the individual provisions, sections 1 and 2 contain the usual provisions setting out the Short Title and commencement provisions and the interpretation section. Sections 3 to 5, inclusive, amend the definitions in the 2010 Act. For the most part, this is to bring them into alignment with the definitions in the directive. In many cases, references to financial services legislation are being updated. An important amendment is that which lowers the threshold for the application of the Act to high-value goods dealers. Currently, they come within the Act if the value of the goods is over €15,000 and this amendment will bring that down to €10,000. There is an amendment in section 5 relating to legal professionals in order to make it clear that the Act only applies to them where they are carrying out certain services. This amendment was previously made by the Criminal Justice Act 2013 but was not commenced as a technical change needed to be made.

Sections 6 to 9, inclusive, amend the definition of "beneficial owner” to bring it in line with the new directive. When carrying out customer due diligence, a designated person must also check the identity of any beneficial owner associated with that customer. This includes, for example, a major shareholder in a company or the beneficiary of a trust. The definition of "beneficial owner" will now be broader than under current law and will include, for example, the trustee of a trust.

Sections 10 to 19, inclusive, are the core provisions of the Bill. Section 10 inserts two new sections in the 2010 Act concerning risk. In this regard, designated persons will now be explicitly required to carry out an assessment of the risks of money laundering and terrorist financing inherent in carrying out their business. They are also required to assess the risk of money laundering and terrorist financing in regard to a customer or a transaction, taking into account factors like the purpose of an account or the regularity of transactions. They have to have regard to guidance and the national risk assessment.

Sections 11 to 19, inclusive, concern customer due diligence. Section 33 of the 2010 Act contains the main obligations to identify and verify the identity of customers and beneficial owners. Some small changes are made to that section. For example, there are additional requirements relating to the identification of the beneficiaries of life assurance policies. There is an exception to the rule that designated persons must cease carrying on business with a customer if they cannot carry out customer due diligence, and that applies to legal and other professionals in certain circumstances.

Simplified due diligence can be carried out where the customer is considered to be low risk. If simplified due diligence is applied, the designated person must keep a record of the reasons for applying it and carry out sufficient monitoring. There is also a specific exemption for electronic money which applies under certain conditions.

On the other hand, where there are factors suggesting high risk, extra measures must be taken. Customers in what are deemed to be high-risk third countries are one such category and politically exposed persons are another. As I mentioned, at the moment, if a bank or other designated person has a customer who holds certain important public offices, and they are resident abroad, the designated person must take extra precautions. They must get senior management approval for the relationship and check the source of funds and wealth. This also applies to the family members of these people. The need to combat corruption requires paying special attention to these persons. In this Bill, as required by the directive, these provisions are being extended to politically exposed persons resident in Ireland, so they will also be subject to these checks. This will include, for example, Members of Dáil Éireann and senior judges, but the need for caution will not stop at these specific categories. Designated persons will have to take an overall view of their customer and apply additional measures, if necessary. Failure to do so will now be an offence punishable by an unlimited fine and up to five years in prison.

Section 20 makes some changes to the circumstances where a designated person can rely on a third party to carry out customer due diligence. Sections 21 to 23, inclusive, concern the functions of Ireland's financial intelligence unit, FIU. This unit is part of An Garda Síochána and these sections place its functions on a statutory footing. They give the FIU the powers to obtain information that it needs to tackle money laundering and terrorist financing. Under this Bill, the FIU can also give information on request to certain bodies and it can share information with FIUs in other member states. The FIU and the Revenue Commissioners will have the power to obtain additional information from a designated person after the person has reported a suspicious transaction.

Section 24 amends section 51 of the 2010 Act. This concerns the offence of “tipping off', in other words, telling someone that they are being investigated for money laundering. This alters one of the defences to the offence so that it applies where financial institutions share the information within a group.

Section 26 relates to the policies and procedures that designated persons must put in place to prevent and detect money laundering and terrorist financing. The new section expands on the matters that must be included in these policies. They must, for example, have policies on measures to be taken to prevent the risk which may arise from new technologies.

Sections 27 and 28 concern the keeping of records. Section 27 allows An Garda Síochána to require that a designated person retains records relating to customer due diligence beyond the current five-year period if they are required for the investigation or prosecution of money laundering or terrorist financing. Designated persons must delete any personal data held solely for the purposes of this section after the end of the retention period. Section 28 extends an existing requirement in regard to keeping information on business relationships.

Sections 29 and 30 require a group of companies to have common anti-money laundering policies. If an Irish company has a subsidiary in another country, it must ensure that it applies adequate anti-money laundering measures. If the subsidiary is in another EU member state, it has to make sure that it complies with local anti-money laundering laws. If it is in a third country where the laws do not allow the implementation of the group's policies and procedures, it must take additional measures. If these measures do not address the risk, action can be taken by the competent authority.

Section 31 extends a prohibition on entering into a correspondent relationship with a shell bank so that it now applies to all financial institutions. Section 32 makes an amendment which will make the Legal Services Regulatory Authority a State competent authority, which means it has extra supervisory powers for money laundering purposes.

Section 33 substitutes the section creating a defence of due diligence to the offences under this part of the Act. There is no longer provision for guidelines to be made to be taken into account here.

Section 34 inserts a section which requires certain designated persons to register with the Central Bank. This is for entities which the Central Bank supervises for money laundering purposes but which are not otherwise authorised by or registered with it.

Section 35 amends the penalties that can be applied by the Central Bank under its administrative sanctions procedure to bring them in line with the directive. As well as its usual penalties, it can impose a €5 million monetary penalty on a natural person for breaches of certain provisions of money laundering legislation. It can also impose a penalty of twice the benefit obtained from the breach.

Section 36 substitutes Schedule 2 to the 2010 Act which lists some of the financial services and activities subject to the Act.

Sections 37 and 38 set out the factors that must be taken into account in determining whether there is a low or high risk. Section 39 repeals certain provisions of existing law and section 40 makes consequential amendments to other legislation.

In conclusion, this Bill is of great importance. By enhancing Ireland's already extensive money laundering regime, it will act as a further tool to combat global organised crime, to protect our financial system and to ensure that we meet the highest international standards. Along with the Criminal Justice (Corruption Offences) Bill, it comprises a strong underpinning in legislation of the fight against so-called white-collar crime, and combatting such crime is a Government priority. I look forward to hearing Members' views and to the passage of the legislation through the Houses in due course. I commend this Bill to the House.

I welcome that the Government has eventually commenced the process of transposing the fourth EU money laundering directive into Irish law. The directive dates from 2015 and I understand it should have been transposed into Irish law by 26 June 2017. We will be doing well if it is transposed into Irish law by 26 June 2018, considering the fact that it has to go through Committee Stage in the Select Committee on Justice and Equality and come back to this House for Report Stage and Final Stage before it heads off to Seanad Éireann.

The delay in the transposition of the directive is not a meaningless transgression. In July 2017, I understand that the European Commission began infringement proceedings against Ireland for its failure to implement the fourth EU money laundering directive. I understand that the explanation, given in November 2017 by the Minister for Finance, was that because of amendments that had been made to the directive in 2016, there were delays on the part of the State in transposing the directive. In March 2018, the European Commission said it had sent a reasoned opinion to Ireland, which is the second stage in EU infringement proceedings, following the aforementioned commencement of infringement proceedings by the European Commission against Ireland in July 2017. It is not good practice nor good governance when directives are not transposed in time. The country gets exposed to infringement proceedings and it is damaging to our international reputation, particularly in an area such as money laundering where, in general, we have a good reputation.

The Minister said that only part of the EU directive is being transposed by this legislation and that a remaining part will have to be transposed by other legislation. I understand that the Department of Finance is working with officials in the Minister's Department on that Bill. Separate legislation is being drawn up to transpose other provisions of the directive that relate to beneficial ownership of trusts and bodies corporate. It is important that we transpose those other provisions as quickly as possible as we do not want ourselves to be subjected to the third level of EU infringement proceedings, which would involve the country being brought before the European Court of Justice.

The fourth EU directive is one of the directives on money laundering that has been issued by the European Union since 1991. The first money laundering directive was the Council directive on the prevention of the use of the financial system for the purposes of money laundering. That defined money laundering in terms of drugs offences and imposed obligations solely on the financial sector. There was an update to that with a directive in 1997 which extended the scope of the 1991 directive, both in terms of crimes covered and the range of professions and activities covered. The third EU money laundering directive arose as a result of the recommendations of the Financial Action Task Force of June 2003. Those recommendations covered terrorist financing and provided more detailed requirements in respect of customs identification and verification. That resulted in a further directive in 2005 arising from the recommendations of the Financial Action Task Force.

Money laundering is a complicated matter and to deter it, it is important that it is recognised as being an international problem. It cannot be dealt with just within the European Union and, in dealing with it, we have to take into account the international context. Money laundering and terrorist financing are international problems and the effort to combat them should be global. Where credit institutions and financial institutions in Ireland have branches and subsidiaries located in third countries, in which the requirements are lower than in the European Union, it is important that obligations are placed upon them. That is what the directive requires and I am pleased to say that it is what the legislation before the House today provides.

I will refer the Minister to two aspects of the legislation which are worth considering on Second Stage. The first is section 15, which deals with the examination of the background and purpose of certain transactions. It deals expressly with the issue of white-collar crime and imposes obligations on a designated person to ensure he or she keeps a vigilant eye out for suspicious activity. The definition of "designated person" in the 2010 Act has been extended in this legislation. I welcome that as doing so is an example of forward thinking. Under the new section 36A of the 2010 Act, there will be an obligation on a designated person to look out for unusual patterns of transactions that have no apparent economic or lawful purpose. We need to ensure that the provision is sufficiently broad to capture as much unusual economic activity as possible. If a designated person is prone to facilitating money laundering, very little can be done to deter it because of that person's criminal mind. However, where a designated person does not have a criminal mind, it is important that the legislation imposes upon that person as wide an obligation as possible, in order that he or she is required to look with suspicion upon transactions which appear not to have economic or lawful purpose. It can sometimes be difficult to understand what a specific economic purpose is. The objective would be to ensure that any transaction that has taken place has been done for some obvious commercial activity, involving a legitimate payment arising from it.

Another sector that merits close scrutiny is section 26, which deals with internal policies, controls and procedures. It seeks to set out further obligations on designated persons to ensure they have procedures and policies in place to make it easier for them to identify any money laundering or terrorist financing that should be brought to the attention of the authorities. At present, many businesses are going through the process of preparing for the coming into force of the GDPR and, similarly, when this legislation comes into force there will be further requirements on designated persons in Ireland to ensure they have fully adequate policies, controls and procedures in place to identify, detect and report any examples of money laundering and terrorist financing.

The legislation replicates the requirements in the directive to identify factors that suggest potentially high levels of risk. The Bill also requires the identification of factors in low levels of risk but the former is more instructive, as high-risk cases are those which need to be watched vigilantly by designated persons. These are listed in the proposed Schedule 4 to the 2010 Act.

Business persons or professional advisers in Ireland must keep mindful of a number of factors for the purpose of ensuring there are no money laundering or terrorist financing processes in operation. One of the geographical risk factors is that the countries where the transaction is coming from or going to would have effective anti-money laundering systems in place. If one identifies countries where there are not effective anti-money laundering systems, that should trigger in one's mind a concern and a high risk factor.

Another factor to be taken into account concerns countries identified by credible sources as having significant levels of corruption or other criminal activity. I have said previously that Ireland is not a country with high levels of corruption but there are other countries where there are very high levels of corruption. Those high levels of corruption have been identified. It is important we do not allow our State, country or financial institutions to be used by individuals from other corrupt countries for the purpose of trying to hide money or for the purpose of criminal activity. It is not always the case that it is for the purpose of terrorist financing. I would have thought that most of this legislation, as it will apply in Ireland, will be in respect of trying to identify money laundering arising from criminal activity.

Fianna Fáil welcomes the eventual introduction of the legislation into this House. It is very important that we transpose it into Irish law as soon as possible. Fianna Fáil will be supporting this legislation on Second Stage. We believe it should be brought in as promptly as possible. We will seek to encourage the Minister to ensure that the remaining parts of the EU money laundering directive, which have not been transposed as of yet or which are not covered in this legislation, are brought forward promptly. We do not want to find Ireland in a position where we are subject to infringement proceedings by the European Union, particularly when it comes to an area of such sensitive reputational value as legislation to deal with money laundering and identifying terrorist financing.

I thank the staff in the Oireachtas Library and Research Service for their help in providing an understanding of the workings of the Bill.

Sinn Féin will be supporting this Bill. It gives effect to the fourth money laundering directive and is a welcome step in terms of transparency, regulation and ensuring financial institutions, as well as states, are measuring up to the mark in terms of money laundering and terrorist financing.

I note, however, that we are somewhat late in implementing this measure; it is a 2015 directive. We are late to the extent that the European Commission has begun infringement proceedings against Ireland for its failure to implement it on time. I understand the infringement proceedings began in July 2017, after Ireland did not transpose the legislation in time, which should have come into force on June 2017. Those proceedings, taken against 17 countries in total, could ultimately result in Ireland facing a fine from the European Union. Persistent non-compliance could end up with Ireland being referred to the European Court of Justice. I ask the Minister what is the current position in this regard. Moreover, by when must Ireland have this directive transposed and this Bill passed to avoid these fines?

As for the substance of the Bill, the directive and the Bill provide for due diligence of customers and put the onus for risk assessment on financial institutions, which will be obliged to carry out business-wide and individual assessments, something which we in Sinn Féin believe can only be a positive step.

Another key provision is expanding the remit of the financial intelligence unit, a part of An Garda Síochána, which receives information from designated persons about suspicious transactions. This is also a step in the right direction, but as we have seen in the past, much of this will come down to the resources that are made available to An Garda Síochána, as well as what I imagine will be significant upgrades in its IT systems. I note these systems very much have been brought into the spotlight in recent months with some worrying and, at times, horrifying outcomes.

The Bill also expands the definition of a "politically exposed person" under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 to include persons holding certain political, judicial or other offices in Ireland, as well as abroad, as currently defined. This measure is again one to be welcome in the context of geopolitics, and how money moves around the world.

The Bill also ensures full implementation of Article 7 of the OECD convention on combatting bribery of foreign public officials by making it an offence to launder the proceeds of bribery outside Ireland involving a foreign public official even if the bribery was not an offence in the place it was carried out. This is complemented by other laws such as the Criminal Justice (Corruption Offences) Bill.

Whether in public life or in business or commerce, corruption has been part of the history of this State. There was quite an interesting article by Ryan O’Rourke in the Irish Independent last September, which found Ireland was ranked in the top ten countries for financial transactions linked to money laundering or terrorist financing in the European Union. A study conducted by Europol shone a spotlight on the anti-money laundering apparatuses within member states and the extent of suspicious transaction reporting in the EU. It highlighted trends and developments and gave recommendations on how the anti-money laundering framework can be improved. To rank in the top ten for me spoke volumes, and the long way we have to travel to proactively address money laundering and potential terrorist financing here.

The number of financial transactions investigated by the Garda nearly doubled between 2006 and 2014, which speaks to quite a significant workload. One could speculate as to why this may have been the case, whether it be perceived ambiguous tax laws, the now infamous loophole created by section 110 of the Taxes Consolidation Act, or other mechanisms that at least in my mind have been subject to the so-called "light touch regulation" approach. Although I would point to these measures and others as providing a possible incentive to locate here, I acknowledge that an increase in detection may be due also to increased focus by the Garda but we badly need to ensure that the Garda and the Office of the Director of Corporate Enforcement, ODCE, are properly resourced to tackle these issues.

Ireland is also the third highest for reports relating to the suspected financing of terrorism, according to the EU police agency. In 2014, the EU financial intelligence units received almost 1 million reports from across the Continent. Despite this, an average of just 10% of suspicious transaction reports were further investigated by authorities, a figure we could all agree we would not like to see replicated here when it comes to pursuing both national and international cases on the part of An Garda Síochána.

Within the report, it was estimated that only 1% of the proceeds of crime are seized by the Garda, and this is a figure which appears to be replicated right across Europe. Between 2006 and 2014, Ireland recorded 120,971 suspicious transactions. These numbers increased from 10,403 in 2006 to 18,302 in 2014, the ninth highest out of 28 states. In Ireland, there were a total of 586, or 4%, of the suspicious transactions reports in 2013, and 618, or 3%, in 2014 related to terrorist financing, with the European average being a fraction of that at 0.6%.

I also wish to query how this Bill covers the area of gambling and gaming. There is a widely held belief that criminal organisations regularly use betting as a way of money laundering. It is not difficult to imagine how this might work. For example, someone placing a combination of bets with cash that is compromised or the proceeds of crime, that the combination can only ever result in a relatively small loss, at least in percentage terms, and that at the other end the person placing the bets gets back substantial amounts of clean cash. Anecdotally, this is an issue, and it is an area over which we need to have tight regulation and oversight.

My understanding is that, under the EU directive, the Irish Government has some latitude as to whether a sector is considered to carry substantial risks domestically. I wish to ask how the Government has designated or looked upon this sector and whether it is placing obligations on bookmakers and other gaming and gambling organisations, to ensure that there are oversights and checks to prevent laundering. This is an important issue that needs to be tackled.

I also wish to touch on the related area of shadow banking, as there is much we do not know about the moneys that flow in and out of some of the darker, murkier areas of financial services. It is not hard to imagine the moneys that flow in and out of these institutions could well include such proceeds and laundered moneys. The finance committee and the Dáil will soon deal with the markets in financial instruments directive, MiFID, legislation which relates to all of this.

In November a Russian bank defaulted on €500 million of loans made through a Dublin office. The International Monetary Fund, IMF, and the Financial Stability Board have warned about our exposure to such defaults and shadow banking. The Irish Times recently reported:

Lawyers, accountants and bankers generated almost €284 million of fees from hundreds of special purpose vehicles last year. The growing use of such entities by Russian groups has come into sharp focus as investors track risks relating to US sanctions.

Are we creating trouble for ourselves by marketing Dublin as a hub for shadow banking? Are we opening ourselves to risks not only reputationally but economically?

Is the Minister satisfied that the Bill adequately deals with this area, and that Government is ensuring that our financial services and institutions have safeguards to ensure we are not so exposed?

I note that there is an obligation under Article 31 of the fourth anti-money laundering directive which states that states shall apply a full public register of beneficial ownership of trusts as per the directive. However, there is a discretion available to member states.

I understand that the Government has run a public consultation on member state discretions, which discussed the matter of a fully public register of beneficial owners. The consultation had 19 submissions, mostly, I assume from organisations and business in the area and other interested parties. It resulted in a mixture of views, with some submission favouring full public access to the register of beneficial ownership of corporate and other legal entities and others that do not support full public access to the register of beneficial ownership of corporate and other legal entities. Another two submissions were unclear as to their position. I therefore have a concern that the Government is not fully implementing the fourth EU anti-money laundering directive regarding the beneficial ownership of trusts and that it is making use of an exemption that means it does not have to apply a full public register of beneficial owners as per the directive. Is that the case, and if so, what is the rationale? For what reason would we not have such a full public register? It is entirely possible to create an appropriate protection regime to allow for certain restrictions to the access to information where such access would expose the beneficial owner to potential risk of intimidation and other harms as outlined in Article 30(9), while still implementing the directive fully. I urge the Minister to implement this and to ensure full transparency in the spirit of the directive.

It is high time we moved to address such deficiencies and pitfalls within Irish legislation as the EU directive outlines. This is a significant task, and there are parameters and limitations for the State in tackling money laundering and terrorist financing, as well as those working within them. However, it is a vitally important piece of work to ensure a properly functioning democracy. Sinn Féin will be supporting this Bill's passage to Committee Stage.

I welcome that this Bill is being brought forward, however belatedly. I would like to know the reasons for the delay. Why did we have to wait until action was taken by the EU to bring this legislation before the House? Much other legislation has obviously been prioritised, including legislation which in my view is not as important as this. I include in this the Judicial Appointments Commission Bill, the Road Traffic (Amendment) Bill and many other items of legislation. Surely, given the serious crash in our economy, the manner in which it happened and the subsequent loss of faith in systems of governance in financial and political institutions, this kind of Bill should take priority. We are seeing a loss of faith and a lack of accountability in the HSE at present, and in other areas of public life.

This Bill's Title refers to money laundering and terrorist financing and I note terrorism has been brought into a new realm in recent weeks by the Minister's colleague, the Minister for Transport, Tourism and Sport, Deputy Ross, when he decided to label some of the members of the Rural Independent Group as "road traffic terrorists". It was an appalling vista-----

The Deputy will be covered by this Bill.

That is not very funny. I hope to be covered by most Bills, as I am entitled to be in a democracy. I am entitled to act within the legislation and obey it, as I and my colleagues do. It does not behove the Minister for Transport, Tourism and Sport to describe us as terrorists. We see the effects and impacts of terrorism all over the world, especially at present. Financial operations and money laundering for terrorists is a big part of it. No one can operate without money and this is especially true in this murky business of money laundering and terrorism financing. Without money these people cannot buy the equipment required for their activities, including guns and bombs. We must cut it off and stop the flow of money to these people.

The Bill was first published here on 25 April 2018 and proposes to give effect to provisions of the EU's fourth money laundering directive, Directive (EU) 2015/849, which is required to be transposed by 26 June 2017. We are almost in the middle of May and the Minister has just introduced it to the Dáil. Why was there a delay? Does the Minister not get asked questions in this regard at the Council of Ministers? The Government is well able to introduce statutory instruments for many issues and to rush legislation through. We even came back here on special dates before and after Christmas to ensure we had an abortion referendum. It was the most important thing in the world; the sky was going to fall if the 26 May deadline was not met. The Citizens' Assembly and an Oireachtas committee were set up, and this deadline was put in place. The legislation was prepared even before the Oireachtas committee reported, as we now know. Matters such as this, however, can be left until the last possible minute. This has to be passed through these Houses by 26 June, which is little over a month away. The Government is not focused. The Taoiseach and his Ministers are on Grafton Street looking for photo opportunities or are out knocking on doors. The Government is not focused by a long shot on what it should be focused on. It might be well focused on 26 May, when it gets the result of the referendum, le cúnamh Dé.

The EU Commission has commenced enforcement proceedings against Ireland and 16 other member states for failure to transpose the fourth directive. The Bill forms part of a group of measures to combat white-collar crime that was announced by the Government in November 2017. There are commitments in the programme for Government. We are always talking about white-collar crime in our own country and it beggars belief that we cannot show leadership on this issue. We are enacting this because we have been asked; we did not have the instinct to do it ourselves in the first place. Some 16 other member states have also failed in this regard. One must ask what is going on in this regard? During the debate on the future of the EU in the Chamber yesterday evening, a survey was quoted which showed that only 47% of the 500 million citizens had confidence in the EU institutions, that they were fit for purpose and were relevant to the lives of the people and that they were listening to citizens and ag éisteacht le cluasa ar oscailt. The EU institutions are not listening and we saw that after Great Britain, a sovereign country, decided to leave. A vote was held and the result was that it decided to leave. The heads of the EU threatened Great Britain, saying that it was out of kilter, was ruining the team spirit and was not acting like the good boys of Europe. The lectures went on and on and did not achieve anything. It only made the British people and the British Government more determined to leave. Who would blame them? The British are a proud people and are not going to take lectures from the heads of the EU.

There are a number of countries in the EU that are a kind of cabal. They are elected individually but they act as a cabal and dictate what happens in Europe. We have permanent structured co-operation, PESCO, and who knows what else, that we have to suck up or else lie down. The Minister of State at the Department of Defence, Deputy Kehoe, mentioned PESCO and the Lisbon treaty this morning when I asked a question on defence. We had to vote for the Lisbon treaty twice, in fact. That was the start of a slippery slope with bully-boy tactics and a refusal to accept the will of the people. I believe that people want fairness. They want to abide by legislation that is representative and which has goodwill behind it. Police forces will not be able to enforce legislation unless that legislation has the goodwill of the people behind it.

I am talking about the people of Ireland here. I am talking about the Minister showing leadership, and passing this legislation, introducing it, debating it and taking amendments in a timely fashion. I am supporting it. The Government should not be dragging its feet, and should not have to be dragged before bodies that want to sanction us for not enacting this legislation.

European directives can be used to prosecute farmers for breaking slurry deadlines and so many other things. European directives and their statutory instruments are unbelievable. They are piled on and when it comes to the most serious basic trust in our institutions, reflected in an issue like stopping money laundering for terrorist activities, it should be a no-brainer. We should be clamouring for Europe to enact this, and to have Interpol and the European police forces wholly on top of this game to put a stop to it. White-collar crime is rampant in this country. We know that. I suppose we cannot tell others what to do when our own house is not in order. We need to deal with it swiftly and effectively, and show cause to the people, the electorate that we are here to serve. We are Teachtaí Dáil and public servants.

The fourth directive creates an anti-money laundering, AML, and counter-terrorist financing, CTF, regime that is premised on the identification, assessment and mitigation of risk by member states and obliged entities, that is, persons such as banks, dealers in high-value goods, financial professionals or estate agents. They are a nice group - a pretty wide group - and they control everything. I raised something with the Minister recently, and he accused me of raising something that was not factual. There is a woman who is now on her seventh day without food, who was thrown into jail last Friday by the courts of this country at the behest of banks. She is refusing food. She has two 14 year old daughters and is a widow. That is what we are doing. They have been lined up before the courts. That is the law for little people. The power of our institutions is thrown at her. She is in prison, and I heard nothing from the Minister except that I was making allegations. It is a fact. She is incarcerated improperly, because the governor has no proper documentation to keep her incarcerated. I appeal to the Minister again to have that checked out and assessed. Some people can run rings around us, such as the terrorists and the big bankers, but this poor woman has no defence.

I am told that she is entitled under European law to have a second judge, independent of the first one who found her in contempt. There must be a separate individual justice in order to imprison her. Deputy O'Callaghan might be able to help me out on this. That did not happen. Is that right? That is the way we are treating our own citizens. I am not talking about rights and wrongs. The premises was a family home, and may have been the site of other business as well. The family home should be sacrosanct, and she cannot be wrongly incarcerated for contempt of court because she would not give up her home. That is what happened. European law has dictated it. A Supreme Court case was held some months ago and we are waiting for a decision. This happened while we await that decision. European law clearly states, and it has been tested, that a second judge has to impose the sentencing if one judge finds a person guilty of contempt. The sentence has to be assessed by a different judge. That is European law. We ignore European law when it suits us but when ordinary citizens are involved in any of a wide range of activities, European directives are very punitive and heavy-handed, and must be implemented. Most times, our own officials will add two or three more statutory instruments onto them.

I have mentioned the categories of people designated by the Bill. They include, as I said, bankers, dealers in high-value goods, financial professionals and estate agents. There is a lot of room for supervision there. There should be a public record of all these transactions. We have to keep our public records. I have to keep my public records. All the Members here have to comply with the Standards in Public Office Commission, SIPO, and rightly so. I raised this in the Dáil as well. Amnesty Ireland has received money from abroad, and was found in breach of SIPO regulations and guidelines. I have raised it twice with the Taoiseach, but it does no seem to bother him that this €130,000 should be given back. He is happy to have his Ministers campaign with the head of Amnesty Ireland on this abortion referendum, despite the fact that they are knowingly in breach of State laws concerning financial transactions and reporting. What kind of banana republic are we in? The Taoiseach told me that was okay, that there is no problem with it. The Minister for Health, Deputy Simon Harris, can go for photo-shoots with a law-breaker. We are debating this legislation here, and meanwhile our own Ministers can take to the streets in a desperate effort to get a "Yes" vote with people who are in clear breach of financial regulations.

If I tell the Deputy to stick to the principle of the Bill, he will tell me that he is in order all the time. He seems to be the only one who is always in order while everybody else is out of step. I remind him that the purpose of this legislation is to transpose a large part of the fourth EU money laundering directive, and I ask him to confine himself to that.

I appreciate the Leas-Cheann Comhairle's guidance.

Deputy McGrath can appreciate it, but I think he should accept it as well.

I am not saying I am always in order. I would never say that. I can be out of order as well as anyone else. I am only an ordinary Teachta Dála here. I am just wondering in my own brain what the difference is between money laundering in Europe and money laundering when an entity gets money from George Soros or somebody else and does not give it back. It is illegal. What is the difference? Surely we can conflate the two, or are we all to be silenced but not by the Leas-Cheann Comhairle, I note? Are we to be blind to this? The Leas-Cheann Comhairle has to report to SIPO and I have to report to SIPO, and rightly so. Yet some people are above the law. They blatantly say that they will not give the money back. Government Ministers are accompanying them while they canvas. That is my point. People watching are confused. We are talking about implementing legislation here, but we have dirt on our own shoes, and we will not clean it. We sweep it under the carpet and leave it there.

The member states are obliged to keep public records and have them available. When the legislation, which I totally agree with, has passed at the request of the European Parliament, and under threat from it, how long will it take to implement? When will we have an evaluation of the impact of the legislation and whether it is working? This is another worry I have, about many pieces of legislation. I am concerned about how long it takes to transpose them into law and have them enacted. There must then be an impact assessment to see how they are bedding in. Are they having the desired effect? Are these vagabonds, rogues and terrorists being taken off the roads? Are their money supplies being cut off? They may be white collar, blue collar or any collar, or many with no collars.

The risk-based approach is intended to avoid a one-size-fits-all approach, which often fails to address or resolve challenges posed by changes in technology, economic activity or patterns of crime. Technology is the one we really have to grapple with, and I certainly have to grapple with it. It is changing literally by the hour. With Google and Facebook we see how the tap can be turned off regarding interference in a referendum in this country. That is what has happened, but people do not all depend on technology, thank God. They know when something wrong is happening. There is a huge issue around economic activity and the patterns of crime. I often wonder if the fraud squad and other Interpol agencies are up to speed at all. I am not criticising them, I am just saying that they need to be ever-evolving, ever-changing and always trying to get ahead of the game, because these terrorists and criminals have all day and all night to plan, plot and design Ponzi schemes. The movement of money by electronic transfer is very hard to supervise. The Bill provides for amendments to the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, which is the principal legislation dealing with the subject. We have had some debates on this in recent times. Measures required under the fourth directive are provided for in the Bill. Deputy O'Callaghan and others have said that they are supporting it. I am supporting it. However, we want to see robust legislation and an impact assessment of the legislation very soon after its enactment.

We should not have to read articles like the one in The Irish Times reporting that the European Commission has begun infringement proceedings against Ireland for failing to implement, on time, a directive which aims to clamp down on money laundering activities and terrorist financing. We must get our priorities right, put our money where our mouths are and insist that legislation be passed in time. I acknowledge that the Minister is a busy man and that he has many things to do in his Department. However, legislation of this sort should be a top priority. It should be brought before the House as swiftly as possible and more time should allocated for debate.

The timeline relating to the Bill before the House is now very tight. I am a member of the Business Committee, which sat this morning to determine the business for the next number of weeks. We struggle constantly to allocate time for legislation to be debated. When we have five or six weeks to pass all Stages of a Bill, due diligence may not be possible. There may not be time to research and propose amendments. There is a need to support Members in that regard. We must act on these directives when we get them. When the Minister says at the Council that we are going to do something, the process should start the next day to give us enough time to examine the proposal properly, debate it fully, tease out amendments on Committee Stage and pass it. The clock is against us. I do not know about the Minister but many of his colleagues are busy and have other things on their minds. The eye is off the ball, clearly. We see what is going on in the HSE and the lack of accountability in that context. It is time that we started to represent those who elected us to do the job we have been asked to do and implement legislation when asked by Europe rather than to have it threaten us with infringement penalties. We will be cleaned out as a result of all the infringement penalties threatened in respect of a plethora of legislative proposals. Anything to do with controlling and turning off the finance and lifeblood of terrorist organisations should be a top priority.

I will talk about the process of money laundering and terrorist financing and the activities involved, which are important for people to know about. It is also important to know about the lives that have been destroyed, about the businesses affected and those who are used to do this. I will also talk about the money created and the money lost to the Exchequer. It is very important for people to realise what is actually going on.

Money laundering is the process by which criminals disguise the illicit origins of their funds. It allows them to conceal the evidence of their crimes and to use the proceeds in legitimate financial systems and markets. The global extent of money laundering is, by its nature, difficult to estimate. The UN Office on Drugs and Crime suggests that dirty money constituting between 2% and 5% of global GDP, which represents sums ranging from $800 billion to $2 trillion, is laundered throughout the world every year. A 2015 report sponsored by the EU estimates that organised criminal activity in the EU generates revenues of at least €110 billion annually. The crimes which generate the funds being laundered are known as "predicate offences" and vary within countries depending on the nature of the national economy, legal system, social conditions and geography. Predominant offences include drug trafficking, human trafficking and exploitation, theft, illegal firearms smuggling, gambling, counterfeiting, online crime and tax fraud and evasion.

The means used to launder the proceeds of crime are equally varied. Common techniques include investment in land and buildings, the purchase of high-value goods such as jewellery and art, which are easy to transport and sell, and the use of cash-centred front businesses such as betting shops, retail outlets and public houses. This is what I mean when I refer to ruined lives. There are decent people in betting shops, retail outlets and pubs. People do not realise the abuse that takes place. New technologies have allowed criminals to exploit prepaid credit cards, online betting, cash transfer system and untraceable cryptocurrencies such as bitcoin.

Money laundering is essential for organised crime. The vast sums generated by criminal activity can be much too large to recycle entirely in the underworld. Without access to legitimate financial systems and markets, those funds can simply lose their value. Significantly, money laundering not only allows criminals to fund further criminal activities, it also enables them to expand and diversify, spreading corruption and instability through commercial, financial and political institutions. Money laundering poses serious risks to Irish people and businesses and to the State. The Government's national risk assessment in respect of money laundering and terrorist financing cites a 2015 study on the financial aspects of organised crime in Europe which estimated that the level of money laundering in the State in 2010 amounted to €1.7 billion. The national risk assessment identifies money laundering risks arising from numerous types of crime, including drug offences, financial crime, tobacco smuggling, tax evasion, prostitution, fuel laundering, cybercrime and corruption.

Terrorist financing is often similar to money laundering. Terrorist groups frequently raise money using common criminal methods such as robbery, fraud and extortion and they face the same difficulties as ordinary criminals in making use of the proceeds. In many cases, however, terrorist financing relies on ostensibly legitimate sources of income such as personal donations or contributions to what are represented to the public as charitable bodies. Such financing operations can be the reverse of money laundering in the sense that they involve moving apparently legitimate funds into illegitimate channels without detection. Terrorists use many of the same techniques as money launderers, including front businesses, cash smuggling, the purchase or theft and resale of high-value retail goods and multiple small cash transactions through supporters' accounts or prepaid credit cards.

I welcome the Bill and the changes it will make, including the obligation placed on certain financial institutions to register with the Central Bank so that it has a full list for supervisory purposes. I also welcome the requirement to examine the background and purpose of complex or unusually large transactions. An illegal cigarette factory was recently discovered in my home town, Dundalk. Officers from Revenue and the Garda did a fantastic job and arrested 11 people who were manufacturing 250,000 cigarettes per hour. It was estimated that approximately €12 million was lost to the Exchequer. Whatever it takes to combat money laundering and terrorist activity must be done. I support the Bill.

I thank all the Deputies who contributed for their remarks and the support they have offered for the Bill. As stated earlier, this is important legislation that will enable Ireland to meet its international obligations. It is also part of our domestic commitment to tackle white-collar crime, a goal shared by all Members of the House. We will have an opportunity to deal in more detail with some of the issues raised on Committee Stage.

Deputy O'Callaghan referred to the late transposition of the directive, which was also raised as an issue by Deputy Quinlivan. This is a somewhat complex Bill, the subject matter of which spans the remits of a number of Departments. There was a need to engage in a significant degree of consultation and collaboration across Departments and that complexity also led to a lengthy drafting process. However, I assure Members that we take our obligations as a member state of the European Union very seriously.

This means spending some time ensuring that the legislation being transposed is not only effective but also enforceable. We have been in touch with the European Commission and have advised it of the publication of the Bill. We hope it can be enacted as quickly as possible. I acknowledge the positive disposition of the Members of the House in this regard.

I welcome, in particular, Deputy O'Callaghan's comments on sections 15 and 26. I am happy to give this matter further consideration and we can return to it on Committee Stage.

A number of issues were raised by Deputy Quinlivan, who is no longer present. He mentioned media reports concerning the special purpose vehicle and shadow banking. We will have an opportunity to discuss that at a later stage, but the legislation for beneficial ownership registers being developed by the Department of Finance will apply to all special purpose vehicles, that is, a body corporate. While the lists will initially be viewable by An Garda Síochána and other appropriate authorities, the fifth money laundering directive provides for wider access to parts of the beneficial ownership information. We will be in full compliance with both the fourth and the fifth money laundering directives.

Deputy Mattie McGrath spoke about priorities. He made a reasonable point about new technologies. I accept his comment that criminals will always try to exploit new technologies as they arise. There have been reports of virtual currencies being used for money laundering. In this regard, the fifth EU money laundering directive, which will shortly be adopted, will mean that the law is to be extended to providers of virtual currency exchange services and custodial wallet providers. I will be bringing forward legislation to transpose that new directive. As Deputy Mattie McGrath is a member of the Business Committee, I am sure he will ensure our legislation can have priority as soon as it is ready.

This is a detailed and technical legislative measure. That reflects the complexity of the measures which we are recommended internationally to take in response to the ever more sophisticated nature of the criminality involved. This Bill is the result of a long process of consultation and drafting involving a number of Departments. I wish to give notice of some amendments I intend to bring forward on Committee Stage. A small further change is required for compliance with the fourth money laundering directive, which is to require cheque cashing offices to register with the Central Bank. I am giving consideration to another amendment in respect of politically exposed persons which is to allow guidance to be issued on the meaning of this term in the Irish context.

I appreciate the contributions from the Deputies and I look forward to continuing the debate on the Bill in the coming weeks.

Question put and agreed to.