The purpose of this meeting is to consider a motion regarding a proposal for a directive of the European Parliament and of the Council on the freezing and confiscation of proceeds of crime in the European Union. A briefing has been circulated to members. I welcome the Minister of State, Deputy John Perry, and his officials to the meeting, and I invite the Minister of State, on what is his first appearance before the committee, to brief the members on the motion.
Proposed EU Directive: Discussion
I am pleased to be here and I congratulate the Chairman on his tenure. On my behalf and on behalf of my colleague, the Minister for Justice and Equality, Deputy Alan Shatter, I thank the members of the committee for making time available to discuss the motion. The Minister regrets that he cannot be present.
The motion concerns an opt-in by Ireland to the proposal for a directive of the European Parliament and of the Council on the freezing and confiscation of proceeds of crime in the European Union. The Commission proposal is one of a package of measures proposed at European level to strengthen further the European response to targeting the proceeds of crime. As outlined in the accompanying explanatory memorandum, the profits derived from organised crime activity in Europe are estimated to amount to billions of euro, and these go straight into the pockets of criminal gangs. Despite the best efforts by European law enforcement agencies, much of the illegal profit remains in the hands of criminals. Of course, this makes criminal groups stronger. It deprives citizens of the benefit of moneys due to the member states that could be invested in social programmes and it represents a risk to the member states' economies that are exposed to criminal infiltration. Strengthening the European response to dealing with the proceeds of crime will facilitate the disruption of criminal gangs in their activities, especially those of a cross-border nature, and it will deter criminality by showing that the member states will not be thwarted in their efforts to deprive criminal gangs of their ill-gotten gains. Recovering proceeds of crime in favour of the member states will have a significant impact on these gangs and to the benefit of the taxpayer and society as a whole.
The Union, its institutions and the member states have long recognised that financial gain is at the heart of organised crime activities and have pursued a policy of strengthening the European response for several years. For more than a decade, the Union has worked to establish a common European legal framework, together with the necessary rules allowing for co-operation in the area of asset forfeiture and the mutual recognition of orders for the freezing or confiscation of assets across Europe. The member states and their asset recovery offices have made significant investments in developing supporting structures and in deepening co-operation to ensure there is nowhere in the Union where those who thrive on the proceeds of crime can hide their illegal gains.
In 2009 the Stockholm programme called on the member states and the Commission to make the confiscation of criminal assets more efficient and to strengthen further the co-operation between asset recovery offices. In June 2010 the Council of Justice and Home Affairs adopted conclusions on confiscation and asset recovery which, inter alia, call on the Commission to consider strengthening the legal framework to achieve more effective regimes for third party confiscation and extended confiscation. The conclusions stress the importance of all phases of the confiscation and asset recovery process and recommend measures to preserve the value of assets during that process. The Commission proposal under discussion today is the first legislative proposal to emerge in this regard. Publication of the proposal re-emphasises the strategic importance of confiscation measures in fighting organised crime and is a first step in opening further discussions at European level on where the European Union needs to go to provide for a more effective European response.
The proposal seeks to strengthen the existing European legislative framework for the freezing and confiscation of proceeds of crime through further common harmonised rules. The scope of the draft directive is limited to the offences listed in Article 83 of the Treaty on the Functioning of the European Union. These are also known as "Eurocrimes". Article 83 provides for the establishment of minimum rules concerning the definition of criminal offences and sanctions in areas of particularly serious crime with a cross-border dimension resulting from the nature or impact of such offences, or from a special need to combat such offences on a common basis. These areas of crime include illicit drug trafficking, money laundering, organised crime and several other serious offences. The proposal seeks to harmonise further the existing EU framework with regard to the freezing and confiscation of proceeds arising from such serious crime. The Commission has indicated, therefore, that it is proposed that the existing Community measures will remain in place to maintain a degree of harmonisation with respect to those criminal activities which fall outside the scope of this proposal.
The proposal seeks to provide for greater harmonisation through enhanced common rules and there are several key provisions in this regard. There is provision for extended powers of confiscation, providing for the confiscation of property belonging to a person convicted of a criminal offence where, based on specific facts, a court finds it substantially more probable that the property in question has been derived by the convicted person from similar criminal activities. There is also provision for non-conviction-based confiscation, providing for the confiscation of proceeds of crime and instrumentalities without a criminal conviction in circumstances where a criminal conviction cannot be obtained because the suspect has died, is permanently ill or when his or her flight or illness prevents effective prosecution within a reasonable time. Provisions for third party confiscation are also being made, as are provisions requiring measures to be taken to freeze property and instrumentalities in danger of being dissipated, hidden or transferred out of the jurisdiction, subsequently to be confirmed by a court. A requirement to manage frozen assets is being introduced to ensure such assets do not lose economic value. Safeguards will be provided for people affected by the measures in the draft directive.
I wish to address the question of Ireland exercising its option or discretion under Protocol No. 21 to take part in the adoption and application of the proposal. It might be helpful for me to outline a preliminary view of the proposal arising from an examination of the text to date. Ireland's regime for the confiscation of the proceeds of crime is generally considered to be advanced. Ireland is one of the few member states that has adopted both conviction-based and non-conviction-based models for the confiscation of the proceeds of crime. Therefore, the proposal does not give rise to fundamental issues of concern about its potential implications. Having said that, it is anticipated that the measure will give rise to the potential for significant legislative change to our current conviction-based confiscation regime, as set out in the Criminal Justice Act 1994.
In further developing the proposal, particularly with regard to non-conviction-based concepts, negotiations will need to be sensitive to the jurisprudence of the European Court on Human Rights and national constitutional courts with regard to confiscation measures, as well as the legal base. It is recognised at European level that negotiations on the instrument will be complex and difficult, reflecting the existence of many varied confiscation regimes across the European Union and the fundamental concerns of a number of member states about the inclusion of non-conviction-based measures applying the civil standard of proof in the instrument. In this regard, the Commission has indicated that the text on the table for negotiation is a compromise proposal that takes account of the strong concerns of a number of member states.
I am sure many of us share the view of my colleague, the Minister, Deputy Alan Shatter, that there is much to be gained from giving due consideration at European level to the inclusion of more extensive non-conviction measures in the instrument, reflecting the regime in operation in Ireland and a small number of member states. The Minister is anxious that all options be explored to create the most effective confiscation regime possible at European level. Therefore, we hope discussions on the proposal will be sufficiently flexible to facilitate the exploration of the regimes in place in member states and from which it might be possible to draw common rules. In this regard, the Minister has corresponded directly with his ministerial colleagues at EU level - a meeting of the Justice and Home Affairs Council is taking place today and tomorrow - on the non-conviction-based confiscation regime as operated in Ireland by the Criminal Assets Bureau. He has done this to try to bring about greater familiarity with such civil confiscation systems at European level and inform future work on mutual recognition measures in this area.
We must appreciate the fundamental concerns some member states have about such regimes. These regimes are not common throughout the European Union. In developing our own regime Ireland has had to comprehensively address the constitutional concerns and fundamental rights that can arise. Having said that, in circumstances where such regimes may be a step too far for a number of member states, value may be found in pursuing the inclusion of some concepts that are in line with the non-conviction-based regime and may subsequently be applied more generally across the Union. Subject to Ireland exercising its option or discretion to opt in to the proposal, it will be important from an Irish perspective that nothing in the proposal should upset or interfere with the non-conviction-based regime in operation here. That system must be preserved. In negotiations we must be mindful of the jurisprudence developed by the Supreme Court in this jurisdiction and the European Court on Human Rights in a number of cases. We must ensure the instrument is in line with that jurisprudence and the legal base provided within the treaty.
In the light of our experience of the operation of non-conviction-based confiscation, the Minister is anxious for Ireland to play a particularly active role in the negotiations on the instrument and in the development of future mutual recognition instruments in this area. He believes it is important for Ireland to opt in to the measure at an early stage to allow us to influence negotiations on the instrument. It should be noted that negotiations on the instrument at working group level commenced last week. We are, therefore, at a very early stage in the negotiating process. I hope the committee can support the exercise of Ireland's opt-in to the proposal.
I welcome the Minister of State and the full outline of the proposal he has given. I am in support of Ireland opting in to it. Although legislative changes might be necessary on foot of this measure, its substantive impact on Ireland will be very limited. The Minister of State has clearly outlined the two reasons for this. I think I am right in saying the proposal applies only to cross-border crime - the "Eurocrimes" defined in Article 83. More importantly, the current Irish legislation which dates back to the mid-1990s goes a good deal further than this proposal. Our non-conviction-based regime for the confiscation of assets which was novel when we introduced it has been the subject of a good deal of interest from other jurisdictions. At the time I voiced concerns about the Proceeds of Crime Act 1996 and the establishment of the Criminal Assets Bureau. The decision to allow for civil proceedings of this nature without the need for proof of conviction was a departure from the approach previously taken in the criminal justice system. I expect similar concerns are being expressed in many EU member states that do not have regimes of this nature. This country's system has worked extremely well and the Criminal Assets Bureau has generated a very good reputation. We have seen a good deal of jurisprudence during the years through the High Court and the Supreme Court. Safeguards have been teased out through law. Ireland will have a good deal to offer at EU level when further developments are being negotiated. We should be opting in particularly because the substantive impact on this country will be limited. I have set out my rather long-winded observations, rather than asking a direct question. Does the Minister of State envisage that Ireland will have a direct role in negotiating, assisting other member states or illustrating how a non-conviction-based regime can operate?
I thank the Senator for her comments. We can have such a role. It is important that any measure not be in breach of the principle of subsidiarity. Ireland is very advanced in this regard. The Criminal Assets Bureau has been very effective. The Minister, Deputy Alan Shatter, has stated clearly that our decision to opt in at an early stage will allow Ireland to play a critical role in the negotiations. Many businesses are affected by illicit trade and the trafficking of substances, etc. Our experience with the operation of the Criminal Assets Bureau has been a model for many countries in Europe. The Minister has circulated a letter to the Justice and Home Affairs Council setting out the background to what has been done in Ireland, emphasising the effectiveness of the Criminal Assets Bureau and outlining what it has achieved since its inception. The Senator's observations are very important. It is clear that Ireland is ahead of the game in this regard in many ways. Other countries are looking at it as offering a model of best practice.
I welcome the Minister of State. Like Senator Ivana Bacik, I support this measure. Ireland has led the way in the confiscation of criminal assets. We have a great deal of experience to offer. For example, we have learned from the mistakes that may have been made. Naturally, there will be concerns about the non-conviction part of Article 5. However, there are enough safeguards within Article 8 to offset any concern. Our experience suggests opting in at this early stage will provide a great opportunity to influence how the debate and negotiations proceed. Sinn Féin will support the opt-in protocol.
With Ireland holding the EU Presidency next year, it is important that the Minister, Deputy Alan Shatter, have a decisive hand in negotiations at this critical time. He will be conscious of the constitutional issues raised by the Deputy. The principle of subsidiarity will not be undermined in any sense. The purpose of the directive is to combat cross-border crime by enhancing co-operation in this area. It provides a means of dealing with the confiscation of the proceeds of crime in the European Union and adopts a win-win approach to the fight against crime. Cross-border crime is a major issue in all member states. The directive will strengthen the Minister's hand if Ireland opts in at this early stage of the negotiations. Our experience in this area has been positive. For example, the Criminal Assets Bureau is an effective organisation which provides great value for money.
I presume the proposal will secure cross-party support. We need to have a conversation about what happens to the proceeds of crime because the value of the assets confiscated by the State is not being utilised in the communities that have suffered at the hands of criminals, especially drug barons. While such a conversation may not be one for today, it is required in the context of the overall debate on crime.
The European Commission opted not to make specific reference to the use of the confiscated proceeds of crime because the issue is one to which the principle of subsidiarity applies. The Deputy makes a good point. Member states will decide how they apply the proceeds of crime, for example, if they will be spent in areas such as social and community enterprise. I am certain the Minister would be pleased to discuss this issue. It would breach the principle of subsidiarity if the Commission were to dictate to member states how they should spend the confiscated proceeds of crime.
It is a conversation we must have in this country.
The Deputy makes a very good point which I will bring to the Minister's attention.
While it is not a matter for discussion at this meeting, it is a very interesting point.
I welcome the Minister of State. Having not yet had an opportunity to do so, I wish him well in his portfolio.
Deputy Jonathan O'Brien referred to having a debate on the use of the proceeds of crime. The Minister of State has noted that crime generates billions of euro across the European Union. We should have debated this issue 20 years ago. The late Deputy Tony Gregory argued in the 1980s that it was essential to invest the confiscated proceeds of crime in communities. The moneys could be used to support small businesses in deprived areas, as the Minister of State pointed out. I ask him to highlight to the Minister and the Government our view that while we understand the necessity to resolve legal issues, the proceeds of crime must be reinvested in communities that have been devastated by criminals.
We hear a great deal about drugs, but criminal elements have also created a lucrative market in the sale of illegal cigarettes. The Government must face reality about tobacco - I say this is as a smoker - because taxes and duties are too high. Making smokers feel like lepers through the smoking ban in public places is driving the habit underground. Some 30% of the population smoke and in the current downturn many of them are purchasing cigarettes from illicit sources. The Government's policy of increasing duty on cigarettes is driving people, especially vulnerable poor people, into the hands of criminals selling illegal cigarettes. I ask the Minister of State to address this issue.
While the Deputy makes a very good point, the joint committee should consider the issue of illicit sales of cigarettes and similar products at another meeting. I ask the Minister of State to respond briefly.
From the establishment of the Criminal Assets Bureau as a statutory body in October 1996 until 31 December 2010, the bureau obtained interim orders to the value of more than €94 million and final restraint orders to the value of €46 million. Taxes and interest demanded stood at more than €188 million, of which more than €133 million was collected. The CAB also assessed payments of almost €5 million and saved almost €4.9 million in social welfare payments.
On the issue of ring-fencing criminal moneys for a community development fund, during the years there has been contact with the Department of Finance - responsibility for this matter recently transferred to the Department of Public Expenditure and Reform - on the issue of ring-fencing moneys returned to the Exchequer by the Criminal Assets Bureau for the purpose of funding community programmes. It has also been suggested from time to time that these moneys should be used for the purpose of funding community projects targeted at drug misuse. While acknowledging the symbolic value of this suggestion, a number of practical difficulties arise in this regard. For example, the Constitution requires that Government accounting principles provide that public moneys be spent only as voted, as approved by Dáil Éireann, unless otherwise provided by statute. A policy of ring-fencing moneys obtained by the Exchequer and the reallocation of same for specific purposes runs contrary to the normal Estimates process. This is the position, although I have no doubt the issue can be debated.
Revenue accumulated by the Criminal Assets Bureau is paid into the Central Fund, from which the Government draws expenditure for public services and instruments. Allowing for a small number of specific targeted exceptions, it is believed earmarking revenues for a specific expenditure programme would, in general, constrain the Government in the implementation of its overall expenditure policy. I am certain, however, that the Minister would be willing to engage with Deputy O'Brien and others on this issue. Funds could be reallocated to addressing drugs misuse and anti-social behaviour. This could be done by ring-fencing funding for a particular area in the voted Estimate. The Minister could certainly discuss the issue.
The Minister of State cited a number of figures, including €133 million collected in taxes and interest. Imagine the impact such a sum would have in a disadvantaged area. The Minister of State appears to be moving in the right direction.
On Article 88 of the treaty which also addresses the drugs issue, does the Government agree that countries across the European Union have been unable to get on top of the issue, despite the considerable efforts being made in the areas of health and education and policing?
As the Chairman noted, the illicit trade and trafficking in drugs are serious problems. The proposal seeks to enhance co-operation among the various police forces in Europe in dealing with this issue. This is a European problem which requires a European solution and the Government is concerned to ensure the new strategy and action plan to deal with the issue are developed at European Union level in the coming months. The illicit trade in tobacco generates significant revenue losses for the State. I concur with the Deputy that drugs are a major concern in every city and town and causing the ruination of communities. The Minister's concern is that this opt-in should give him a greater role in developing a European solution to deal with this across borders and that is the Government's objective. This is a significant problem that the CAB, the Garda and the authorities are fighting constantly.
The Minister of State said in his submission that Ireland's regime with regard to confiscating the assets of criminals is quite advanced. Do any other European Union countries have a system better than ours or systems that could provide us with ideas on how to deal with this? With regard to the human rights aspects on this issue, is the Department satisfied with Article 8, which guarantees the right to a fair trial and the right to appeal against a decision to seize property? Is it happy that article covers human rights concerns with regard to the broader issue?
With regard to the operation of CAB, the Minister must be happy with how it has operated since 1996. We are in advance of other European countries in that regard although there are operations similar to the CAB in other jurisdictions. It is about collective discussion and we are trying to make improvements at all times. We try to ensure the Constitution is not impacted in any way, but equally that the right to a fair trial always remains. It is important that we are vigilant with regard to crime and its assets. We have good powers on the books and are somewhat ahead of the European Union in how we deal with crime. At this point in time, the opt-in will allow the Minister to promote Ireland's best practices on the basis of non-conviction in other countries and this could help the overall objective of the prevention of trafficking of substances across borders.
Are we ahead in that regard?
We are ahead with regard to good practice in that area.
With regard to other countries and where we are, some countries do not have anything like the CAB and other countries probably have something similar. The Minister of State may not have that information with him, but it would be helpful for committee members if we had some information on the extent of the provisions in other EU countries and how they compare with what we have. Perhaps that could be provided at a future date.
We can do that. We are very lucky with our nearest neighbour and that both ourselves and the United Kingdom operate similar regimes. This is important. It is good that there are so many similarities between us and our biggest trading partner and that our CAB operates in a similar way to the operations in Northern Ireland and the UK.
I welcome the Minister of State to the committee. We have no choice but to opt in and due to our experience with the CAB, we could offer significant guidance on this. Deputy Jonathan O'Brien has started a conversation on which this committee could do further research, in terms of what happens the proceeds of the CAB and the recommendations this committee can make with regard to what should happen those proceeds. Perhaps we could put that issue on our work programme for later this year or next year. It would be an interesting exercise. These moneys are generated as a result of crime and should be ring-fenced for the communities affected by it.
Deputy McGrath's points with regard to cigarette smuggling were well made. I am not a smoker, but there is logic in his argument. I suggest we should look at a scenario where people are not allowed bring in more than one pack of cigarettes. The current system whereby people can import so many cigarettes at a reduced price fuels the illegal importation of cigarettes.
With regard to the Chairman's question on the situation in member states, we will get the report on best practice elsewhere in Europe to the committee. However, it is important to remember there is significant diversity among the member states in this regard. While Ireland and the United Kingdom have very similar non-conviction-based regimes which apply civil processes and are targeted at the property rather than the person, there are also a small number of member states that also have non-conviction-based regimes, such as Italy and Slovenia. The majority of member states would not have such regimes, but may, within their conviction-based regimes include certain processes which are not conviction-based. We will provide the information on that for the committee.
The Minister of State pointed out in his speech that it would be important from the Irish perspective that nothing in the proposal upsets or interferes with the non-conviction-based regime in operation here and this system is preserved. However, Article 4 states the purpose is to establish a single minimum standard for extended confiscation. If we are already far ahead of other states in our provisions in that regard, is there a concern that we may be coaxed to change our standard? Surely we want other states to come up to our standard rather than the other way around.
The instrument does not intend to stop states going further than the minimum. Article 4 refers to a more probable standard, which while less familiar is a move away from the criminal standard of "beyond reasonable doubt" and a move towards the civil standard we use for confiscation proceedings, which is based on the balance of probabilities. We also see a shift in the focus from the "convicted person" in article 6. Instead, we have a focus on the "proceeds of crime" which have been transferred to another person. We are very fortunate that we have had a system in place since 1996 and the Minister is in a very strong position on this. By coming in at the early stage of the justice and home affairs, JHA, discussion on this, Ireland's overall experience gives us a strong position.
I am sure the Minister of State will agree that Ireland has blazed a trail when it comes to this type of legislation, which was introduced here approximately 15 years ago by former Minister, Nora Owen. It is interesting that the issue of illicit trade in cigarettes has arisen. Yesterday, I submitted a parliamentary question on this issue. This illicit trade has cost us €502.4 million over a period of just two years, 2010 and 2011, in terms of lost revenue. Some 20% of that sum refers directly to people bringing cigarettes into the country legally in their suitcases. This is a massive amount, over €50 million per annum. As a former smoker, I would not go as far as Senator Conway in banning people from bringing in a carton of cigarettes, but his suggestion raises an interesting point in terms of the overall strategies of Ireland and our European partners.
I welcome the rolling out of this type of directive across the European Union. The Minister of State pointed out in his speech the importance of our opt-in to this at an early stage. This is particularly important because of the knowledge we already have that may assist other countries that are only picking up the ball now. I thank the Minister of State for coming in and putting this before us.
Tobacco and fuel smuggling and laundering by organised criminals is a major issue and some €5 million a week is lost on cigarettes alone. Law enforcement with regard to the smuggling of tobacco products and the sale of illicit or counterfeit tobacco products within the State is primarily a matter for the Revenue Commissioners. Penalties for these offences are set out in the Finance Acts and are a matter for the Minister for Finance. There is co-operation between the customs service of the Revenue Commissioners and An Garda Síochána in targeting the illicit tobacco trade. Searches are regularly undertaken by the Garda as part of the intelligence operations led by the Revenue Commissioners. The Garda Síochána also continues on a district and divisional level to target those involved in the sale and distribution of illegal products at markets and via door to door sales, something that is on the increase as we speak. Revenue strategy for tackling this illicit trade is focused both on intercepting and seizing illicit consignments at the point of importation, and also in carrying out checks at retail outlets, markets and commercial premises. The Revenue Commissioners advise that in 2011, enforcement officers seized 109 million cigarettes with a retail value of €46 million, and 11,158 kg of tobacco with a retail value of €4 million.
In addition to national actions, there is also very considerable cross-Border co-operation in place among the relevant law enforcement agencies to tackle this illegal trade. It is a big issue at the moment and is a huge cost to the State.