Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2020: Report and Final Stages

Before we commence, I remind Senators that a Senator may speak only once on Report Stage, except the proposer of an amendment who may reply to the discussion on the amendment. I point out also that the debate must terminate at 2 p.m., so Senators should bear that in mind.

Amendments Nos. 1 to 3, inclusive, are related and may be discussed together by agreement. Is that agreed? Agreed.

Government amendment No. 1:
In page 11, line 15, to delete “subsection” where it firstly occurs and substitute “subsections”.

We discussed this area in detail on previous Stages, so I will speak on it briefly. I have carefully considered the debate and the cross-party support Senator McDowell's amendment received. The approach we are proposing in the amendment is in a similar spirit. Senators will be aware that section 37(12) already provides for guidance to be issued to competent authorities in respect of the definition of "prominent public function". These amendments insert a subsection (13) to provide that guidance may be issued more generally to competent authorities in respect of this section. Such guidance will be issued only where the Minister believes it is necessary and expressly "for the purpose of facilitating the consistent, effective and risk-based application of this section." I wish to be clear on the distinction between subsections (12) and (13). While guidance under subsection (12) on prominent public functions will be issued on, or soon after, the commencement of the Act, I do not envisage guidance being issued under subsection (13) in the short or medium term. My hope is that the subsection (13) guidance will not be required at all. We expect the designated persons and competent authorities to develop an appropriate and a reasonable approach without top-down guidance.

In general, the Minister for Justice is also not the appropriate person to be issuing detailed operational instructions to financial services firms. These are matters for the Central Bank. However, I am conscious that politically exposed person, PEP, obligations apply to all designated persons, and so are relevant to all competent authorities. I would like to see a consistent and effective approach. I am conscious also that best practices in respect of the PEP regime will evolve both in Ireland and internationally.

Guidelines under this section will always be subject to consistency with the Act and must also be consistent with the directive. We do not have discretion to exclude, for example, family members and their spouses, or to disapply the need to determine the sources of funds. That is not our intention. Rather, it is to provide a flexible tool that can be used if necessary, having seen how the regime develops over a period of time.

Senator McDowell raised also the question of whether extended third party reliance under section 40 might be possible. We are of the view that this is not possible under the directive at present. Reliance on third parties is governed by Article 25 of the directive, as amended, and this specifically allows reliance in respect of Article 13(1)(a), (b) and (c). These provisions are implemented in sections 33 and 35. The provisions in section 37 instead transpose Article 18, which we do not believe falls under the Article 25 provisions. However, this may be something which can be worked through on a practical level to minimise duplication. I thank all Senators for their constructive contributions on this issue.

I welcome the Minister of State's amendments. Since we are dealing with amendments Nos. 1 to 3, inclusive, I want to thank the Minister of State for listening to the debate and the contributions of the Members of this House, and responding in this manner to the proposal which I made. I fully accept what the Minister of State said that it is not possible to effectively amend the requirements of an EU directive through guidelines or anything else. The more complex amendment I proposed on Committee Stage was designed to achieve the maximum of what could be achieved within that parameter.

Accepting what the Minister of State said about the advices received about section 40, as well as looking at the difficulties that have arisen under this particular rubric in which we are introducing guidelines on enhanced supervision of politically exposed persons' accounts, the Minister of State should put down on the departmental agenda that when this matter comes up at the next Justice and Home Affairs Council meeting some consideration should be given to dealing with the practicalities of what it has imposed. I know the British minister expressed considerable doubts as to the extent and effect of this measure as it affected ordinary MPs in Westminster. She said she hardly could go into the tearooms in Westminster without being besieged by people horrified by the extent of this enhanced surveillance of their activities. Some real effort should be made to make it practical in its effect.

We are a small country and, therefore, the administrative council of the Labour Party might not be the same as the executive of the Labour Party in England or whatever. However, when one thinks about it, the average county councillor has far more discretion to affect people's well-being and economic existence than anything we do in this House individually and certainly anything that anybody does at the national executive or national governing body level of any political party. Accepting that the Central Bank and the other enforcement agencies for this legislation have to work within the letter of the law, will the Minister of State accept the letter of the law has been cast too wide here at the European level? Will he accept that some degree of moderation is sensible in these circumstances? It is bad enough that administrative council members of the Labour Party are subject to this regime every time they open a bank account or every time they want to continue an existing account when it is realised they have been appointed to that position. It is bizarre that one could have been paying a mortgage for donkey's years, gets elected to the Labour Party's council and suddenly gets this letter from a bank or building society asking where did one get all one's money for the past 18 years. It is bonkers by any standard.

If that is the literal interpretation of this, then there is a strong case for indicating at the Justice and Home Affairs Council that it has gone a little bit too far and asking if the Council could moderate it somewhat. If it is mad to do that to a member of a particular body. What about their parents, who to their horror find out, that their child, male or female, has been given this elevated position in the Labour Party or Sinn Féin and they suddenly get these letters requiring them, exactly on the same basis, to account for their wealth over their lifetime? That is just crazy stuff.

Without pushing the matter any further, I fully accept the position the Minister of State is in. I thank him for the reasonable approach he has taken. It should not be necessary for the Minister or the Department to issue any guidelines. Common sense should prevail in all of these matters. Common sense should actually allow a two-line letter, if such is required, from the parent of a newly appointed member of the Labour Party's administrative council stating their wealth over their lifetime of work from A, B and C. Asking them to produce audited accounts of their business and all their tax returns since the year dot, along with asking them to prove what they got in their parents' will by supplying a copy of that will, is just crazy. If common sense cannot work out how this is implemented at the level of the Central Bank and other implementing bodies, we are in a sorry place.

I do not want to elaborate any further. I said everything I needed to say - perhaps at too great a length - on the last occasion. I thank the Minister of State for giving his Department and his successors the power to actually blow the whistle, say this has got to a ridiculous stage and ask if common sense could be applied.

Therefore, I support and welcome the Minister of State's amendment.

Despite the gravity and seriousness of the matter, a little levity on a Monday is no harm. I thank Senator McDowell for that.

I join in thanking the Minister of State for moving these amendments, which I fully support on behalf of Labour. It is very welcome to see common sense prevail, as Senator McDowell said. It is a good day for the Seanad as regards reforms being made here as a result of Private Members' and Opposition amendments being tabled. Clearly, however, there has been a problem with the overreach, as I said the other day, of these provisions. I should hasten to say, in the spirit of levity, that Deputy Howlin first raised the issue of a member of Labour's national executive being concerned to discover that they too were covered by the PEP definition, so it is not that Labour has any monopoly on having persons on its executive councils or on national bodies-----

I did not want to mention Sinn Féin and-----

-----who are covered. Joking aside, this is clearly a serious matter as regards political organisation, democracy and attracting people to become involved in political parties. That is why I very much welcome these amendments. I also welcome the Minister of State's positive comments on the previous Stages regarding the Magnitsky Act that Deputy Howlin and I, and others in Labour and other parties, have been proposing. It is a long-overdue reform, so I thank the Minister of State for that.

I ask the Minister of State to bring similar common sense to bear in respect of another aspect of this Bill to which my attention was, unfortunately, drawn too late for me to table amendments on it. I was contacted over the weekend by the Union of Students in Ireland, USI. The latter has legal advice on this and is concerned that because of later provisions in the Bill, namely, section 26 and related sections, every students' union which has a board of trustees will have to register every student as a beneficiary, and when any student drops out, it will have to update the register accordingly. Clearly, this has massive implications for students' unions. They are very concerned. They have had legal advice on the matter. I myself looked at section 26, which inserts a new section 106ZD into the 2010 Act. Subsection (5) of that new section provides an exemption for bodies established for the purpose of promoting amateur games or sports so, clearly, the GAA had similar concerns but at an earlier stage was provided with an exemption - not just the GAA, but any amateur sports bodies. It seems that there is a similar exemption for charitable trusts.

I know it is too late in the day to amend this if, indeed, it is a problem. It is too late in the day to amend it in the Seanad, but given that our amendments are now due to go back to the Dáil, I ask that an amendment be made in the Dáil to address this issue, if indeed it is an issue. As I said, I have not had time to look into this in more detail because it came to my attention so late. However, I am conveying, on behalf of the USI, a serious concern that this will create a major logistical and operational problem for students' unions. I know from Trinity College Dublin Students' Union that many unions have boards of trustees now. I am on the board of Trinity College Dublin Students' Union so I should declare an interest. These were set up with a view to ensuring good governance for students' unions. Many of us, me included, came into politics through student union activism. It is really important that common sense prevails and that we do not see unforeseen consequences for bodies such as students' unions as a result of this Bill, in particular section 26 and the related sections related to trusts and trustees. I ask again that this be looked at by the Minister of State and his Department. The USI, I am sure, will make contact as well, but I ask that a sensible approach be taken similar to that which was taken in response to the concern Senator McDowell, I and others had raised about the PEP provisions.

Speaking of national executives, our next speaker is a distinguished member of his national executive.

I disagree with what the other Senators have said. I welcome the fact that the Minister of State and the Department have listened to what has been said in this Chamber, taken it on board and rendered it into legislative format. That is welcome. I still think, as Senator McDowell has said, there are difficulties, and Senator Bacik has perhaps identified just one such difficulty. I cannot let stand the comment of Senator McDowell to the effect that councillors have more powers than anyone in this House individually. While I accept the importance of the work local authorities do, it is important to note that the chief executive of each local authority wields the vast majority of the power and that these Houses have, during the lifetimes of successive Governments, been responsible for stripping councillors' powers away since the enactment of the Planning and Development Act 2000.

It is my understanding that chief executives of local authorities would not be subject to the PEP provisions. Therefore, there are still massive contradictions in the way this is phrased. I support what Senator McDowell has said about raising this at European level at the Justice and Home Affairs Council meetings to suggest to our European counterparts that there are issues here. Perhaps the sixth framework could look at amending these in a way that would allow us to come back here in the coming years and make them more reasonable.

At the beginning the Leas-Chathaoirleach said we would be allowed speak only once. Was he referring to each aspect or the entirety?

Senators may speak once on the combination of amendments as Nos. 1 to 3, inclusive, are being taken together.

I have one further point to raise with the Minister of State. I raised it on Second and Committee Stages. It is about the index-linking of the amounts mentioned in the Bill and specifically in section 5, I think, in relation to arts dealers and letting agents. The figure of €10,000 was used. Section 5 of the Bill amends section 25 of the 2010 Act. I suggested that that should be index linked. At the moment we are in a very stable, low-interest environment and that is obviously to be welcomed, but it will not be that way forever. I anticipate a situation where, in very short succession, those figures will be outdated and we will bring upon ourselves another situation where, within a period of time, artwork of a certain value may be much more common than it is now and then a huge burden is created for those people. I asked the Minister of State if he would examine that and wish to know if he did.

My comments will be brief. I acknowledge the contribution of my Opposition colleagues and of Senator Ward. They have highlighted the example of where the law has detached itself from common sense. I acknowledge also the Minister of State for his practical approach to the issues raised. As Senator Bacik said, the implications are far-reaching. We had a good debate here and clearly highlighted the anomalies that arise. I look forward to the Minister of State addressing them, going forward.

There were a number of points. I hope common sense will prevail and that these regulations will not be needed.

The anti-money-laundering aspects were actually handled by ECOFIN rather than by the Justice and Home Affairs Council, so I will bring that matter to the attention of the Minister for Finance, Deputy Donohoe, and his Department with a view to having it put on the agenda of the next ECOFIN meeting.

Senator Bacik raised the issue of the Union of Students in Ireland, USI. I will discuss this with the Department of Finance as this relates to a Department amendment brought in on Committee Stage in the Dáil. There is provision for flexibility. Regulation can be made for the Minister for Finance but I want to get clarity on whether those regulations are strong enough to resolve any potential issues for students' unions. I will bring it to the Minister's attention this week with a view to seeing what can be done about it, because obviously it would be a very worrying situation and would put an intolerable burden on students' unions.

On index-linking, the directive has €10,000 in it and so does not give us flexibility on that as written. Again, it is something which could be brought to the attention of the Minister for Finance to be raised at the next ECOFIN meeting. I agree with Senator Ward that it makes eminent sense for index-linking to be included in these directives. As he said, years will pass and suddenly €10,000 might not be worth what it used to be.

Amendment agreed to.
Government amendment No. 2:
In page 11, line 19, to delete “guidelines.”.” and substitute “guidelines.”.
Amendment agreed to.
Government amendment No. 3:
In page 11, between lines 19 and 20, to insert the following:
“(13) The Minister may, where he or she believes it is necessary to do so, and with the consent of the Minister for Finance, issue guidelines to the competent authorities for the purpose of facilitating the consistent, effective and risk-based application of this section.”.”.
Amendment agreed to.
Government amendment No. 4:
In page 12, lines 10 and 11, to delete ““including any information from relevant trust services as set out in the Electronic Identification Regulation”” and substitute the following: ““(including any information from relevant trust services as set out in the Electronic Identification Regulation)””.

This is a technical amendment. I thank Senator Ward for identifying the issue within the legislation. The proposed amendment is to improve the clarity of the relevant subsection. While we could not accept the precise formulation that Senator Ward used in the Committee Stage amendments as the phrase was used elsewhere in the Bill, this amendment achieves the same result.

I thank the Minister of State for taking on board what was said. Again, it reflects very well on the Department, the Minister of State and the Government that they take on board what is said on Committee Stage. It enhances the legislation.

I echo what Senator Ward has said.

Amendment agreed to.
Bill, as amended, received for final consideration.

When is it proposed to take Fifth Stage?

Is that agreed? Agreed.

Question, "That the Bill do now pass," put and agreed to.
Sitting suspended at 1.56 p.m. and resumed at 2.15 p.m.