Criminal Justice (Money Laundering and Terrorist Financing) Bill 2009

As we have a quorum the committee is in public session. This meeting has been convened for the consideration of the Criminal Justice (Money Laundering and Terrorist Financing) Bill 2009. Apologies have been received from Deputy Niall Collins. I welcome the Minister of State, Deputy Barry Andrews, and his officials to the meeting. Deputy Joanna Tuffy is attending in substitution for Deputy Pat Rabbitte and Deputy Edward O'Keeffe in substitution for Deputy Michael Mulcahy.

A grouping list has been circulated. A submission from Compliance Ireland Regulatory Services and the Consultative Committee of the Accountancy Bodies — Ireland was received in relation to this Bill and has been circulated to members. As we are in public session I request that all mobile telephones be switched off. I now invite the Minister of State to make an opening statement.

The purpose of the Criminal Justice (Money Laundering and Terrorist Financing) Bill 2009 is to transpose the third EU money and laundering directive into Irish law.

Government approval for the drafting of the Bill was given in February 2008. Given that this is both a criminal law provision and because it is closely associated with financial services, the Department of Justice, Equality and Law Reform and the Department of Finance have worked together, along with the Office of the Attorney General, on the development of the Bill since then. The Garda Síochána, the Revenue Commissioners and other stakeholders have been consulted regularly on the drafting of the Bill.

The Government is interested in progressing the Bill without delay, first, because it is important for Ireland's reputation as a centre for international financial services that we update and strengthen our existing anti-money laundering legislation and, second, because we are aware of the initiation of infringement proceedings by the European Commission against Ireland for non-transposition to date of the relevant EU directive. Naturally, it is in all our interests to offset a further stage in such proceedings and ultimately to avoid any sanction against Ireland. In that regard, we have maintained regular contact with the European Commission in the matter and have provided it with detailed updates on the progress of this Bill so far. We will continue to do this as the Bill progresses through both Houses of the Oireachtas.

This is a lengthy and complex Bill containing 121 sections in all. It repeals and re-enacts the existing money laundering legislation as well as taking on board the requirements of the EU directive and recommendations of the financial action task force.

The financial services sector, and many other sectors involved by way of business in significant money transactions, including the legal and accountancy professions, real estate agents, insurance intermediaries and others, have been consulted on an ongoing basis on provisions in the legislation related to their particular areas of operation. These groups are anxious to see the legislation enacted as soon as possible as its provisions will affect significant aspects of their work.

It is the Government's hope that the provisions of the Bill will be considered by all sides of the House with a view to bringing the proposal to completion at an early date. The constructive comments made by Deputies from all sides on Second Stage in support of the Bill were very much appreciated. I should inform members of the committee that my colleague, the Minister, Deputy Dermot Ahern, will give consideration to a small number of amendments on Report Stage. Among the matters to which such consideration may be given is the issue of the categories which qualify as relevant third parties for the purpose of the Bill. Another is the circumstances where reporting of suspicious transactions may not be required. The issue of the status of moneys paid as legal fees in the context of the provisions of the Bill are also under consideration. Some drafting changes may be made under sections 11, 20 and 24 of the Bill. It is possible that other minor technical amendments may be proposed.

The Bill before the committee today is important to Ireland's international reputation as a financial services centre. The provisions of the directive it transposes are a requirement for all EU member states and I am hopeful that we can make effective progress on the matter today.

In welcoming the Minister of State as an infrequent visitor to this committee, I wonder if we have just heard an opening statement. I would be a bit concerned that we are departing from the normal structures and protocols for dealing with amendments. I do not wish to be divisive, but for the Minister of State to come in here and say that he wants this Bill passed as soon as possible without making reference to a massive delay on the part of his Government in transposing this directive is somewhat unfair. We will give it due consideration, but an opening statement claiming that the Minister of State wants the Bill passed as soon as possible is not in the best interests of Committee Stage. The Minister of State speaks of having the Bill passed as soon as possible as though this committee is being placed under undue pressure to deal with the matter, yet he did not make any reference to the fact that Denmark made this directive part of its domestic law in 2006. We are here in 2010, and the implication of what the Minister of State said is that this committee and these Houses are in some way responsible for a delay.

There have already been judgments against Ireland. The European Court of Justice has found that the Government has failed to provide a legal basis to monitor the actions of financial institutions. There is a cost factor involved. Can the Minister of State tell us how much the Government has to pay due to the delay? Perhaps he might tell us about the fines that have been imposed to date and which are likely to be imposed. There will have to be co-operation. This committee has always worked on that basis. Chairman, you have the record of the number of times this committee has divided since you took the Chair and since the committee was reconstituted following the general election. We work on the basis of compromise and we deal with matters in an open way. However, I regret to hear the Minister of State use the words "as soon as possible" in his opening statement as though we are being placed under pressure.

Deputy Byrne and other committee members from the Government side will know that we do our business in an open way. We have divided very rarely over the past 12 months. We will get through our business, but it will be regrettable if there is any implication that this committee was in any way responsible for the delay here, because it is not.

The committee is not in any way responsible for any delay. The committee will decide how quickly the Bill is dealt with, not anybody else.

I agree with Deputy Flanagan's comments. It is very important that we give this Bill proper scrutiny. The Minister of State spoke about our reputation. If we want to make sure that we protect our reputation, we have to deal properly with the Bill and make sure that it is not flawed. One of the European Union requirements for transposing directives is that they are done properly. If we do not transpose it properly, it can lead to legal infringements. We have had many cases where we have had to go back over legislation due to mistakes made, so it is very important that we give it proper scrutiny.

Submissions have been made to the Department by professional bodies with legal and financial expertise. It is very important that we consider what they have had to say about the Bill. Some of those bodies are not happy as many of their concerns have not been addressed in the Bill. We will have to raise those issues as we go through the Bill.

When the Minister of State is proposing Government amendments, he should tell us if any of them are related to submissions he received. If a particular amendment deals with something raised by one of the professional bodies, he should explain it to us so that we are aware of it.

Thank you Deputy. I can assure you that this Bill will get all the scrutiny that it needs at this committee.

I find it regrettable that Deputy Flanagan would chose to make an attack on the Minister of State as he is not before this committee very often. The Minister of State paid tribute to Members in the Dáil for their constructive comments on Second Stage. I presume he was referring to Opposition spokespersons, who generally make constructive comments. We should move forward on this committee in that magnanimous mood.

I warmly welcome the Minister of State and I thank him for the statement he has made. We all have a serious collective responsibility to deal with this issue. We are in a very open economy and we are members of the European Union. Deputy Flanagan has alluded to the fact that this has been passed by at least one member state as far back as 2006. Taking into account the current mobility of capital, the difficulties in tracking much of it and the modern facilities that criminals and others have in moving capital to different areas, it is critically important that we have the best corpus of law and instruments available to our police, CAB, the Revenue Commissioners, Customs and Excise and to all agencies and Departments. We must show that Ireland is equal to the best and better than most in dealing with situations like this.

The Minister of State said that we want to pass this Bill as soon as possible. Deputy Flanagan is a lawyer with a long track record of success. I am sure he has heard of the phrase quam celerrime, or “as soon as possible”. That is a reasonable statement for any Minister of State to make. It behoves all of us to work together to get this passed as quickly as we can in the best way possible to ensure that this law is available to Ireland as a member of the European Union.

Thank you Deputy. We will now deal with the Bill.

Section 1 agreed to.
SECTION 2.

Amendments Nos. 1, 15, 18, 19, 21 to 23, inclusive, 30 to 32, inclusive, and 64 to 66, inclusive, are related and may be discussed together.

I move amendment No.1:

In page 10, subsection (1), to delete lines 21 to 24 and substitute the following:

" "Third Money Laundering Directive" means Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing, as amended by the following:

(a) Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC 2;

(b) Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC 3.”.

These amendments arise as a result of the payment services directive and the electronic money directive, both of which amend articles in the third EU money laundering directive and the recast banking consolidation directive. Many of the amendments change relevant definitions contained in the Bill to ensure that they reflect this fact.

The 2007 payment services directive has limited relevance to this Bill. It was transposed into Irish law last September by statutory instrument No. 383 of 2009. It introduces a new regulatory regime for payment services that includes money transmission services. Therefore, in addition to updating relevant definitions, it requires a change in the references to money transmission services in the Bill. These occur in sections 33, 34 and 40. The references in these sections have the effect of excluding this category. Money transmission services are now changed to payment services, and bureaux de change services are changed from the category of financial institution for certain purposes. For example, financial institutions can be relied on as third party identifiers under section 40 of the Bill. However, it is considered that money transmitters and bureaux de change, which can be small and inadequately resourced, should not qualify for such services. The amendments to Schedule 2, which reflect annex 1 to the re-cast banking consolidation directive, also arise from the payments services directive.

The 2009 electronic money directive has recently been adopted. Its main relevance to this Bill is that the third EU money laundering directive allows providers of electronic money devices not to apply full customer identification procedures below certain thresholds. The previous electronic money directive in 2000 set a threshold of €150, which is the amount currently included in section 34. Arising out of the 2009 directive, the threshold has been increased to €250, with discretion for member states to adopt a higher threshold of €500 in the case of national transactions. This change is reflected in amendment No. 23. Other amendments relevant to this directive deal with the definitions, as I have mentioned, and the inclusion of an additional point in Schedule 2. I commend this amendment to the House.

I welcome that. It important in terms of interpretation that there be an element of clarity and certainty in so far as is possible. I am not sure whether the Minister's amendments deal with a probable gap that was in the legislation. Whether such an amendment might have been appropriate for section 2, I stated on Second Stage that some institutions that were bona fide and authorised under the Investment Intermediaries Act were not included in the legislation. It is important that this Bill be amended to introduce an element of clarity and certainty so that all authorised firms under the Investment Intermediaries Act would be designated for the purposes of this legislation. If what I say is not applicable to section 2 and the current amendment, I ask the Minister to consider an amendment to the appropriate section or part of the Bill that would include all of our designated investment institutions.

We are dealing with section 2. Obviously, if we want to table an amendment on Report Stage, the issue must be raised on Committee Stage. The point has been made in submissions to the Department, for example, by the Consultative Committee of Accountancy Bodies — Ireland and Compliance Ireland Regulatory Services, that the definition of the offence to which money laundering will relate is too broad. The Consultative Committee of Accountancy Bodies — Ireland referred to the onerous nature of the reporting obligations on designated persons in general. Compliance Ireland Regulatory Services also raised this issue and stated that under the Bill any criminal conduct which leads to the proceeds of crime will constitute the offence of money laundering, and it made the point that any crime, regardless of how trivial, where one derives property will constitute a money laundering offence.

Has the Minister considered this issue? The point has been made to me that the definition of criminal conduct is broader in this Bill than what was required under the third directive. Has the Minister of State any comment in this regard?

On Deputy Charles Flanagan's point, the issue of investment intermediaries which he raised on Second Stage is dealt with in later amendments. The Minister acknowledged this point in his winding-up speech on Second Stage, where he welcomed the constructive comments made by Deputy Charles Flanagan and other Deputies. They are reflected in later amendments, with which we will deal.

With regard to definition of money laundering, the Attorney General gave very careful consideration to that definition and this is reflected in the way it is framed in this legislation. Deputy Tuffy refers to submissions made by professional bodies. One of the reasons we have taken a little longer with the preparation of this legislation is to try to acknowledge and consult as broadly as possible with groups such as that. Their views are reflected to the greatest extent possible while having regard to the overall authority of the Attorney General on matters such as legal definitions.

On that point, why was it decided to make a broader definition of criminal conduct? From my reading of it, this would seem to cover any kind of criminal offence, some of which could be very minor. Most people would not think money laundering would apply where the crime involved is minor. Why was the decision taken to have as broad a definition as is contained in the legislation?

If a case is prosecuted, ultimately, the seriousness of the criminal conduct is a matter that can be reflected in the consideration of the offence. However, if one tries to draw a line somewhere in the area of criminal activity by saying that all of this is not criminal activity that should give rise to any suspicion, one would create legal uncertainty and there would then be the possibility of people getting off on technicalities, which is not the intention of anybody in this House. The Attorney General's view at the time was that, in order to achieve legal certainty, the definition would have to be absolutely clear. The note available to me states that the money laundering offence is very difficult to prosecute successfully and that broadening the offence refers to a predicated offence, not a money laundering offence. We are trying to ensure that there will be successful prosecutions in this area and not to leave hostages to fortune in terms of later prosecutions.

At the same time, it is my understanding that the directive would not have had as broad a definition. When other countries transpose this directive, do they have a similar definition to Ireland's?

As a lawyer, the Deputy knows that under the directive a country is only required to achieve the result whereas the general nature of how one transposes it into domestic law is a matter for that country. We have our own Constitution and criminal justice system, and all of that has to be reflected in the way the directive is transposed into Irish law. I repeat that the Attorney General gave very careful consideration to this issue, which is obviously a central plank of the legislation.

Amendment agreed to.
Section 2, as amended, agreed to.
Sections 3 to 5, inclusive, agreed to.
SECTION 6.
Question proposed: "That section 6 stand part of the Bill."

On a point similar to that just made by Deputy Tuffy, section 6 is important in so far as it defines the money laundering offence, as does section 7. A point was made in a submission to the Minister's Department by the Consultative Committee of Accountancy Bodies — Ireland on 22 September that this definition was somewhat broad in terms of the later reporting obligations it would place on designated parties. Was the Minister satisfied that the reference made to this section by the accountancy bodies and the concern expressed has been dealt with in such a way as to obviate the need for a ministerial amendment at this stage? The point was that the definition of money laundering is on the basis of an indictable offence rather than just an offence. I take the view that this Bill should be sufficiently broad to ensure that we can not only comply with but lead international best practice, having regard to the importance to our economy of the financial services sector. Does the Minister of State have a response to the point made on the matter of the definition of a money laundering offence?

I refer to my previous comments on the Attorney General having given it due consideration and that his overall position was informed by the need to have certainty in the area. I agree with Deputy Charles Flanagan that while the directive gives an indication of what must be achieved, there is no reason that Ireland should not take a lead in such matters and apply vigilance in this area as broadly as possible to all categories of criminal conduct. I reiterate that it is difficult to then exclude certain categories of lower level criminal conduct. However, the submission made in September to which the Deputy referred was taken into consideration.

I wish to raise a point regarding criminal conduct about which a decision not to prosecute might be taken by the authorities in the normal course of events. People sometimes do things whereby although a criminal offence may technically have been committed, given the circumstances a decision not to prosecute is taken. Should there be a form of limitation on what criminal conduct means and what constitutes an offence? A broad range of offences is committed by people for which they are not prosecuted as it is not considered to be necessary. For example, in the case of someone who embezzled money from his or her employer, such issues sometimes may be resolved without criminal proceedings and the authorities may decide that this is fine. A definition that includes every criminal offence is too broad.

This legislation pertains to money laundering and terrorist offences and the average workplace embezzlement probably has nothing to do with money laundering. Second, if one reads sections 6 and 7 together, while criminal conduct is an ingredient, the relevant property must be the proceeds of criminal conduct to ground the offence. Moreover, as the Deputy noted, it is up to the authorities in all cases. They have discretion to decide whether to prosecute under this statute or otherwise if it is more appropriate. Were someone simply to have stolen money from his or her office, it obviously would be a different offence and certainly would not be prosecuted under this provision. It is important to reflect that section 7 states: "A person commits an offence if ... the person engages in any of the following acts in relation to property that is the proceeds of criminal conduct." The previous section simply defines what is criminal conduct in a broad sense. The advice received states strongly that to prosecute successfully in this area, in which it is difficult to prosecute, as broad a definition as possible is necessary.

Question put and agreed to.
SECTION 7.

Amendments Nos. 2, 5 to 7, inclusive, 14, 20, 24, 26, 29, 34, 36, 37, 39 to 44, inclusive, 51, 53, 54 and 57 are related and may be discussed together.

I move amendment No. 2:

In page 12, subsection (3)(b), line 2, to delete “14” and substitute “20”.

This amendment and the consequent amendments are self-explanatory. I am attempting to increase the term of imprisonment and the sanctions under this legislation to reflect the serious nature of the offence. On indictment, the term of imprisonment, or at least the range of imprisonment available to a court on conviction, should go as far as 20 years. Similarly, for other offences under the Bill, a judge should have an opportunity, were he or she so disposed on conviction, to impose a period of ten years' imprisonment. This is not inconsistent with other criminal justice legislation that this House has enacted in recent years and would reflect the seriousness with which it regards offences under this legislation. I do not propose to impose a mandatory sentence as this would be part of a range available to a court on conviction, having regard to the serious nature with which the court would reflect on the circumstances of the case. The proposals merely empower the court to take a serious view.

The Bill as currently drafted provides for a fine or imprisonment on conviction on indictment. I take it that were a court of law or judge to decide that a term of imprisonment was not to be imposed, the fine in effect would be unlimited on indictment. If so, I certainly would welcome it on the basis that parties engaging in the criminal activity of money laundering and terrorist financing should be hit right in their pockets. In this regard, members should permit the courts to introduce multi-million euro fines on conviction if deemed appropriate. I do not believe a ceiling should be imposed on such a fine, particularly as money-laundering offences can involve multi-million euro transactions, frauds or endeavours. However, such fines also should be accompanied by a lengthy term of imprisonment which the court can deem fit, having regard to the circumstances. This is the basis for these amendments.

I understand the thrust of Deputy Flanagan's amendments. However, many types of offences are covered by the Bill and when formulating sentencing policy, one must be mindful that punishment of wrongdoing must be proportionate to the harm done or to the risk of harm occasioned by the offence. The law should indicate a rank order of social wrongdoing that is roughly in accordance with the scale of damage or potential damage involved. In other words, the severity of the sentence to be imposed on a person should be measured in proportion to the seriousness of the offending behaviour.

The main offence of money laundering, which is the most serious included in the Bill, carries a custodial sentence of up to 14 years and a fine or both. Deputy Flanagan's proposed amendments indicate a desire to increase this penalty to 20 years. Members will be aware that as this Bill will transpose the directive into law, similar provisions have been or soon will be incorporated in all other European Union jurisdictions. An indication of the level of penalties provided for elsewhere would be helpful in this regard. For example, money laundering is subject to ten years in prison and a fine of €375,000 in France. In Austria, the maximum sentence is five years, as well as the possibility of a fine, while in Germany, the maximum custodial sentence for money laundering ranges from six months to ten years. The Irish penalty for the principal offence is on the high side by the standards of our European Union partners. As for our nearest neighbour, the United Kingdom, the penalty for the comparable offence in that jurisdiction in respect of a custodial sentence also is up to a maximum of 14 years. This is significant because in the main, the Irish financial services sector operates on an all-Ireland basis and most of our financial institutions also do business extensively or have branches in Britain. It is perhaps fortuitous that the penalties for such offences in both jurisdictions are similar.

It should be borne in mind that most of the proposed amendments that have been tabled relate to a variety of lesser offences. These can range from offences which might arise in the context of negligence or recklessness by, for example, a junior bank official to somewhat more serious offences whereby a potential money launderer could be tipped off about a possible investigation into his or her activities or when there has been a failure to report a suspicious transaction. The penalties for such offences, which provide for a fine or a maximum custodial sentence of up to five years, are appropriate and proportionate and are in line with the level of penalties in other European Union jurisdictions for similar offences. The penalties as set out in this Bill also give the Judiciary the necessary leeway to judge each case on the facts and circumstances and to exercise its independence and discretion to sentence accordingly if the outcome is a guilty verdict.

While the penalties contained in this Bill for the main offence of money laundering set a maximum custodial sentence of 14 years, which can be combined with an unlimited fine, the offence of financing terrorism is considered in a more serious light. The penalties for that offence are set out in section 13 of the Criminal Justice (Terrorist Offences) Act 2005 and provide for an unlimited fine or 20 years' imprisonment or both. Consequently, I do not propose to accept Deputy Flanagan's amendments.

I do not wish to divide the committee. I have listened carefully to the Minister of State's helpful comments and, between now and Report Stage, will reflect on them. I do not intend to interfere with the independence or discretion of a court. Were my amendments accepted, they would broaden the range of discretion available to a court, not narrow or confine it. The court would be empowered by a greater level of discretion, but I do not take significant issue with the Minister of State's comments by and large.

Amendment, by leave, withdrawn.
Section 7 agreed to.
SECTION 8.

Amendments Nos. 3, 4, 9, 10 and 11 are related and may be discussed together.

I move amendment No. 3:

In page 12, lines 28 to 34, to delete subsection (1).

The purpose of the amendments to section 8 is to remove the provision that it is an offence to aid, abet, cancel or procure outside the State in respect of a principal offence occurring outside the State. The extent of extraterritorial jurisdiction that should be taken was considered further following publication of the Bill. The advice of the Attorney General is that, in the case of such inchoate offences, it should be limited to situations in which the principal offence is one occurring in the State. As Deputies will be aware, this matter is dealt with in section 10.

The cross-references in section 11 to subsection 8(1)(a) will automatically change as a consequence of the amendments to subsection 8(1). However, in this part of the Bill, cross-references are to a section rather than a subsection unless there is a particular reason to specify a subsection. To ensure consistency in this approach, the amendments will ensure that the cross-reference is to section 8. I commend the amendments to the committee.

I accept the Minister of State's comments.

Amendment agreed to.

I move amendment No. 4:

In page 12, lines 35 to 39, to delete subsection (2) and substitute the following:

"(1) A person who, in a place outside the State, engages in conduct that constitutes an offence under the law of that place and that would, if the conduct occurred in the State, constitute an offence under section 7 commits an offence if any of the following circumstances apply:”.

Amendment agreed to.
Amendment No. 5 not moved.
Question proposed: "That section 8, as amended, stand part of the Bill."

Concern about section 8 was raised in one of the submissions. Where offences that occur outside the State are concerned, are we required to transpose the third directive into this legislation? Determining offences carried out elsewhere will be a complex matter for our authorities. Has the Minister of State further clarification to provide regarding the purpose of this provision?

According to my notes, there is a UN convention on transnational organised crime. Consideration was given to the question of whether we were falling beneath the directive's requirements. We are satisfied that the amendment just agreed does not mean that the section falls short of those requirements.

Question put and agreed to.
Amendment No. 6 not moved.
Section 9 agreed to.
SECTION 10.
Amendment No. 7 not moved.

Amendments Nos. 8 and 12 are related and may be discussed together.

I move amendment No. 8:

In page 14, subsection (3), line 6, to delete "section 7" and substitute "section 7(1)".

These are amendments to sections 10 and 11 to clarify that the reference to section 7 of the Criminal Law Act 1997 is to subsection 7(1) of that Act. The other amendment to section 11 is consequential on amendments Nos. 3, 4, 9, 10 and 11 to section 8, which we have discussed. The purpose of this amendment is to remove the references to subsection 8(1)(a). As Deputies will appreciate, as a result of the amendments to section 8, this reference is no longer relevant and, therefore, must be deleted. The remaining references to subsections (b) and (c) will become references to subsections (a) and (b). I commend the amendments to the committee.

I accept the Minister of State's reasons.

Amendment agreed to.
Section 10, as amended, agreed to.
SECTION 11.

I move amendment No. 9:

In page 14, subsection (1), line 10, to delete "8(1)(a)” and substitute “8”.

Amendment agreed to.

I move amendment No. 10:

In page 14, subsection (2), line 18, to delete "8(1)(a)” and substitute “8”.

Amendment agreed to.

I move amendment No. 11:

In page 14, subsection (3), line 31, to delete "8(1)(a)” and substitute “8”.

Amendment agreed to.

I move amendment No. 12:

In page 15, subsection (7), to delete lines 20 and 26 and substitute the following:

"(7) This section also applies to proceedings for an offence under---

(a) section 10, or

(b) section 7(1) of the Criminal Law Act 1997 of aiding, abetting, counselling or procuring the commission of an offence under section 7, 8 or 9,”.

Amendment agreed to.
Section 11, as amended, agreed to.
Sections 12 to 16, inclusive, agreed to.
SECTION 17.

I move amendment No. 13:

In page 17, subsection (2), line 26, to delete "21 days" and substitute "28 days".

Subsection 17(2) as published gives power to the Garda in certain circumstances, including those where if a transaction or service were to proceed, it might assist money laundering or terrorist financing, to apply to the District Court for an order to suspend any specified transaction or service for a specified period. The court may allow more than one such order if it is sought. The period originally envisaged for the duration of such an order was 21 days. The purpose of the amendment is to increase the maximum period of a court order to 28 days. The intention is to allow more time for an investigation by the Garda where there is a suspicion of money laundering or terrorist financing. Many investigations into these offences have an international dimension. In such circumstances, there can be delays in gathering all of the necessary information, particularly if it is being provided from outside the State. This amendment is intended to assist with that situation.

Amendment agreed to.
Amendment No. 14 not moved.
Section 17, as amended, agreed to.
Sections 18 and 19 agreed to.
SECTION 20.

I move amendment No. 14a:

In page 18, subsection (1)(a), line 47, after “expenses” to insert the following:

", including legal expenses in or in relation to legal proceedings".

As Deputies will be aware, section 20 is contained in Part 3, the purpose of which is to provide that, if the Garda has a suspicion that a service or transaction may be linked to money laundering or terrorist financing, it may take immediate action to ensure that the transaction is delayed for a specific period to allow preliminary investigations to be carried out and issued with direction. It also provides for applications to be made to the court for an order for similar reasons with the specified timeframe applying, which we discussed in respect of amendment No. 13.

Provisions are also included regarding issues such as notification of persons who could be affected by such directions or orders and for the application of the release of funds for reasonable living and other necessary expenses or to carry out a business or other occupation. The purpose of the official amendment is to include in the latter an explicit reference to the fact that such expenses can include legal expenses, putting that question beyond doubt. I commend the amendment to the committee.

The Law Society's submission included a point in this regard and I take it that the Minister of State has taken that point on board. Under the Bill's initial general scheme, section 20 provided for legal expenses in respect of proceedings under the legislation, but that provision is not included in the current draft of the Bill. Will the Minister of State's amendment bring the section back in line with the general scheme of the heads of the Bill as published?

The matter of legal expenses will be included in terms of the discharge of reasonable living and other necessary expenses.

Clearly, that person may require legal services in those circumstances.

The amendment seems to deal with the issue raised by the Law Society of Ireland.

Amendment agreed to.
Section 20, as amended, agreed to.
Sections 21 and 22 agreed to.
SECTION 23.

I move amendment No. 14b:

In page 19, between lines 26 and 27, to insert the following subsections:

"(2) The doing of any thing in accordance with an authorisation under this section shall not be treated, for any purpose, as a breach of any requirement or restriction imposed by any other enactment or rule of law.

(3) Subsection (2) is without prejudice to section 7(7).”.

Section 23 provides that a member of the Garda Síochána, not below the rank of superintendent, may, by notice in writing, authorise a person to do something referred to in section 7(1) if it is considered necessary in respect of an investigation of an offence. Section 7(1) sets out the key components of the principal offence of money laundering and the purpose of section 23 is to ensure that in the circumstances specified, that is, when directed by gardaí, a person is not committing such an offence and, therefore, protected. The proposed amendment clarifies the matter and puts it beyond doubt. It also ensures a person cannot be subject to civil liability. Section 7(7) already covers the issue of criminal liability. I commend the amendment to the committee.

I accept what the Minister of State says.

Amendment agreed to.
Section 23, as amended, agreed to.
SECTION 24.

Amendments Nos. 14c, 16, 17, 17a and 17b are related and will be discussed together.

I move amendment No. 14c:

In page 19, subsection (1), to delete lines 41 and 42 and substitute the following:

" "credit institution" means—

(a) a credit institution within the meaning of Article 4(1) of the Recast Banking Consolidation Directive, or

(b) An Post in respect of any activity that it carries out, whether as principal or agent, that would render it, or a principal for whom it is an agent, a credit institution as a result of the application of paragraph (a);”.

These amendments deal with the definitions of credit institutions and financial institutions as set out in section 24. The amendment to paragraph (a) of the definition of credit institution is merely to change slightly the article reference applicable in the recast banking consolidation directive from Article 4(1)(a) to Article 4(1). This is to reflect amendments to the directive by the electronic money directive.

An Post is a designated person under this legislation because it conducts various activities that bring it within the definition of a credit institution or financial institution in section 24. During the debate on Second Stage the Minister referred to the fact that he would be introducing amendments on Committee Stage for clarification purposes to include An Post within the definition of financial institution. It is also necessary to include it within the definition of credit institution to take into account the fact that some of the activities could bring it within the meaning of credit institution as defined in the Bill. Paragraph (a) of the definition of financial institution is primarily to delete the reference to credit institution as currently contained in sub-paragraph (i) which provides for exclusion. The exclusion of credit institutions from paragraph (a) could have unintended consequences. Section 25(2) of the Bill provides that for the purposes of this Part, a person is to be treated as a designated person only in respect of those activities or services that render the person a designated person. For this reason, the exclusion of credit institutions from paragraph (a) of the definition of financial institution could mean that an undertaking that is a credit institution and carries out one or more of the activities listed in paragraph (a) would not be treated as a designated person when carrying out one of these activities and might only be treated as a designated person when carrying out credit institution activities.

The reference to the activities in paragraph (a) has also been amended to include an additional point, No. 15, now relevant to Annex I of the recast banking consolidation directive arising from the amendments to the directive by the electronic money directive. The reference to the markets and financial instruments directive in paragraph (c) of the definition of financial institution covers the vast majority of investment intermediaries operating in Ireland. The directive deals with investment intermediaries engaged in what I referred to as passportable activities, activities that can be undertaken in a number of member states on the basis of authorisation in only one member state. The purpose of the amendment which inserts a new paragraph (d) in the definition of financial institution is to include an additional provision within that definition to ensure a category of investment intermediaries not already covered by the markets and financial investments directive reference is also included. Deputy Flanagan raised the matter of investment intermediaries during the debate on Second Stage last November. Having considered the matter, the Minister decided to table this amendment.

The other amendments are drafting amendments consequential on amendments to the Bill. I commend them to the committee.

I welcome what the Minister has done in respect of the definition section in Part IV. We need clarity and certainty as this is complex legislation. Section 24 is complex. Is the Minister of State satisfied the definitions are sufficiently strong to ensure all investment and business activities that may involve an element of money laundering are covered? I ask for clarity that no further amendments are required and that this section is sufficiently watertight to ensure there is no loophole in terms of what is a business relationship as covered by the legislation.

I acknowledge the points made by Deputy Flanagan — the amendments were informed by the observations made. The Department of Justice, Equality and Law Reform liaised with the Department of Finance on these technical definitions to ensure there would be no loopholes and that the legislation would be robust and watertight and include all categories of money laundering. The Deputy asked me to indicate if I was satisfied — we have done this to the best extent possible.

I refer to the definition of business relationship, a matter raised by Compliance Ireland. I do not fully understand the point raised. The author of the submission states Irish administrators may lose work to other jurisdictions, given the lack of clarity in the Bill about the definition of business relationship. As I am not familiar with the issue, I do not really understand the point being made. The Minister of State has examined the submissions made and may have a comment to make.

I refer to the definition of tax advisers. The point has been made by the accountants body, the Consultative Committee of Accountancy Bodies — Ireland, that "tax adviser" means any person who provides tax advice for remuneration, even if remuneration does not change hands. Presumably, this refers to accountants, auditors or tax advisers, although the latter term could include any professionals who provide such advice, including legal professionals. Does the Minister of State have a comment to make on the issue?

In the absence of an amendment, it is difficult to comment fully on the question raised by the Deputy. If amendments had been tabled, we could have given the matter full consideration. Tax advisers, be they accountants or solicitors, are covered in the usual way by the Bill. I am not 100% sure what the position is if the people concerned set up as tax advisers without qualifications. They probably hold themselves out as experts in an area in which they could not possibly have expertise. Perhaps the Deputy intends to submit an amendment on this point. In the absence of an amendment, however, we have given as much consideration as we can to the observations made to us in submissions.

There is no such profession; the term "tax advisers" covers a broad range of people. Is there any other legislation which imposes requirements or deals with tax advisers, their qualifications and with whom they should be registered?

A definition of "tax adviser" is included in the Bill. Section 24 states "tax adviser" means a person who by way of business provides advice about the tax affairs of other persons. While they do not necessarily have to be qualified, they are covered by the legislation.

It is essential that a person giving advice on another person's tax or business affairs is covered. The Minister of State has perhaps gone as far as he can by requiring that any person who provides advice for others by way of business should have a sufficient level of training or qualification or be a member of an organisation. It is important that it is not restricted to persons belonging to a designated organisation or who have a particular standard of education. I am reasonably happy with the amendment.

Amendment agreed to.

I move amendment No. 15:

In page 20, subsection (1), between lines 27 and 28, to insert the following:

" "Electronic Money Directive" means Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC;".

Amendment agreed to.

I move amendment No. 16:

In page 20, subsection (1), to delete lines 34 to 44 and substitute the following:

"(a) an undertaking that carries out one or more of the activities listed in points 2 to 12, 14 and 15 of Annex I to the Recast Banking Consolidation Directive (the text of which is set out for convenience of reference in Schedule 2) or foreign exchange services, but does not include an undertaking—

(i) that does not carry out any of the activities listed in those points other than one or more of the activities listed in point 7, and

(ii) whose only customers (if any) are members of the same group as the undertaking,".

Amendment agreed to.

I move amendment No. 17:

In page 21, subsection (1), between lines 7 and 8, to insert the following:

"(d) an investment business firm within the meaning of the Investment Intermediaries Act 1995,”.

Amendment agreed to.

I move amendment No. 17a:

In page 21, line 9, to delete "shares, or" and substitute "shares,".

Amendment agreed to.

I move amendment No. 17b:

In page 21, line 14, to delete "services;" and substitute the following:

"services, or

(f) An Post, in respect of any activity it carries out, whether as principal or agent—

(i) that would render it, or a principal for whom it is an agent, a financial institution as a result of the application of any of the foregoing paragraphs,

(ii) that is listed in point 1 of Annex I to the Recast Banking Consolidation Directive, or

(iii) that would render it, or a principal for whom it is an agent, an investment business firm within the meaning of the Investment Intermediaries Act 1995 if section 2(6) of that Act did not apply;".

Amendment agreed to.

I move amendment No. 18:

In page 21, subsection (1), between lines 34 and 35, to insert the following:

" "payment service" has the same meaning as in the Payment Services Directive;

"Payment Services Directive" means Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC;".

Amendment agreed to.

I move amendment No. 19:

In page 22, subsection (1), to delete lines 8 to 11 and substitute the following:

" "Recast Banking Consolidation Directive" means Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast), as amended by the following:

(a) the Payment Services Directive;

(b) the Electronic Money Directive;”.

Amendment agreed to.
Section 24, as amended, agreed to.
SECTION 25.

I move amendment No. 19a:

In page 24, between lines 31 and 32, to insert the following subsection:

"(3) A reference in this Part to a designated person does not include a reference to any of the following:

(a) the Minister for Finance;

(b) the Central Bank and Financial Services Authority of Ireland;

(c) the National Treasury Management Agency.”.

Section 25 sets out the meaning of "designated person" as any person acting in the State in the course of business carried on by the person in the State who is a member of one of a number of listed groups. Subsection (2) provides that, for the purposes of this Part, a person is to be treated as a designated person only in respect of those activities or services that render the person a designated person. The purpose of the amendment is to exclude the Minister for Finance, the Central Bank and Financial Services Authority of Ireland and the NTMA from the scope of the Bill. The activities of these bodies do not involve any material risk of money laundering and they do not come within the scope of the current money laundering legislation. However, as the range of financial activities covered by the Bill is very wide, the amendment is necessary to clarify the issue as it relates to these bodies.

Amendment agreed to.
Question proposed: "That section 25, as amended, stand part of the Bill."

I refer to a point made by Compliance Ireland which states that the list included in section 25 is deficient. It makes the point that the list of designated persons is not as extensive as the list of designated bodies included in section 32 of the 1934 Act. It assumes that the deficiency will be addressed in subsections (1)(j) and (6) of section 25 the Bill in which the Minister can prescribe a class of persons. What are the Minister’s intentions in that regard? How will he prescribe these classes of person and who might be covered?

The consideration of the question of what other categories of persons might be considered for inclusion has not been progressed. The Minister anticipates, however, that there will be such a process and will invite submissions from interested bodies on the issue.

Question put and agreed to.
Sections 26 to 32, inclusive, agreed to.
SECTION 33.
Amendment No. 20 not moved.

I move amendment No. 21:

In page 31, subsection (10), lines 43 and 44, to delete "foreign exchange, or money transmission, services" and substitute the following:

"either foreign exchange services or payment services, or both".

Amendment agreed to.
Question proposed: "That section 33, as amended, stand part of the Bill."

Compliance Ireland and the Consultative Committee of Accountancy Bodies — Ireland raised an issue about section 33. The former believes section 33(1)(d) should make it clear that designated persons are not required to review all of their customer files to ensure compliance with existing laws. It raises concerns about the capacity of designated persons to carry out such reviews and previous legislation of this nature did not require designated persons to do so. Has the Minister taken on board the concerns expressed about the section and its application and will he consider introducing an amendment to clarify the matter?

First, a review is required under the directive. As the Deputy said, a failure to meet our requirements could expose the State to the risk of a fine or other proceedings. Section 33(2)(b) contains a compensatory clause which states measures are required when reasonably warranted because of the risk of money laundering. This ensures the provision will not be overbearing for anybody providing services in this sector. A reasonable assessment of whether there is a risk of money laundering must be carried out but it does not apply to every single transaction.

The consultative committee states sections 33(8) and 35(2) should also apply to transactions. It also states Article 9(5) of the third money laundering directive provides for an exemption from this requirement where notaries, independent legal professionals, auditors, external accountants and tax advisers are in the course of ascertaining the legal position for their client or performing their task of defending or representing that client in or concerning judicial proceedings, including advice on instituting or avoiding proceedings. It further states there is no equivalent exemption in these sections as drafted. Has the Minister considered this point?

That is a very technical point. As we do not have an amendment before us, we are not in a position to fully reply to the Deputy or do justice to the submission made.

Has the Minister of State considered such an amendment? Obviously, these submissions were made directly to the Department.

I am not sure they were. The Deputy is talking about subsection(8) which states:

A designated person who is unable to apply the measures specified in subsection (2) or (4) in relation to a customer, as a result of any failure on the part of the customer to provide the designated person with documents or information required under this section—

(a) shall not provide the service sought by that customer for so long as the failure remains unrectified, and

(b) shall discontinue the business relationship (if any) with the customer.

It is because of the requirement to try to safeguard and ensure the overall integrity of the transposition of the directive that those things occur. I am informed that very careful consideration was given to this so I can only assume that any submissions were made were considered in the preparation of that section.

When this Bill is passed must the various bodies covered by it start going through all their existing clients over many years to ensure that certain documentation is provided to comply with the Bill?

Regarding previous money laundering legislation and our previous compliance with earlier directives, that has always been an ongoing requirement but it is based on an assessment of risk. This is simply a continuation with additional safeguards and requirements in the new directive.

Deputy Tuffy raised an important point in respect of new clients and new or additional services. In current practice, with the relevant law being the Criminal Justice Act of 1994, the obligation in the first instance is to identify the person being the customer, client or person for whom the service is provided. Second, there is an obligation to report a suspicious transaction to the authorities. With this Bill, the obligations are far greater and for very good reason.

Regarding the provision of the service, there is now an obligation to satisfy oneself as to the veracity of the documentation upon which the service is being provided. If there are reasonable grounds for doubt the service provider is then prohibited from engaging in the provision of services. This places an extensive act of due diligence, or burden of responsibility, on the service provider. In the event of advice having been given or cases having been undertaken that are ongoing, these new provisions will place a burden of responsibility. In respect of new clients that is a given but what about ongoing cases or established clients where, notwithstanding the obligation to report a suspicious transaction, the due diligence carried out to date is not deemed as onerous as will now be the case? For example, what kind of framework is required for keeping files? One would have thought of something such as a six-year professional rule. Filing of documents electronically has the potential to change that substantially on the basis that the record is far easier to access and much less difficult to store, in the event of that being a reason for destroying or disposing of files.

I wonder about the extent to which this legislation applies to existing work with ongoing clients, having regard to the fact that it is given that it refers to all new dealings or transactions. In respect of the provision of ongoing services what burden of responsibility is placed on persons to go back and trawl through previous documentation that did not give rise to suspicions on the part of the accountant, the auditor, the lawyer or whomsoever?

It is a fair point and the concern expressed by the two Deputies is legitimate. First, the keeping of records issue is covered by section 55 and the Deputies can refer to that. Regarding customer due diligence and older files as opposed to those that now come into an office in some form or other, there has always been a requirement for ongoing monitoring of files under existing legislation. The standard of ongoing monitoring will be against the new standards imposed by this legislation so that while in the past one might have carried out ongoing monitoring of files, now one must do this under the new provisions. I hope that clarifies the point.

Regarding ongoing monitoring of files, in my recollection, as a solicitor one is obliged to keep files only for so long.

I just referred to that. Section 55 has provisions with regard to the keeping of records.

Is it in keeping with all the regulations already in place?

I assume so. It is not a trawl through every file a solicitor has in his or her office. It is a risk-based assessment of files where there might be the reasonable possibility of an issue of money laundering. It is not over-onerous. Again, returning to the basic issue, it is required by the directive.

Question put and agreed to.
SECTION 34.

I move amendment No. 22:

In page 33, subsection (6), lines 34 and 35, to delete "foreign exchange, or money transmission, services" and substitute the following:

"either foreign exchange services or payment services, or both".

Amendment agreed to.

I move amendment No. 23:

In page 34, subsection (7), lines 3 to 20, to delete paragraph (d) and substitute the following:

"(d) electronic money, within the meaning of the Electronic Money Directive, where—

(i) in a case where the electronic device concerned cannot be recharged, the monetary value that may be stored electronically on the device does not exceed €250 or, if the device cannot be used outside of the State, €500, or

(ii) in a case where the electronic device concerned can be recharged—

(I) the total monetary value of all amounts by which the device may be charged or recharged (or both), in any calendar year, including any initial stored value of the device on purchase if the device is purchased during the year, does not exceed €2,500, and

(II) none, or less than €1,000, of the electronic money may be redeemed by the issuer (as referred to in Article 11 of that

Directive) in that year.".

Amendment agreed to.
Section 34, as amended, agreed to.
SECTION 35.
Amendment No. 24 not moved.
Question proposed: "That section 35 stand part of the Bill."

The consultative committee for accountants made a point about section 35(3) namely, that the third directive refers to ensuring that documents data or information held are kept up to date. The committee states there does not appear to be any provision within sections 33 or 35 for keeping documentation or information up to date. It suggests that should be part of the section of the Bill under consideration. Has the Minister of State any comments to make?

If the Deputy wishes to table an amendment on Report Stage it will be considered, as would a submission supplied concerning the issue.

Deputy Tuffy might consider section 55 in terms of the keeping of records generally before making a decision to tabling an amendment.

Question put and agreed to.
Section 36 agreed to.
SECTION 37.

Amendments Nos. 25 and 28 are related and will be considered together.

I move amendment No. 25:

In page 35, between lines 42 and 43, to insert the following subsection:

"(5) Notwithstanding subsections (2)(a) and (4)(b), a credit institution may allow a bank account to be opened with it by a customer before taking the steps referred to in subsection (1) or seeking the approval referred to in subsection (4)(b), so long as the institution ensures that transactions in connection with the account are not carried out by or on behalf of the customer or any beneficial owner concerned before taking the steps or seeking the approval, as the case may be.”.

This amendment allows a credit institution, such as a bank, to allow the opening of a bank account, pending the verification of the customer in question as a politically exposed person. It is not always possible for a credit institution to identify a particular customer as a politically exposed person, even when there is a suspicion that the potential customer may be in that category. As a politically exposed person is someone who, by definition, is not resident in this State, the information as to his or her precise status is not always readily available to the credit institution. Rejection of a customer, and of the customer's potential business, on the basis of a suspicion which may turn out to be groundless can cause obvious difficulties for the credit institution concerned. The purpose of this amendment is to minimise any such difficulty by permitting the opening of the account but not permitting any activity to take place on the account until the verification and identification of the customer or the beneficial owner has been completed.

Amendment No. 28 is a drafting amendment in the interests of greater clarity. It amends section 37(10) by changing the word "year" to "twelve months".

This creates an increased obligation on credit institutions when opening accounts. I referred earlier to the keeping of records and the current obligations and the change in the nature of the obligation under the directive for the increased level of scrutiny or invigilation necessary in respect of a person giving advice. In terms of the obligation to identify the person with whom a business transaction is being arranged, are we saying the obligation on a credit institution is less than may be on a person providing a professional service such as accountancy or tax advice, in so far as the primary obligation before any due diligence is undertaken on documentation or the provision of service is to identify the person with whom one is dealing? Are we limiting that obligation, as far as credit institutions are concerned, because a person might be overseas? I thought there would be an obligation on credit institutions to obtain identification and verify it with other documentation, as is the current practice, whereby a utility bill, birth certificate, passport or driving licence is required, must be copied and the documentation kept on file for the period for which the service is being provided.

Unless I misunderstood, does this amendment say one can open an account but not deal with it if there is doubt as to the identity of the politically exposed person because he or she is overseas? That should not limit the process of scrutiny. There could be an argument for an increased level of scrutiny if somebody is overseas and is not in a position to be immediately contacted by the person providing the service or, in the event of a suspicious transaction, may not be readily contacted by a member of the Garda Síochána, the fraud squad or any person engaged in monitoring the legislation.

I want to raise the issue raised by Compliance Ireland and the Consultative Committee of Accountancy Bodies, namely, that they have concerns about the term "cohabitant" being used in the Bill. Section 37(9)(c) states “ any cohabitant (whether or not of the opposite sex) of the politically exposed person”, which is very broad. I do not know if the term “cohabitant” is defined elsewhere; it might give clarity to the wording used in the Bill.

The idea of a politically exposed person is new and has not been covered in any other legislation. I am not the justice spokesperson so I am not sure if that is the case. While reading the Bill, it struck me that when we discuss people living outside the State, Northern Ireland is also included. There could be huge implications in terms of the number of people who could be covered by this Bill who are in some way connected with people who are politicians in the North of Ireland. Has a great deal of thought gone into this provision? I am sure many people have done business with people in the North of Ireland and have not looked at them in this way. They are in a different state and a large number of people in the North would be politically exposed. Has that aspect of the provision been examined? It might impact on our business relations with people in the North.

To give some background, a politically exposed person is someone who is or was, at any time in the preceding 12 months, a holder of a prominent public function and is residing in a place outside the State. The provisions of the Bill also apply to close associates and immediate family members of a politically exposed person. It should be noted that a designated person such as a credit institution, for example, a bank, is taken to know that someone is a close associate of a politically exposed person only if it is reasonable to assume that it had information in its possession as to a person's status or there was public knowledge as to his or her status as a close associate. It is a new feature.

In regard to the North and money laundering in general, there have been convictions in recent times which may be related to issues in the North of Ireland. On the point regarding cohabitants, a Fine Gael amendment has been tabled on the issue and we will be able to consider it later.

On Deputy Flanagan's question, the section is specifically designed to capture the unique setting up of a bank account, the operational reality of a bank and its customers, to try to avoid the embarrassment of unnecessarily raising a suspicion when somebody is merely opening an account, while retaining the safeguards required by the directive, ensuring no transactions can take place until the verification is done. That is the thinking behind the section.

I am concerned that there would be a lesser degree of scrutiny on the matter of opening a bank account than there is on a tax adviser or a legal adviser providing a service. Somebody could arrive at a solicitor's office with a bag of cash and say he or she is thinking of buying a house, asks the solicitor to lodge the money to his or her account and the auctioneer will be in contact with the details. The solicitor might have no knowledge of the person or have any information which might lead him or her to believe this could be a suspicious transaction; the money may have been under a mattress for many years or be an inheritance, the particulars of which the solicitor does not have. With this Bill in mind, the solicitor could tell such a person to put the money in the bank, and when it is in the bank and the auctioneer provides details of the business transaction or whatever, he will contact the solicitor. The money could be a deposit or the entire purchase money, which could be forwarded by the bank at that stage. In other words, the onus could be put on the financial institution if the person did not wish to engage in the type of scrutiny this Bill might at a later stage impose.

I would therefore be concerned if there was not the same high degree of scrutiny or onus of due diligence placed on the bank official or credit union manager or, indeed, the official at junior level who might be at a hatch in a financial institution taking in money or opening accounts. It could well be the case that such diligence is already in place or perhaps other sections of the Bill deal with my point. However, I would be concerned if the level of scrutiny imposed on auditors, accountants, lawyers and so forth was not imposed on credit institutions.

I will come back to Deputy Tuffy. We will deal with Deputy Flanagan's point first because it is different from Deputy Tuffy's.

The Deputy is describing a guy who brings a bag of cash into his solicitor's office or political office and tells him to lodge it. That is a transaction. This amendment is trying to capture a situation where somebody is simply opening a client account in a solicitor's office, that is, where the person tells the solicitor that he wants him to open a client account but there is no transaction or cash involved. The anomaly the Deputy points out is that the solicitor must carry out the verification exercise even in opening a client account without a transaction, whereas the credit institution can open a bank account with no transaction without having to do the verification until there is some activity in the account. That is a difference, but I do not believe it is an anomaly. One has different relations with a bank; it is quite different from going to a solicitor's office. There are reasonable public policy grounds to allow the amendment. It properly captures the reality of banking in Ireland and the reality of other highly suspicious situations where somebody can go to a solicitor and ask for a large amount of money to be lodged. If a solicitor can do something in terms of a risk assessment, that should be done.

Why does it only apply to politically exposed persons who reside outside the State? Why does it not apply to politically exposed people in the State?

It is a direct transposition of what the directive requires. Even the phrase in the definition is strange. We do not tend to use phrases such as "politically exposed person". It could mean anything in Ireland but it is a direct transposition of the new and extra requirements of the directive.

Amendment agreed to.
Amendment No. 26 not moved.

I move amendment No. 27:

In page 36, subsection (9), to delete lines 42 and 43.

The relates to the cohabitant, which was referred to earlier by Deputy Tuffy and the Minister. The amendment seeks to delete the lines on the basis that there is a difficulty with the definition and an absence of clarity and certainty in the current wording. The Minister should delete these lines and perhaps consider the definition in the forthcoming civil partnership legislation. Although it is not yet enacted, it will be. That might be more appropriate than attempting to define cohabitant in a way it has not been defined previously. There is no requirement on the parties to live together under the one roof for any period of time so it is open to a number of interpretations as to what exactly is meant by the term "cohabitant". Perhaps between now and Report Stage the Minister might be in a position to look again at the current wording and consider the definition in the current civil partnership Bill. I do not intend to divide the committee on this point but I ask the Minister to examine it.

The effect of the proposed amendment would be to delete paragraph (c) from the definition of immediate family member, that is, any cohabitant whether or not of the opposite sex with the politically exposed person. Section 37 requires a designated person to take steps to determine whether a customer residing in a place outside the State is a politically exposed person or immediate family members or close associates. If a customer falls within one of these categories, the designated person must determine the source of wealth and funds involved, and if it is proposed to establish a business relationship with a customer, obtain approval from senior management.

These provisions are required to give effect to Articles contained in the directive and the related implementing directive. In particular, Article 2 of the implementing directive sets out details of the types of persons who should be captured by the definition of politically exposed person and related groups, and is the source of the definitions in the Bill. The intention of paragraph (c) is to ensure that persons often known as “de factos” are subject to the same level of scrutiny as persons described in paragraphs (a) and (b). This is spouses in the case of the former and, in the case of the latter, any person who is considered to be equivalent to a spouse of the politically exposed person under the national law of the place where that person resides. The reason we have included paragraph (c) is that in some countries only civil partners will be captured by paragraph (b) whereas in other countries de factos may be captured by paragraph (b). In terms of the potential risk of money laundering activities, there is no reason a person falling within paragraph (c) could be viewed as a lower risk than the others. Paragraph (g) also refers to a cohabitant in the context of a child of the politically exposed person. For these reasons I cannot accept the amendment.

I ask the Minister to examine what is in the Civil Partnership Bill. It might introduce a level a certainty that is not in this Bill. An important point is that there is a difference between the cohabitant referred to in paragraph (c) and the other parties mentioned, that is, the spouse, the person considered to be the equivalent of a spouse, the child, the spouse of a child, a person considered to be equivalent to the spouse of a child, a parent or any other family member. The difference is that this cohabitant could in no circumstances reside in this State because to qualify as a cohabitant he or she must reside with the other person. This is different from the spouse because the spouse need not necessarily reside with the customer. The parent and the children need not reside with the customer either, but the cohabitant must reside with the customer. There could be circumstances where there could be uncertainty, and if there is such uncertainty, it could be seen to be a weakness.

I ask the Minister to examine the definition in the Civil Partnership Bill between now and Report Stage. I do not have it to hand but I believe it fits the bill and would introduce a level of clarity.

The points are well made. I see where the phraseology originated because in a country where under national law a person is considered to be equivalent to a spouse, it might include certain other categories. It could be only a civil partner, as we understand it in our proposed legislation, and therefore exclude individuals who might be partners in any other way. In addition, people who live under the one roof might be cohabitants but there might not be any intimate relationship of any nature. There is a lack of clarity there. We will consider those points on Report Stage and consider a further amendment.

Amendment, by leave, withdrawn.

I move amendment No. 28:

In page 37, subsection (9), line 12, to delete "year" and substitute "12 months".

Amendment agreed to.
Section 37, as amended, agreed to.
Amendment No. 29 not moved.
Sections 38 and 39 agreed to.
SECTION 40.

I move amendment No. 30:

In page 39, subsection (1)(a)(ii), lines 15 and 16, to delete “foreign exchange, or money transmission, services” and substitute the following:

"either foreign exchange services or payment services, or both".

Amendment agreed to.

I move amendment No. 31:

In page 39, subsection (1)(b)(ii), lines 34 and 35, to delete “foreign exchange, or money transmission, services” and substitute the following:

"either foreign exchange services or payment services, or both".

Amendment agreed to.

I move amendment No. 32:

In page 40, subsection (1)(c)(ii), lines 5 and 6, to delete “foreign exchange, or money transmission, services” and substitute the following:

"either foreign exchange services or payment services, or both".

Amendment agreed to.
Question proposed: "That section 40, as amended, stand part of the Bill."

Compliance Ireland and the consultative committee for the accountants raised a point in regard to section 40(4). They said it should include the words "a relevant third party". I raise that in case I have to table an amendment on Report Stage. Has that been considered by the Minister of State and his advisers?

Absolutely everything has been considered. If the Deputy wishes to table an amendment on Report Stage, she may do so. I think she is just putting it on the record to——

I am putting it on the record but does the Minister of State believe those words should be included?

In the absence of an amendment for which we can prepare, it is hard to give a full answer. If the Deputy wishes to table an amendment, it can be considered on Report Stage.

Question put and agreed to.
NEW SECTION.

I move amendment No. 33:

In page 41, before section 41, to insert the following new section:

41.— In this Chapter, a reference to a designated person includes a reference to any person acting, or purporting to act, on behalf of the designated person, including any agent, employee, partner, director or other officer of, or any person engaged under a contract for services with, the designated person.".

This proposed amendment is to provide for the inclusion of persons acting on behalf of a designated person such as selling agents or other intermediaries working on behalf of the designated person set out in this Chapter. The requirement in the Bill also applies to an employee, a partner, a director or other officer or any other person engaged in a contract for services with the designated person.

This provision applies only to such agents in circumstances where they know or suspect that a person is engaged in an offence of money laundering or terrorist financing. The legal advice available to us on this point is that agents as such could not be regarded as designated persons for the purpose of this Bill but they should be required to report suspicious transactions.

The Bill does not apply to agents, however the reporting of suspicious transactions is such an important element in the detection of money laundering that it is felt such a provision is essential. I commend this amendment to the committee.

Amendment agreed to.
Section 41 deleted.
SECTION 42.
Amendment No. 34 not moved.
Question proposed: "That section 42 stand part of the Bill."

What is the meaning of the term "in the course of reasonable business practice"? Why is it felt necessary to include that phrase?

Is that section 42(3)?

Yes. What does that mean?

For the purposes of subsections (1) and (2) a designated person is taken not to have reasonable grounds to know or to suspect that another person commits an offence on the basis of having received information until the person has scrutinised the information in the course of reasonable business practice.

Most professions have their own regulations and guidelines. Later in the Bill, there is reference to the fact that in a prosecution under the legislation, the trial judge can have regard to practices that occur within a specific profession and both Departments will work with those professional bodies in the preparation of those types of guidelines. I presume it is trying to capture the fact that in different professions, one will find different business practices and that they can be taken into account when a judge is considering whether to make a conviction in the case.

A rather detailed point is made by Compliance Ireland. If the Minister of State has not seen it, I would ask that he look at it before the completion of the Bill. Attention has been drawn to the difference in the current section 42, dealing with the reporting of money laundering, and section 57 of the Criminal Justice Act 1994. We are informed to the effect that section 42 does not include an obligation to report another designated person breaching the control obligations.

The Minister of State will be aware of section 57 of the 1994 Act and the transfer of business from one bank to another. In the example give by Compliance Ireland, bank A when taking over the clients of bank B would not be obliged to report bank B if it was discovered that bank B did not identify its clients or if bank B had ignored its administrative responsibilities under the 1994 Act.

The ability to report another financial institution for poor controls has meant that banks and other financial institutions have an incentive to do their job properly. It is advised that section 42 be expanded to include suspected breaches of Part 4, Chapters 3 and 6, dealing with internal policies and procedures, training and the keeping of records.

An amendment has not been tabled on Committee Stage but that is not sufficient reason for this to be ignored. It is an important point and I ask the Minister of State to give it due consideration. In the event of there being merit in the point made, I would support any amendment the Minister of State might table on Report Stage.

I raise a point made by the consultative committee for the accountants. It suggested a different wording for section 42(6) as it has a problem with the current wording. It recommended a specific wording whereby the provision in section 42(6)(d) would be much clearer. We may not have received these submissions in time to table amendments on Committee Stage but I understand they were submitted to the Department and the Minister, although I may be wrong about that.

Where a particular wording is proposed in one of the submissions, has the Minister of State considered it? The submission by the consultative committee for the accountants recommended a specific wording for section 42(6). Has it been considered?

For the information of members — I know Deputy Tuffy is not a member and is substituting today — this was circulated on 7 December 2009.

I do not believe the Compliance Ireland submission was furnished but the other one was.

I will start with Deputy Charles Flanagan's point about bank A receiving the business of bank B. In general, there is a requirement to report the commission of an offence. That would apply in that situation where bank A would have a suspicion that bank B's clients were not properly verified under this Bill. There might be a requirement for more clarity on that, as suggested, but we would certainly consider those. Obviously, the intention is to make it as robust as possible and ensure we can carry prosecutions.

We have not seen a Compliance Ireland submission, as far as I am informed. I have not seen the other one to which Deputy Tuffy referred. If it is helpful that paragraph (d) has more detail on any further relevant information, then I am sure it will be considered at Report Stage.

One of the points it makes is that the wording in the third directive better reflects what they consider should be in this Bill. It says the wording in the third directive requires all necessary information to be provided rather than any other relevant information, and then it suggests a wording. I could table an amendment on Report Stage. Did the Department have any thoughts on that?

Before I go back to the Minister of State, could I get the agreement of the committee that we make a copy of this submission available to the Minister.

Do so immediately. I am surprised that this has not happened.

Obviously, it is a matter for Compliance Ireland, not the committee, to supply it to the Minister.

Of course. However, it could be done now.

We will provide a copy of it now.

That should be done straightaway. Thank you, Chairman.

When was this submission given to the committee?

On 7 December.

The deadline for making amendments was this week, was it not?

On a general point, the Law Society, accountants and banks, like many other interested parties, suggested changes they felt would benefit their members in the context of the Bill. The Department gave careful consideration to all the submissions received. Officials have been in touch with relevant bodies — accountants, banks and the Law Society — in the meantime. We are happy to consider anything that makes the legislation watertight and eliminates potential loopholes or anomalies.

Question put and agreed to.
SECTION 43.

I move amendment No. 35:

In page 42, subsection (1), line 30, after "Síochána" to insert "and Revenue Commissioners".

Reporting to the Garda Síochána and the Revenue Commissioners is required in a number of different provisions in the Bill. This proposed amendment relates to the requirement for designated persons to report transactions connected with places having inadequate procedures for detecting money laundering and terrorist financing. It is intended to maintain a consistent approach to the reporting requirements by including the Revenue Commissions, along with the Garda, as authorities to which a report should be made in these circumstances. I commend the amendment to the committee.

Amendment agreed to.
Amendment No. 36 not moved.
Section 43, as amended, agreed to.
Sections 44 and 45 agreed to.
SECTION 46.
Question proposed: "That section 46 stand part of the Bill."

A point on section 46 was made by the Law Society. Did the Minister have an opportunity to look at it? It relates to the matter of disclosure not being required in certain circumstances. The Law Society took the view that the provision should expressly refer to "relevant independent legal professional", a category which is most likely to be involved in ascertaining the legal position for clients.

The consultative committee pointed out that the wording of this provision is different to the wording in the directive. Has the Minister of State any comments on that submission from the consultative committee?

I support the point made by Deputy Charles Flanagan.

There are no amendments tabled on this. I cannot give the committee a full response to it. Clearly, the intention is to protect the principle of legal privilege in all its forms. If there is a proposal to amend it, it is open to members of this committee to propose that now or on Report Stage. It must be considered in that context.

The point made is — why change it at all?

Perhaps that is something that could be looked at between now and Report Stage.

Yes. It is something to which we can come back.

Question put and agreed to.
Sections 47 agreed to.
SECTION 48.
Question proposed: "That section 48 stand part of the Bill."

On section 48, indeed, on Chapter 5, there is a strong case to be made for replicating Article 28.6 here, but I am not sure of the reason it is being done differently on the basis of tipping off designated persons.

Would the Deputy read Article 28.6? If there are no amendments, it is difficult to keep up with the Deputy.

Perhaps the Minister of State would take a look at it between now and Report Stage.

It is in the submission from Compliance Ireland.

All of the submissions were considered.

Except that one. That one was not——

Because the Minister of State did not have it.

——because the Minister of State did not have it.

Question put and agreed to.
Amendment No. 37 not moved.
Sections 49 to 53, inclusive, agreed to.
SECTION 54.

Amendment No. 38 in the name of the Minister. Amendments Nos. 55 and 56 are related. Amendments Nos. 38, 55 and 56 will be discussed together.

I move amendment No. 38:

In page 47, subsection (5), lines 21 to 23, to delete all words from and including "code" in line 21 down to and including "Section 108" in line 23 and substitute the following:

"guidelines applying in relation to the designated person that have been approved under section 107”.

Section 54(5) provides that designated persons covered by it shall have regard to any relevant codes of practice in preparing policies and procedures to prevent and detect money laundering and terrorist financing. A similar provision is a feature of the current anti-moneylaundering provisions in the Criminal Justice Act 1994, which provides, in section 57A(7), that a court may take account of any relevant supervisory or regulatory guidance which applies to that person or any other relevant guidance issued by a body that regulates or is representative of any trade, profession, business or employment carried on by that person. There are, therefore, already guidelines prepared by the designated bodies covered by the existing anti-moneylaundering legislation which are consulted by practitioners when applying the law in this area. Courts can have regard to these guidelines currently in determining if a person complied with the requirements of the 1994 Act. In light of the new and updated provisions in this Bill, it will be necessary to provide for similar provision in this legislation also. It is our understanding that the preparation of new guidance by many of the interested parties covered by this Bill is at an advanced stage. These guidance documents are expected to be completed as soon as the legislation is passed.

The Bill, as published, refers to such guidance as codes of practice. It has been decided since publication of the Bill that the term "guidelines" would be preferable and would more accurately reflect the status and function of the guidance provided for different sectors.

Amendment No. 38, which amends section 54, reflects this change of description. It also contains a minor drafting change to a reference to section 107 rather than section 108.

Amendments Nos. 55 and 56 propose a policy change on the approval of such guidelines. Heretofore such guidelines received the approval of a money laundering steering committee chaired by an official of the Department of Finance. As this Bill is primarily a criminal justice measure and, therefore, comes under the aegis of the Department of Justice, Equality and Law Reform, it is more appropriate that guidelines prepared by those covered by this Bill should be approved by the Minister for Justice, Equality and Law Reform in consultation with the Minister for Finance. It is proposed that they put a structure in place to process the approval of such guidelines in future. Amendments Nos. 55 and 56, therefore, are intended to ensure that the approval of such guidelines will be by the Minister for Justice, Equality and Law Reform, in the first instance, in consultation with the Minister for Finance.

Both amendments also propose replacement of the term "code of practice" with "guidelines". In the same way as a court currently has regard to such guidance under existing legislation, this Bill provides, in section 107, that a court can have regard to guidelines approved by the Minister in determining whether a defendant took all reasonable steps and exercised all due diligence to avoid committing the offence. I commend the amendment to the committee.

The Minister of State has dealt with the issue in the amendment, but I would like to point out that Compliance Ireland highlighted the fact that section 108 was incorrectly referenced in the Bill as drafted. It also suggested this issue would, no doubt, be expanded upon in the codes to be issued by the Minister under section 107. It picked up on this error.

Amendment agreed to.
Amendment No. 39 not moved.
Section 54, as amended, agreed to
SECTION 55.
Amendment No. 40 not moved.
Question proposed: "That section 55 stand part of the Bill."

Compliance Ireland makes the point that section 55 which deals with record keeping requirements does not correspond to Article 30 of the directive which requires that records be kept for at least five years after the ending of the business relationship and that transaction records be kept for at least five years after the relevant transaction. Both Compliance Ireland and the consultative committee expressed concerns about this section. The issue of customer and business relationships is not straightforward. Some relationships extend for a long time and the question is whether the section, as worded, caters for the keeping of records over the course of the relationship with the customer. There are concerns about how extensive is the provision.

The directive refers to a period of at least five years and states that in the case of a customer due diligence requires a copy or references be kept as evidence for at least five years after the ending of the business relationship with the customer. As the Deputy knows, the practice in Ireland for solicitors and others has been to retain records for six years. This complies almost exactly with the directive.

Does that relate to all records? Perhaps a relationship with a customer has been ongoing for 30 years. Does the directive mean all records to do with that client must be retained?

No. Section 55 states a designated person should keep records as evidence of the procedures applied. It goes on to give further details. Therefore, not everything must be retained.

Question put and agreed to.
Amendment No. 41 not moved.
Section 56 agreed to.
Amendment No. 42 not moved.
Section 57 agreed to.
Amendment No. 43 not moved.
Section 58 agreed to.
Amendment No. 44 not moved.
Sections 59 to 62, inclusive, agreed to
SECTION 63.

Amendments Nos. 45 and 46 are related and will be discussed together. Is that agreed? Agreed.

I move amendment No. 45:

In page 52, subsection (2), line 35, to delete "Such measures may include" and substitute the following:

"The measures that are reasonably necessary include".

Section 63 deals with the general functions of a competent authority. Subsection (1) provides for a competent authority to monitor the designated persons for whom it is a competent authority and to take measures that are reasonably necessary for the purpose of securing compliance by those designated persons with the requirements of this Part of the Bill. Subsection (2) currently provides that such measures may include reporting knowledge or suspicions of money laundering or terrorist financing. The amendment to this subsection and the insertion of a new subsection provide certainty with regard to the measures that are reasonably necessary and the requirement for a competent authority to report any knowledge or suspicion of money laundering or terrorist financing required in the course of carrying out its monitoring functions. I commend the amendment to the committee.

I agree this is important.

Is the Minister of State happy he has satisfied the concern raised by the Law Society which states it does not have the authority or permission to ensure the monitoring obligations are met on a risk sensitive basis? Does the amendment cover that problem or is this a separate issue?

It is part of the old 1994 Act that a supervisory body such as the Law Society has to report suspicions. This is in compliance with Article 25 of the directive.

Has the Minister of State discussed the matter with the Law Society and is it happy with the amendment?

Yes. I understand all of the submissions made by the Law Society were considered and that all of its observations were discussed during the meetings.

Amendment agreed to.

I move amendment No. 46:

In page 52, after line 43, to insert the following subsection:

"(4) A competent authority that, in the course of monitoring a designated person under this section, acquires any knowledge or forms any suspicion that another person has been or is engaged in money laundering or terrorist financing shall report that knowledge or suspicion to the Garda Síochána and Revenue Commissioners.".

Amendment agreed to.
Section 63, as amended, agreed to.
Sections 64 to 75, inclusive, agreed to.
SECTION 76.

Amendment No. 47 is an alternative to amendment No. 46a. These amendments are related and will be discussed together. Is that agreed? Agreed.

I move amendment No. 46a:

In page 56, lines 13 and 14, to delete all words from and including "any" in line 13 down to and including "purposes" in line 14 and substitute "any dwelling".

Section 8 includes provisions relating to the appointment of authorised officers by a stated competent authority and certain powers available to enable them to carry out their functions. Section 75 contains general powers for an authorised officer to enter premises, while section 77 sets out the powers of an authorised officer at any premises lawfully entered. Section 76 was included as a result of Article 40.5 of the Constitution which provides that the dwelling of every citizen is inviolable and shall not be forcibly entered, save in accordance with existing law. Its purpose is to ensure a dwelling cannot be entered by an authorised officer without the permission of the occupier or the authority of a warrant issued by a judge of the District Court under section 78. If the intention of Deputy Tuffy's amendment to section 76 is to clarify the issue in order to achieve the intentions outlined, I thank her for her suggestions. Arising from her proposals, this section and section 78 which is dealt with in the next group of amendments were given further consideration. The Minister decided to amend the sections to ensure there was no ambiguity. Our view is that the Deputy's proposed amendment would not achieve the desired outcome. It is preferable to amend the current wording of these provisions, as outlined in the official amendments, in order to avoid any potential ambiguities. The official amendments will also replace the term "residential" with "dwelling". I commend the Minister's amendments to the committee.

The amendments are welcome and deal with the issue we raised.

Amendment agreed to.
Amendment No. 47 not moved.
Section 76, as amended, agreed to.
Section 77 agreed to.
SECTION 78.

As amendments Nos. 48 to 50, inclusive, are alternatives to amendment No. 47a, they may be discussed together.

I move amendment No. 47a:

In page 57, lines 19 to 47 and in page 58, lines 1 to 9, to delete subsections (1) to (3) and substitute the following:

"78.—(1) A judge of the District Court may issue a warrant under this section if satisfied, by information on oath of an authorised officer, that there are reasonable grounds for believing that—

(a) documents relating to the business of a designated person that are required for the purpose of assisting the State competent authority that appointed the authorised officer under this Chapter in the performance of the authority’s functions under this Part are contained on premises, and

(b) the premises comprise a dwelling or an authorised officer has been obstructed or otherwise prevented from entering the premises under section 75.

(2) A warrant under this section authorises an authorised officer, at any time or times within one month of the issue of the warrant—

(a) to enter the premises specified in the warrant, and

(b) to exercise the powers conferred on authorised officers by this Chapter or any of those powers that are specified in the warrant.”.

As a consequence of the protection given to the inviolability of the home under Article 40.5 of the Constitution, we must be conscious of the need for an authorised officer to obtain a warrant if it is intended to enter a dwelling without the permission of the occupier. The amendment I propose, which is linked to the previous amendment to section 76, is intended to remove any potential ambiguities. There is no change in intention from the draft Bill, as initiated. This section is merely being redrafted in what we think is a clearer way. The amendment proposes that a warrant may be issued by a judge of the District Court if he or she is "satisfied, by information on oath of an authorised officer, that there are reasonable grounds for believing" that relevant documents which would assist the State competent authority "are contained on premises", and "the premises comprise a dwelling or an authorised officer has been obstructed or otherwise prevented from entering the premises". I commend the amendment to the committee.

The Minister of State has dealt with the issues raised in our related amendments.

Amendment agreed to.
Amendments Nos. 48 to 50, inclusive, not moved.
Question proposed: "That section 78, as amended, stand part of the Bill."

Is it possible for me to speak on amendment No. 50, which relates to a separate issue?

We have already dealt with amendment No. 50. The Deputy can speak about the relevant issue in the context of the debate on section 78 as a whole.

I have a note on amendment No. 50.

I am trying to ascertain whether part of the section has been deleted.

It would be helpful if the Minister of State were to read his note.

Amendment No. 50 proposes to replace the word "oath" with the term "oath or affirmation". It is not necessary to include the words "or affirmation" after the word "oath" in this section. It is not the practice to do so. The Interpretation Act 2005 states that ""oath", in the case of a person for the time being allowed by law to affirm or declare instead of swearing, includes affirmation or declaration". It is generally preferable not to attempt to deal with or define something in a Bill or Act that is already dealt with in the Interpretation Act 2005, as to do so could potentially undermine the intention of the 2005 Act and cast doubt on the provisions in it.

Question put and agreed to.
Sections 79 to 86, inclusive, agreed to.
SECTION 87.
Amendment No. 51 not moved.
Question proposed: "That section 87 stand part of the Bill."

This section relates to the business of a trust. The Law Society has made a substantial point on Chapter 9 which comprises sections 84 to 106. The sections in question propose that the Law Society should monitor the compliance of trust and company service providers that are controlled solely by their members. The Law Society has clarified its policy position on this. I have been given details of its current position. I assume the Minister of State has also seen that document and is happy enough to deal with the issue in the manner proposed.

The provisions of this Part have also been raised by the consultative committee for accountants. The committee may have referred to the definitions in section 84, but it is a similar point. The committee stated that a trust and company service provider should not include a member of a designated accountancy body whose business activities are subject to regulation and monitoring by virtue of holding a valid practising certificate from that designated accountancy body. I raised this matter in case an amendment is needed on Report Stage. It may not relate to the issue raised by Deputy Flanagan.

I think the Deputy is right. Her remarks pertain to the exclusion provided for in section 84. The inclusion of the phrase "designated accountancy body" in the definition mentioned by the Deputy was considered by the Department. Perhaps its inclusion was deemed not to be necessary as the existing definition is sufficiently broad to capture members of such a body. We can consider the matter again on Report Stage.

Question put and agreed to.
Sections 88 to 97, inclusive, agreed to.
SECTION 98.

I move amendment No. 52:

In page 70, subsection (6)(b), line 2, to delete “Part” and substitute “Chapter”.

The purpose of this amendment is to change the reference to "Part" in section 98(6)(b) to “Chapter”. Section 98 is part of Chapter 9 which deals with the authorisation of trust and company service providers. The relevant part of the Bill, Part 4, contains ten chapters, of which Chapter 9 is relevant for the purposes of section 98. The amendment, therefore, corrects this reference.

Amendment agreed to.
Amendment No. 53 not moved.
Section 98, as amended, agreed to.
Sections 99 to 105, inclusive, agreed to.
Amendment No. 54 not moved.
Section 106 agreed to.
SECTION 107.

I move amendment No. 55:

In page 74, lines 43 to 44 and in page 75, lines 1 and 2, to delete subsection (1) and substitute the following:

"(1) The Minister may, after consulting with the Minister for Finance, approve guidelines for the purpose of guiding designated persons on the application of this Part to those designated persons.".

Amendment agreed to.

I move amendment No. 56:

In page 75, subsection (3), lines 8 to 10, to delete all words from and including "code" in line 8 down to and including "force" in line 10 and substitute the following:

"guidelines applying in relation to the person that have been approved by the Minister under this section and are in force".

Amendment agreed to.
Section 107, as amended, agreed to.
Sections 108 agreed to.
Amendment No. 57 not moved.
Sections 109 to 111, inclusive, agreed to.
SECTION 112.

I move amendment No. 58:

In page 77, subsection (2), line 40, after "purpose," to insert "as giving rise to civil or criminal liability or".

This amendment proposes that to clarify that a disclosure under section 112 will not give rise "to civil or criminal liability". Perhaps the Minister of State would like to comment on this revised wording.

It is important to consider that the intention of section 112 is to protect those who report a suspicion of money laundering or terrorist financing so that where such a report has been made in good faith, it will not be treated as a breach of disclosure of information regulations imposed by other enactments or by rule of law.

While I understand the intention of the Deputy's amendment, that is, to ensure persons who comply with the law and report such suspicions are fully protected, it is not necessary. Civil or criminal liability could not arise unless there was a breach of an enactment or the rule of law. The section specifically states that, in the circumstances outlined, it would not constitute such a breach. For these reasons, the inclusion of an express reference to liability is not required. Therefore, I do not accept the amendment.

Amendment, by leave, withdrawn.
Section 112 agreed to.
NEW SECTIONS.

I move amendment No. 59:

In page 77, before section 113, to insert the following new section:

113.—The Schedule to the Bail Act 1997 is amended by inserting the following paragraph after paragraph 34 (inserted by section 48 of the Criminal Justice (Miscellaneous Provisions) Act 2009):

35.—Any offence under Part 2 of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2009.“.”.

This amendment is to include the principal offence of money laundering in the Schedule to the Bail Act 1997. As Deputies will be aware, under section 2 of that Act, an application for bail made by a person charged with a serious offence may be refused if the court is satisfied that it is reasonably necessary to prevent the commission of a serious offence by that person. Section 1 of the 1997 Act defines a serious offence as one specified in the Schedule for which a person may be punished by a term of imprisonment of five years or more. As the penalty for the principal offence of money laundering carries a term of imprisonment of up to 14 years, it is appropriate to include this offence. I commend the amendment to the committee.

Amendment agreed to.

I move amendment No. 60:

In page 77, before section 113, to insert the following new section:

113.—The Proceeds of Crime Act 1996 is amended in section 4(1) by the substitution of "2 years" for "7 years".".

The purpose of this amendment is to bring the Proceeds of Crime Act 1996 into line with the legislation before the House. Does the Minister of State have any comments to make on it?

The amendment goes beyond the scope of the Bill because it purports to amend the proceeds of crime legislation. It would not be an appropriate amendment to the Bill and should be considered in the context of a review of the proceeds of crime legislation. As the Deputy will be aware, on 30 December 2009 the Minister issued a statement on the annual report on the activities of the Criminal Assets Bureau for 2008, in which he expressly referred to the establishment of an expert group comprising representatives of the CAB and his Department to review the operation of the legislation. In this respect, one of the issues to be examined in the review is decreasing the amount of time that must elapse before criminal assets that have been frozen become the property of the State. As Deputies will appreciate, it might be unwise to accept such an amendment in the light of the review. For these reasons, I cannot accept the amendment.

That is fine and I will withdraw the amendment. The point has been made to me that the conditions that now affect professionals such as accountants and solicitors in regard to money laundering, theft and fraud might be different in different Acts. The money laundering legislation introduces certain conditions for solicitors, accountants, etc., whereas other legislation covering the same individuals might impose different conditions in respect of the requirements related to reports and disclosures. Has a study been carried out with a view to streamlining all of the provisions included in similar Acts pertaining to the proceeds of crime and money laundering? It is getting very complicated for the professionals involved. This is happening in all areas of life and has much to do with EU legislative requirements. Is there any way we can consolidate the legislation to ensure professionals will not have to produce multiple reports and to prevent duplication and overlapping?

I am informed there is an ongoing project on codifying the criminal law involving the Department of Justice, Equality and Law Reform and UCD. In any case, each of the professional sectors has its own guidelines. The Department is working with the sectors to ensure they are in compliance with the law. This will ensure the streamlining to which the Deputy refers. The project will draw on all the relevant legislation and statutes. That is the best outcome.

Amendment, by leave, withdrawn.
Sections 113 to 115, inclusive, agreed to.
SECTION 116.

I move amendment No. 61:

In page 80, between lines 33 and 34, to insert the following subsection:

"(4) Section 3(1) of the Act of 1994 is amended by the insertion of the following definition—

" ‘gift' includes a transfer in consideration of natural love and affection or otherwise than for full commercial value, and includes the transfer by one spouse of property to another spouse, or an arrangement between spouses for the joint ownership of any property;" ".

The purpose of the amendment is to define "gift". Does the Minister of State have any comments to make on why it should or should not be included in the Bill?

The proposed amendment to the Criminal Justice Act 1994 is outside the scope of the Bill. We are advised by the Office of the Attorney General that it does not come within the remit of the Bill as set out in the Long Title and Short Title. The acceptance of such an amendment would, among other things, require an amendment to the Long Title. Furthermore, the proposed amendment, as it stands, seeks to define the term "gift". However, that term is not used at any point in the Bill. The amendment, as it stands, appears in isolation to the rest of the Bill.

The term "gift" is found in the Criminal Justice Act 1994 in which it is considered in the context of amounts that may be realised on foot of a confiscation order. Gifts that a defendant makes directly or indirectly to another may be regarded as realisable property for the purposes of that Act. Section 3(2) provides, inter alia, that amounts that may be realised at the time of a confiscation order include the aggregate value of all gifts caught by the Act. However, confiscation orders in that legislation relate to areas unconnected with money laundering and terrorist financing. Specifically, they apply to drug trafficking offences and others where property is obtained as a result of the commission of that offence. It is not considered appropriate to amend the Criminal Justice Act 1994 in this Bill in regard to matters that are outside the scope of money laundering and terrorist financing. We are transposing an EU directive in this legislation. That directive has a specific purpose in combating money laundering and terrorist financing. It is not appropriate to use it as a vehicle to amend other statutes covering unrelated areas. For that reason, I cannot accept the amendment.

Amendment, by leave, withdrawn.

I move amendment No. 62:

In page 80, between lines 33 and 34, to insert the following subsection:

"(5) Section 24 of the Act of 1994 is amended by the insertion after subsection (10) of the following subsection—

"(11) A court may on or at any time after an application under this section direct the respondent to the application to deliver a statement of his or her income and assets, but such a statement shall not be admissible in evidence against the person for any offence other than an offence of contempt of court arising from a breach of an order under this subsection." ".

This amendment sets out that if a respondent is required to deliver a statement of his or her income and assets, the statement should not be admissible in evidence against the person for any offence other than an offence of contempt of court arising from a breach of an order under this subsection. The purpose is to ensure there would be fair procedures. Does the Minister of State have any comments to make on it?

The principle that applied in the case of amendment No. 61 also applies to this amendment which is also outside the scope of the Bill. Section 116 relates to consequential amendments of the Criminal Justice Act 1994. This has reference to an amendment consequential on other provisions set out in the Bill being considered. Section 24 or the 1994 Act which the Deputy's proposal intends to amend deals with restraint orders, a form of freezing order that may be made by the High Court where it is satisfied that it may be instituted against a person for an offence. The aim of the provision is to prevent the assets being dissipated before a confiscation order under the same Act comes into force. These kinds of orders go beyond the offence of money laundering and terrorist financing. What is being proposed is an amendment to a provision not within the scope of the Bill. My advice is that the acceptance of such an amendment would also require a change to the Long Title of the Bill. For these reasons, I am not in a position to accept the amendment.

Amendment, by leave, withdrawn.
Section 116 agreed to.
Sections 117 and 118 agreed to.
SECTION 119.

I move amendment No. 63:

In page 81, to delete lines 8 to 14 and substitute the following:

"(iv) money or investment instruments arising out of transactions in respect of which an offence has been committed under a provision of Part IV of the Criminal Justice Act 1994 prior to the repeal of that provision by the Act of 2009,

(v) money or investment instruments arising out of transactions in respect of which an offence has been committed under a provision of section 57 or 58 of the Criminal Justice Act 1994 prior to the repeal of that provision by the Act of 2009, or

(vi) money or investment instruments arising out of".

The primary purpose of the amendment is to correct an error in section 119. Part 4 of the Criminal Justice Act 1994 is completely repealed in the Bill, whereas not all of sections 57 and 58 are repealed therein. The section, as currently presented, would exclude the application of the provisions in the section to sections 57 and 58. The official amendment corrects this issue and also separates the references to sections 57 and 58 and Part 4 of the 1994 Act which in the Bill are in one subsection into two subsections to ensure clarity of intention in the section. I commend the amendment to the committee.

Amendment agreed to.
Section 119, as amended, agreed to.
Sections 120 and 121 agreed to.
Schedule 1 agreed to.
SCHEDULE 2.

I move amendment No. 64:

In page 85, to delete line 11 and substitute the following:

"4. Payment services as defined in Article 4(3) of Directive 2007/64/EC of the European Parliament and of the council of 13 November 2007 on payment services in the internal market'."

Amendment agreed to.

I move amendment No. 65:

In page 85, to delete lines 12 and 13 and substitute the following:

"5. Issuing and administering other means of payment (e.g. travellers' cheques and bankers' drafts) insofar as this activity is not covered by point 4.".

Amendment agreed to.

I move amendment No. 66:

In page 85, between lines 31 and 32, to insert the following:

"15. Issuing electronic money.".

Amendment agreed to.
Schedule 2, as amended, agreed to.
Title agreed to.

I thank the Minister of State, Deputy Barry Andrews, and his officials for attending here this morning and the members of the committee for their co-operation.

Several people have raised the issue of the implementation of the Bill. The Law Society said there are provisions available in England and Wales to lawfully provide legal services to individuals in receipt of payments it might suspect represent the proceeds of criminal conduct in the context of solicitors, and how this principle is based on the right to obtain legal advice and the legitimacy provided by the lawyer. The Law Society points to a provision under section 329 of the Proceeds of Crime Act 2002 and believes there should be a similar provision in Irish legislation. I do not know whether it means under another Act, but in any event I raise that point.

We have finished discussing the Bill at this stage.

It is just because it has to do with the implementation. I could raise the matter on Report Stage, but it seemed appropriate to deal with it now. It is just a point the society made and it has obviously made it to the Department as well. On compliance, the Law Society believes the three-month implementation period should be introduced only for those designated persons who are not currently designated bodies. The consultative body for the accountants makes a similar point to the effect that when the legislation is passed it shall train its members to ensure compliance. When the consultative body sees the final legislation, as passed, it says it will need time to train its members from the date of the Bill's passage to its implementation.

Thank you, Deputy. I am sure the Minister will take this into consideration.

Bill reported with amendments.