Amendments Nos. 32 and 38 are related and will be discussed together.
SECTION 43.
Amendments Nos. 30 and 30a not moved.
Section 43 agreed to.
Amendment No. 31 not moved.
NEW SECTION.
I move amendment No. 32:
In page 42, before section 44 (but in Part VII), to insert the following new section:
"44. — (1) Nothing in this Act shall make any failure by a professional legal advisor to disclose any information or other matter which has come to him in privileged circumstances an offence
(2) No person shall, by virtue of any disclosure made pursuant to the provisions of this Act incur any civil liability in respect thereof, save only where the matter purported to be disclosed by such person was to that person's knowledge false.".
Section 44 relates to obligations of disclosure of information. My amendment seeks to clarify the position currently enshrined under common law relating to legal privilege and the confidentiality and protection accorded to communications between lawyer and client. Section 44 (4) refers to statutory and other duties and states that any disclosure as envisaged under this Act by an official or otherwise on the basis of a suspicion of money laundering and so forth will not be treated as a breach of that restriction, statutory or otherwise. To a degree that subsection refers to what I am seeking in my amendment.
Perhaps the Minister would clarify if this covers all communications which occur between lawyer and client and which are traditionally protected by absolute privilege under common law. I note that the principle of legal privilege is recognised under section 51 (5). That section deals with the authority of search by the Garda Síochána in relation to documents. The subsection states:
Where a member of the Garda Síochána has entered premises in the execution of a warrant issued under this section, he may seize and retain any material other than items subject to legal privilege.
It is clear that in section 51 the concept of legal privilege is protected. Given that this Bill overturns traditional notions of confidentiality as they are applied to banker and financial institution and client, it would be useful to clarify the issue of legal privilege. Traditionally it was an absolute privilege from the point of view of both lawyer and client. However, we must also consider what this legislation seeks to achieve. The objective is to catch the financial advisers; bankers, accountants and, perhaps, lawyers who are acting in concert with the criminal in money laundering. I refer to the possibility that a solicitor's client accounts could perhaps be used for depositing laundered money.
In the UK solicitors and accountants have been caught by legislation but only when they are dealing and operating in investment related business under the Financial Services Act. However, legal privilege still provides protection in relation to the normal advice between solicitor and client in criminal proceedings. I put down this amendment because the issue requires clarification in the interest of the legal profession and in the interest of the best purposes of this Bill.
The second section of the amendment relates to the exposure of bank officials and personnel in financial institutions in relation to the obligations imposed on them by this Bill to disclose matters which they consider suspicious in the context of money laundering. Since non-disclosure carries such heavy penalties — up to 14 years imprisonment for non-disclosure of a suspicion — the bank official or the person working in a financial institution who is suspicious of a transaction and who believes he should disclose his suspicions to either the Garda Síochána or to his superior might find himself in an impossible situation if he is also fearful that on disclosing a suspicion that turns out to be unfounded, he is vulnerable to a libel or slander action being taken against him.
The two issues in the amendment are related. The bank official who acts in the public interest and carries out his civic duty under this legislation would, under common law, have qualified privilege. However, if we impose such heavy penalties for non-disclosure it is also necessary to offer some protection to the individual from a libel action. Although the two points in the amendment are quite different, they are related as they refer to the general duty of disclosure in section 44.
Amendment No. 38 is similar in its objective to the second part of amendment No. 32. This section makes it an offence for any person under section 28 who suspects an offence under sections 27 and 28 not to report it. The traditional role of an auditor is one of watchdog and not bloodhound. Those words — used, I remember, by a lecturer of mine — were handed down by a judge in the past and were always quoted as the important line beyond which the auditor is not meant to go. If we put the emphasis on the word "suspect" we are turning bank officials and others into bloodhounds rather than watchdogs and we are going beyond what is reasonable.
Furthermore, we are saying that if they even suspect that it is an offence, then it is an offence not to report it. That is going too far because all manner of things can go through a large company's bank account or through the banking institutions. Somebody could maliciously seek to raise questions about the activities of somebody in public life, for example, and cover themselves by saying that they are obliged to do so if they suspect that something is wrong. I am nervous about the section and the use of the word "suspect." I think it should be "suspect with reasonable cause" or another form of words to put that in context. I might suspect one thing and the Minister might suspect something else and a busybody might suspect everybody. The word "suspect" is subjective.
However, having said that, where a bank official or such person as is defined in the Bill has reasonable grounds for suspecting something and reports it, and it turns out that the suspicions are ill-founded, then if the intention is good and the report is bona fide, that person should not be liable to any court action or action for defamation, particularly if the reporting or the investigation has remained confidential. On the one hand I think that a provision along these lines to protect persons designated should be introduced, but on the other hand the word "suspicion" is too subjective in the section. I ask the Minister to consider those two points.
With regard to the first part of Deputy O'Donnell's amendment, the general thrust of which I support, I would be fearful if we were to include it in this Bill and not in other legislation, and that it would somehow water down the professional privilege that exists between a client and their legal advisers. A person should always be free to consult their adviser without fear of reprisal. In law and in common justice that should be available to people. I worry that if we provide for it in this Bill and do not provide for it in other Acts that, therefore, the law under other Acts regarding people accused of offences is somehow watered down. That is my one reservation, although I support the thrust of what Deputy O'Donnell says, and if that reservation is not real I will be happy not to pursue it.
I wonder how this applies. If a bank official wonders where an individual got, say, £10,000, he might ask a harmless question and be given a plausible answer. How can subsection (3) be applied? How will anyone know that a person suspected something unless he reports it? If he reports it he cannot be found guilty of not complying with section 44 (1). Subsection (3) states that: "A person who fails to comply with subsection (1) or (2) of this section shall be guilty of an offence . . ." If a bank official is suspicious and goes home and tells his partner that someone came in to the bank and he really thought it funny that they had so much money but that he let it go, unless his partner reports this nobody can convict the bank official of being guilty of anything.
Deputy O'Donnell's amendment raises two distinct issues. The first relates to the protection of material which is legally privileged and the second, which covers the same ground as Deputy G. Mitchell's amendment, is concerned with the implementation of article 9 of the EU money laundering directive.
With regard to the first part of Deputy O'Donnell's amendment, I am sure that members of the committee will be aware that a number of provisions in this Bill specifically exempt material which is subject to legal privilege from disclosure to the Garda Síochána and other parties. In that regard I refer in particular to section 43 (6), section 50 (8) and section 51 (5). I also note in passing that the wording which Deputy O'Donnell has proposed in her amendment could have implications for those provisions, but from what she has said I understand that she is concerned mainly with section 44.
I am well disposed toward the idea put forward by Deputy O'Donnell regarding a specific exemption for items subject to legal privilege which might be caught, but there could be genuine difficulties with the wording the Deputy has proposed. In particular, it is too broad because it would protect from disclosure material which originally came into the hands of a solicitor under conditions of privilege but was subsequently retained by the solicitor for a furtherance of a criminal purpose. Accordingly, I would like to have the opportunity to consult the parliamenary draftsman in order to ask him to prepare an appropriate amendment along the lines suggested by Deputy O'Donnell which I would introduce on Report Stage.
The second part of Deputy O'Donnell's amendment and Deputy G. Mitchell's amendment relate to the way in which the Bill gives effect to article 9 of the EU money laundering directive. I believe — and this also relates to the point raised by Deputy Browne (Carlow-Kilkenny)— that section 44 (4) of the Bill fully and fairly meets the requirements of that article. Part of that article says that the employees and directors of financial institutions must fully co-operate with the authorities responsible for combating money laundering and inform those authorities on their own initiative of any fact which might be an indication of money laundering.
I recognise, for the reasons that all three Deputies gave, that the wordings of the amendments have merit. Therefore, rather than have a long discussion today about which form of words would best meet what we all desire, I propose to put Deputy G. Mitchell's and Deputy O'Donnell's wordings to the parliamentary draftsman to see if they are suitable, or if a different form of words or a combination would be suitable for inclusion in this section.
I thank the Minister for taking on board the points we raised in the interests of the legislation and of those who will enforce it and be involved in its processing. A point I raised and to which the Minister did not respond concerns the solicitors prosecuted to date under the UK legislation who have only been caught when operating in investment related business under the Financial Services Act. What does the Minister think of that? It means that some activities in which lawyers are involved — for example, activities not related to litigation, or advice relating to criminal activity for defence — seem to be privileged in the UK and yet are not privileged under the Financial Services Act in the UK. I wonder about the different type of law people are practising and the different kinds of lawyers. Some solicitors may be more like financial advisers. That is an area of dispute. I am glad to see the Minister is taking this on board and I will be interested to see what the parliamentary draftsman devises in relation to both parts of my amendment.
I am pleased with the Minister's attitude to the amendments. I am prepared to withdraw mine to allow her to consult with the draftsman before Report Stage.
I might be out of order because this may not relate to the amendments. It will be impossible to implement subsection (3) of this section. It cannot be proved that a person suspects anything unless he reports it.
Perhaps I should have dealt with that when responding. I was waiting until we discussed the section but I will deal with it now if I may, Chairman. Supposing a bank official suspects that someone who arrives with a large sum of money may have acquired it illegally. If he or she decides not to say anything, the only person who knows about the suspicion is the bank official. However, if the person who brought the money into the bank subsequently becomes the subject of an investigation and the matter is traced back to when he or she was in contact with the official of a bank or a financial institution, the official will be brought in for questioning. If it can be proved that the official had a suspicion at that time, he or she will be subject to the rigours of this legislation.
Perhaps, but how does one prove that the person had the suspicion? If I lodged £50,000 in the bank and the official wondered where I obtained that money, since I only receive a TD's salary——
You could be on Cork County Council.
——I could say I received a tip for a race and bet £1,000 on a horse which won at 50 to one. He might be satisfied with that and it would be impossible to prove afterwards that he suspected anything. If £1,000,000 was found one still could not prove the official was suspicious. One could say he should have suspected. I think the provision is inoperable.
Are the Deputies indicating they are withdrawing the amendments?
Are we not discussing the section? I wish to contribute.
We have to deal with the other amendments to the section before we can discuss the section. Is the amendment withdrawn?
I see. My apologies.
I withdraw the amendment, given the Minister's undertakings.
Amendment, by leave, withdrawn.
Amendment No. 32a not moved.
Amendments Nos. 33, 34, 35, 36, 37 and 40 are consequential and may be discussed together.
I move amendment No. 33:
In page 42, after line 51, to insert the following subsection:
"(2) where any person to whom or which section 28 of this Act applies has established procedures of internal control and communication in order to forestall and prevent operations related to money laundering in accordance with guidelines laid down for this purpose by their supervisory body, or which have been approved as adequate by their supervisory body, the directors, employees and officers of such person shall not be under any obligation under subsection (1) of this section but such directors, employees and officers shall instead report in accordance with those procedures where they suspect an offence under section 27 or 28 of this Act in relation to the business of that person or body has been or is being committed.".
These amendments are all in my name. They are technical amendments which try to ensure the Bill is fair to everyone. These suggestions were put to me by the Irish Bankers' Federation, if I remember correctly. The objective is to tidy the wording of the Bill rather than to introduce new provisions. I am interested in the Minister's response.
Amendment No. 33 would open the way for banks and other financial institutions subject to section 44 to set up special machinery for receiving and processing reports of transactions which may be linked to money laundering. I have had only a limited opportunity to consider this matter but I think I could support in principle what the Deputy seeks to achieve in this amendment. For example, I believe it would be far preferable that the Garda would be able to receive reports under section 44 from persons experienced in the operation of the section and aware of the type of information which should be provided in such cases, rather than having individual employees ringing Garda headquarters or their local stations with details of individual transactions they felt were suspicious.
Therefore I am sympathetic to the amendments, but I would need to discuss it and its implications with other parties whose operations would be affected if this amendment was made to the Bill, especially the Minister for Finance, the Central Bank and the Garda Síochána. In addition, officials from my Department will be talking to the bankers' federation who are anxious that this amendment be made to the Bill. Subject to any insurmountable difficulties which may arise in those discussions, I would be happy to bring forward an amendment on Report Stage to give to Deputy Mitchell's wishes. I cannot see such difficulties arising at present. Because the other amendments are consequential to this amendment, I am happy to examine alternatives to them also.
I am happy with that reply. I will not press the amendment and I will leave the matter until Report Stage.
I agree there would have to be a central reporting system. It would not be desirable for bank officials to ring Garda stations to inform them of their suspicions in relation to an account. Central arrangements and procedures would have to be put in place. We have spoken about this earlier. This may create problems for banks and we must facilitate them.
On the other hand the strength of the legislation should not be diluted. One of its great strengths is that it imposes an obligation on individuals. Any diminution of the obligation to disclose, rather than of the manner of disclosure, should be resisted. When the Minister drafts the amendment providing for the central reporting system, which is essential for practical banking, I would caution against diluting the sense of responsibility and onus of disclosure which should be put on individuals. If that is removed, the responsibility is abrogated and abstracted to a supervisory body. The individual responsibility should be maintained in the wording the Minister presents later.
Amendment, by leave, withdrawn.
Amendments Nos. 34 and 34a not moved.
Amendments Nos. 39 and 41 are related and may be discussed together.
I move amendment No. 39:
In page 43, between lines 27 and 28, to insert the following subsection:
"(5) It shall be lawful for the Garda Síochána to communicate information disclosed to it under this section to officers of the Revenue Commissioners for the purposes of enabling them to carry out their duties in relation to customs and excise and the control of importation.".
This is another amendment relating to the involvement and inclusion of the customs authorities. We have discussed this at length with the Minister. I ask her to respond to the need to include those authorities in this aspect of matters. Perhaps she will include it in her review.
My amendment seeks that in relation to disclosure, any report made to the Garda Síochána pursuant to section 44 (1) or (2) shall be used by them only in connection with a drug trafficking offence or other criminal activity. One would be on dangerous ground if the bank or financial institution concerned was allowed to talk to the Garda about money passing through. It may have tax or other implications, for instance. Although the general interest of the State would be pursued by finding out these tax implications, under criminal law it would be wrong to empower banks to break their trust by supplying information to the Garda Síochána, which in turn could be supplied to the State to be used for purposes other than drug trafficking or criminal offences.
I would be nervous of this provision because fiduciary information is not the sort of information we would want to leave lying arund. We are all entitled to our privacy. I oblige the bank by giving them my overdraft; I am giving them my business. It is wrong for those who are, in a commercial sense, acting for me — I would have a certain trust in the fiduciary relationship with them — to supply information to the Garda Síochána if they could in turn use that information for something other than drug trafficking or criminal offences. That would be wrong, both in theory and in practice. It would certainly be wrong to provide for it in legislation of this kind. My amendment seeks to prevent this from happening.
I am examining the thrust of Deputy O'Donnell's amendment in relation to the relationship between the Garda, customs offices and the Naval Service within the review. I cannot accept Deputy Mitchell's amendment because the wording he has suggested is narrow and would not appear to allow the Garda to use information from reports of suspicious money laundering transactions in the context of an investigation for the purposes of confiscation proceedings, rather than the prosecution of an offence. That would considerably weaken the confiscation and the other related provisions in the Bill. I cannot accept the amendment in its present form.
Deputy Mitchell went away from that aspect of it in certain instances when he spoke about what he wanted to achieve, such as limiting the use. I am prepared to look at that aspect of it between now and Report Stage. I would be happy to incorporate that as part of this section of the Bill at that stage.
Amendment, by leave, withdrawn.
Amendments Nos. 40 and 41 not moved.
Question proposed: "That section 44 stand part of the Bill."
I am nervous about the word "suspect". It is too subjective and broad. One person's suspicions might not be the same as those of another. Maybe if it could be rephrased to "with reasonable grounds for suspecting" or whatever term the parliamentary draftsman or the Minister might find suitable if she were to look at it again. The word seems a little bald to me and I would prefer if it was tightened up a little.
If logic and common sense were to prevail in section 44 (3), the only wording one could put in is that a person who fails to comply with subsection (1) or (2) of this section shall be called a "thundering eejit" or an absolute disgrace and should be warned as to their future——
Remember what happened the last time someone used these words.
——performance. It does not matter if the word "suspect" is changed because one can say they never thought of it if they do not report something. One could tell them that they were foolish not to suspect and that they should have guessed that money could not have accumulated that fast. One cannot prove it.
This notion of the subjectivity of how one intends the consequences of one's actions goes right through criminal law. This point is interesting because it relates to the notion of wilful blindness. Wilful blindness is when one ignores all the signals, behaves like an ostrich and ignores the fact that there are dodgy practices going on all around them. I think the word "suspect" is fine, but it will have to be judged in the same way as are all other criminal acts. As Deputy Mitchell said, certain reasonable conditions surrounding an activity will give reasonable grounds for suspicion. I suppose it is the man on the Clapham omnibus again. If a person with ordinary faculties, given their training and knowledge of the background of banking, see such conditions, there will have to be presumptions that one could reasonably expect that these indications would give them reasonable cause for suspicion. I would not worry about it because it is part and parcel of criminal law.
I was about to make a similar point to that of Deputy O'Donnell. It is part and parcel of criminal law and it is effectively operated in other criminal law legislation in the courts. They make a decision on each individual case. I accept that Deputy Browne and Deputy Mitchell are worried about the wording. I am prepared to ask the parliamentary draftsman to look at that to see if there is some way in which it can be tightened up. However, it is reasonable to assume or suspect that he will come back and say that the provision is correct and operates successfully within the law. Deputy Browne also spoke about logic and common sense and I hope the debate on this legislation has revolved around those words.
Certain Deputies are in a rush now; they have been busy all afternoon.
The state of the nation when in focus.
With all due respect, the Minister should talk to a common sense member of her cumann in County Galway instead of the parliamentary draftsman.
Is Deputy Browne suggesting that the parliamentary draftsman is not good enough?
Parliamentary draftsmen are sensible people, but the legal jargon plays too much of a leading role here. Common sense should prevail.
I feel compelled to be honourable to parliamentary draftsmen.
I would be happy if the Minister would talk to the parliamentary draftsman. It seems a bald wording to me. I would be happier if the Minister could come up with a tighter wording, but if not, then so be it.
Question put and agreed to.
Sections 45 and 46 agreed to.