Thomas P. Broughan
Ceist:98 Mr. Broughan asked the Minister for Finance the proposals, if any, he has to amend section 16 of the Central Bank Act, 1989; and if he will make a statement on the matter. [19493/98]
Written Answers. - Banking Legislation.
Section 16 of the Central Bank Act, 1989, sets out the Central Bank's confidentiality obligations. The section has been amended on a number of occasions since then. These amendments have mostly been concerned with extending the list of bodies to which the bank can disclose information in accordance with EU law on prudential supervision. Other legislative provisions are also relevant. Under section 49(2) of the Investment Intermediaries Act, 1995, the Central Bank may disclose to the gardaí, where it has reasonable cause to believe that a criminal offence has been committed, any information to enable further investigation of the alleged offence. Further, under the provisions of the Criminal Justice Act, 1994, the bank is obliged to report to the Garda a suspicion that any entity it supervises has committed or is committing the offence of money laundering or certain related offences; money laundering embraces tax evasion.
Confidentiality is a core element in the prudential regulation of financial institutions, not only in Ireland and the European Union, but internationally. It is seen as a necessary balance to the extremely wide powers of intrusion and information gathering provided to the Central Bank and other supervisors in legislation. Irish law on confidentiality in financial supervision implements European Union law which requires a high standard of professional secrecy. Article 12 of the First Council Directive on the co-ordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of credit institutions requires the State to ensure that the Central Bank maintains very strict confidentiality.
I have no proposals at this point to amend section 16. However, the Deputy will be aware that earlier this year I established an interdepartmental working group representative of the Departments of Finance, the Taoiseach, Enterprise, Trade and Employment, the Central Bank, the Office of the Director of Consumer Affairs and the Office of the Attorney General, The mandate of the group is "to investigate the law and practice governing the provision of financial services in Ireland and the impact this has on consumers". It was also to consider what steps may be required to increase the public understanding of the regulatory systems, including the manner of their implementation. I understand that a very significant amount of work has been undertaken on a wide range of issues related to banking and consumer matters. In particular, I understand that a considerable amount of time has been spent in addressing the complex legal question of Central Bank confidentiality restrictions in the context of EU law, with a view to establishing the extent to which, if any, the provisions of the latter would permit any change in present domestic legislation.
The work of the group has taken longer than anticipated, but the issues involved are both complex and important. I understand, however, that the group's deliberations are nearing finality.