Seanad amendments Nos. 1 and 2 are related and may be discussed together by agreement.
Seanad amendment No. 1:
Section 8: In page 12, subsection (1), line 39, to delete "that constitutes an offence under the law of that place and".
Vol. 707 No. 4
Seanad amendments Nos. 1 and 2 are related and may be discussed together by agreement.
Seanad amendment No. 1:
Section 8: In page 12, subsection (1), line 39, to delete "that constitutes an offence under the law of that place and".
Section 8 provides for the offences of money laundering outside the State in certain circumstances. The opening words in Section 8 (1) provide that the offence is committed only if the conduct concerned is an offence under the law of the place in which it has occurred, that is, outside the State. The advice of the Office of the Attorney General is that sections 8(1)(a) and 8(1)(b), which deal with conduct that takes place on board an Irish ship or aircraft registered in the State, are incorrect. Therefore, the provision requires amendment. There is no change of policy in respect of these amendments.
I accept what the Minister has stated in this regard. This matter was debated in the Seanad and I believe it is a worthwhile amendment. On behalf of Fine Gael, I support the amendment.
Seanad amendments Nos. 3, 6, 8, 9, 22 and 23 are related and may be discussed together by agreement.
Seanad amendment No. 3:
Section 24: In page 20, subsection (1), between lines 6 and 7, to insert the following:
""barrister" means a practising barrister;".
Amendments Nos. 3, 6, 8 and 9 deal with the definitions of various professional groups and the application of these terms within the Bill. The reason for including the definitions "barrister" meaning a practising barrister and "solicitor" meaning a practising solicitor is to clarify that the persons referred to are practising in their professions.
The amendments to section 40 relate to the reliance on the relevant third party to carry out customary due diligence. The amendments replace the references to "Law Society of Ireland" in sections 40(1)(a)(iv) and 40(1)(a)(vi) with “solicitor”. The reference to a member of the Law Society of Ireland could have the effect of including persons who are members but not practising, such as myself and probably Deputy Flanagan, although I do not know about that. As the legislation stands, such persons could be relied upon under the third party provisions.
The inclusion of definitions for members of a designated accountancy body and the Irish Taxation Institute is due to the fact that the current reference to members could have the effect of including persons not subject to the regulatory regime, for example, students in those bodies. In addition, membership of such bodies is a criterion used in several importance sections. As a consequence, the definition of a relevant profession adviser has also been amended because it is no longer necessary to refer to the condition stated and these provisions will now be covered by individual definitions.
Seanad amendments Nos. 4 and 5 are related and may be discussed together by agreement.
Seanad amendment No. 4:
Section 24: In page 21, subsection (1), line 39, after "1995" to insert the following:
"(other than a non-life insurance intermediary within the meaning of that Act)".
On Committee Stage in the Dáil an amendment was made to the definition of a financial institution in section 24 to include the category of an investment business firm, within the meaning of the Investment Intermediaries Act 1995, to bring within the scope of the Bill certain insurance intermediaries not otherwise covered. However, this had the unintended effect of bringing non-life insurance intermediaries within the scope of the Bill. Non-life insurance intermediaries are not covered by the third EU money laundering directive because the products they sell do not constitute a material money laundering risk. There is no requirement to include this group in the Bill and, therefore, the amendment excludes them. The second amendment relates to section 24(1)(g), that is, the definition of financial institution in respect of An Post. The amendment is tabled for the same reasons. The matter was discussed at length in the Seanad.
I do not have a problem with the amendment but I am unsure why the Minister does not leave it as it was on the basis that it was broadened. We made changes on Committee Stage to deal with a broadening of certain categories. Now it is intended to exempt certain intermediaries. Why have a specific exemption? If the non-life insurance people were not directly affected, then they would remain silent to any obligation under the act. As the Minister correctly stated, it would not apply to them because they are not engaged in the business. Why is there a need or requirement to introduce an exemption for non-life insurance intermediaries having regard to what the Minister has stated about the broadening of the categories since the Bill was first introduced?
The reason for the exclusion of non-life insurance business is mainly because much of the non-life insurance business is relatively small. It includes motor insurance policies and house policies. We tried to be as broad as possible to include as many circumstances as possible in which a money laundering risk could arise. It is unreasonable to extend the provisions of money laundering legislation to individual, small contracts to do with motor cars and house insurance etc. By and large these deal only with a very small amount of money. It was not included as a requirement under the third EU money laundering directive, which this legislation attempts to transpose. In the aftermath of the inclusion of investment insurance intermediaries, some insurance companies made representations to the Department of Finance, which in turn raised them with the Department of Justice, Equality and Law Reform, to the effect that it would be somewhat unreasonable to include all of them, as it would cause many bureaucratic problems.
I accept the Minister's explanation.
As Seanad amendments Nos. 7, 10 and 14 are related, they may be discussed together.
Seanad amendment No. 7:
Section 24: In page 22, subsection (1), between lines 31 and 32, to insert the following:
""occasional transaction", in relation to a customer of a designated person, means a single transaction, or a series of transactions that are or appear to be linked to each other, where—
(a) the designated person does not have a business relationship with the customer, and
(b) the total amount of money paid by the customer in the single transaction or series is greater than €15,000;”.
This amendment provides for a definition of "occasional transaction" in section 24 of the Bill. It has been included so that the term "occasional transaction" can be used in the relevant sections of the Bill without needing to be described separately each time as it applies. The amendments to sections 33 and 37 delete the current text, which in each case describes an "occasional transaction", and instead refers to the new definition set out in section 24.
I accept that.
This amendment was made to section 33, in Chapter 3 of the Bill, which relates to customer due diligence. Section 33(1)(d) provides that the identification and verification measures set out in section 33(2) must be applied before a service is carried out for a customer, if the designated person has reasonable grounds to doubt the veracity or adequacy of documents or information previously obtained relating to the verification of the customer. The amendment will ensure there is no question of whether the section applies to documents or information obtained before the commencement of section 33 of the Bill. It replaces the original section 33(1)(d) of the Bill. It states that the relevant documents or information may be obtained under section 33; under section 32 of the Criminal Justice Act 1994, which sets out the current requirements in relation to identification and verification; or under any administrative arrangements that a person may have applied before section 32 of the 1994 Act operated in relation to that person. The amendment also inserts a new section 33(1)(d)(ii), which reflects the fact that a designated person may, in the meantime, have obtained other relevant documents or information — not those which may have caused the doubt in the first instance — which adequately verify the identity of the customer.
We addressed this matter at some length on Committee Stage. As the Seanad also dealt with it to a significant degree, I do not intend to repeat any of the points that have been made. Section 33, which deals with the verification of customers' identities, is an important section. This specific point was made in a submission we received from Compliance Ireland. I am pleased that the Minister has probably introduced a more robust meaning to this section, which I support.
I thank the Deputy.
As Seanad amendments Nos. 12 and 21 are related, they may be discussed together.
Seanad amendment No. 12:
Section 33: In page 33, subsection (8)(a), line 3, after “service” to insert “or carry out the transaction”.
The purpose of these amendments is to insert the term "transaction" after the word "service" in sections 33(8)(a) and 37(8)(b) of the Bill, thereby clarifying that the provisions apply to a transaction or service, as appropriate. The reason for this change is that the carrying out of a transaction with a customer, and nothing more, does not involve the provision of a service. By contrast, the carrying out of a transaction for or on behalf of a customer, or assisting a customer to carry out a transaction, involves the provision of a service.
This amendment merely corrects a textual error in section 34 of the Bill, which should refer to "the treaties".
As Seanad amendments Nos. 15 to 20, inclusive, are related, they may be discussed together.
Seanad amendment No. 15:
Section 37: In page 37, lines 4 to 16, to delete subsection (4), and substitute the following:
"(4) If a designated person knows or has reasonable grounds to believe that a customer residing in a place outside the State is a politically exposed person or an immediate family member or close associate of a politically exposed person, the designated person shall—
(a) ensure that approval is obtained from any senior management of the designated person before a business relationship is established with the customer, and
(b) determine the source of wealth and of funds for the following transactions—
(i) transactions the subject of any business relationship with the customer that are carried out with the customer or in respect of which a service is sought, or
(ii) any occasional transaction that the designated person carries out with, for or on behalf of the customer or that the designated person assists the customer to carry out.".
These amendments to section 37 provide for enhanced customer due diligence to be carried out in the cases of people who are politically exposed. They deal with the requirements on designated persons to obtain approval from senior management before a business relationship is entered into and established with a politically exposed person and to determine the source of wealth and funds involved in such business or transactions. The amendments have the effect of setting out these provisions more clearly and thereby achieving greater clarity. For this reason, there has been some reordering of section 37(4), which now specifically states that the requirements apply if the person "knows or has reasonable grounds to" know that a person is a politically exposed person. The amendment to section 37(6), which relates to the beneficial owner, reflects the same approach as that in section 37(4). The amendments to section 37(7) specify clearly the circumstances in which a designated person is deemed to know that a person is a politically exposed person for the purposes of sections 37(4) and 37(6) and in which there are reasonable grounds for concluding that the designated person so knows. The amendment to section 37(8)(a) arises essentially from the previous amendments and, for instance, reflects the fact that the determination of the source of wealth and funds is an ongoing responsibility.
This point arose on Committee Stage. I think what the Minister has done is laudable. I accept these amendments.
I thank the Deputy.
As Seanad amendments Nos. 24 and 25 are related, they may be discussed together.
Seanad amendment No. 24:
Section 55: In page 49, lines 36 to 45, to delete subsection (4) and substitute the following:
"(4) The documents and other records referred to in subsections (1) to (3) shall be retained by the designated person, at an office or other premises in the State, for a period of not less than 5 years after—
(a) in the case of a record referred to in subsection (1)(a), the date on which the designated person ceases to provide any service to the customer concerned or the date of the last transaction (if any) with the customer, whichever is the later,
(b) in the case of a record referred to in subsection (1)(b), the date on which the correspondent banking relationship concerned ends,
(c) in the case of a record referred to in subsection (3) evidencing the carrying out of a particular transaction by the designated person with, for or on behalf of the customer (other than a record to which paragraph (d) applies), the date on which the particular transaction is completed or discontinued,
(d) in the case of a record referred to in subsection (3) evidencing the carrying out of a particular occasional transaction comprised of a series of transactions, with, for or on behalf of a customer, the date on which the series of transactions is completed or discontinued, or
(e) in the case of a record referred to in subsection (3) evidencing the carrying out of a particular service for or on behalf of the customer (other than a record to which paragraph (c) or (d) applies), the date on which the particular service is completed or discontinued.
(5) Subsection (4)(a) extends to any record that was required to be retained under section 32(9)(a) of the Act of 1994 immediately before the repeal of that provision by this Act.
(6) Subsection (4)(c) to (e) extends to any record that was required to be retained under section 32(9)(b) of the Criminal Justice Act 1994 immediately before the repeal of that provision by this Act and for that purpose—
(a) a reference in subsection (4)(c) to (e) to a record referred to in subsection(3) includes a reference to such a record, and
(b) a reference in subsection (4)(d) to an occasional transaction comprised of a series of transactions includes a reference to a series of transactions referred to in section 32(3)(b) of the Criminal Justice Act 1994.”.
These two amendments change the period of time for which documents and records must be kept from six years to five. They also provide that the period of time for which records relating to transactions and services will be kept will be five years from the date on which the transaction or service is completed or discontinued, regardless of whether the business relationship applies. This means that the time period will be the same, from the date on which the transaction or series of transactions is completed or discontinued, regardless of whether the transaction takes place in the context of a business relationship or in the context of a once-off or occasional transaction. The same principle will apply in relation to a service in the case of the new section 55(4)(e). The text of sections 55(5) and 55(6) arises from the fact that section 32 of the Criminal Justice Act 1994 is being repealed in this Bill. These provisions will ensure that the current money laundering record-keeping requirements, which are set out in section 32(9) of the 1994 Act, will continue to apply.
Amendment No. 25 changes the subsection references to cater for the other amendments and additional subsections involved. Article 30 of the EU money laundering directive provides that records must be kept for a period of at least five years. Of course this does not preclude a member state from applying a longer period of time. The Bill did provide for a period of not less than six years, but amendment No. 24 will change this to five years. Various pieces of domestic legislation in respect of record-keeping provide for periods of five and six years. Following further consideration it was decided that it would be more appropriate to apply the five-year threshold, which applies in most other member states.
I will not divide the House at this stage of the Bill, as we reach the last amendment. It strikes me as somewhat inconsistent that there are, as the Minister has said, certain professional requirements for those in the business of the delivery of a service to the public that all, or, in some cases, certain records be kept for a number of years. As far as some legislation is concerned, six years is the norm. For other professional bodies their duty is to keep records for five years.
The Minister, in his closing remarks on the amendment, adverted to this inconsistency. In terms of the statute of limitations, the limitations of actions and the onus or burden placed on professional bodies, I thought we would have an element of consistency and not only would the practitioners and professions be aware of it, but members of the general public would also be aware of the duty of care or the statutory duty, in the form of an obligation, to retain certain records and make them available.
I thought we were moving, in the bulk of legislation, towards a six-year rule. It now appears that the Minister is in favour of a five-year rule. I will not make a big deal about this but I thought the Department of Finance, the Department of Justice, Equality and Law Reform or any other Department would strive for an element of consistency in this regard and not have different rules applying in different sets of circumstances in a way that is less than consistent and can give rise to an element of uncertainty or confusion on the part of the service providers and members of the general public. However, I will not divide the House on the issue.
I can understand what the Deputy is saying but the original intention in the Bill was, because of the relevant period regarding business transactions, that the statute of limitations period would be six years. As the matter progressed and there was consultation with Departments and interested parties, it was felt that in the modern era of financial transactions a five-year period is the norm for the keeping of documents. It was done to align us with the vast majority of the requirements. Given that this is cross-border legislation it was important that we align ourselves to what is the norm among other member states. The directive indicates a period of five years as being the norm.
I apologise for being late; I was not notified about this debate as I am not the party spokesperson. There seems to have been some confusion.
On the legislation which covers areas such as money laundering, account keeping and rules and regulations which the various professions have to abide by regarding clients' money and so on, does the Minister plan to consolidate it in some way in order that there are not different dates and such things?
When the Bill is passed, what time period will the Minister give the professional bodies in terms of informing their members about the new legislation and the provision of guidelines?
This Bill is urgent because we are fulfilling the commitments under the directive. As I said, we have tailored it to suit our circumstances, up to a point. We had very robust money laundering legislation heretofore, but this will tighten it yet again and ensure we conform with the rest of the European Union.
As regards consolidation, it will not happen in the area of money laundering per se, but I have indicated to my Department in the past couple of months that a lot of what is in the public domain regarding potential fraud in money transactions and potential corruption is covered by legislation in the area of company or criminal law. Even the area of consumer law covers the issue.
I have asked my Department to bring forward a consolidated Bill on white collar crime and have a one-stop piece of legislation which may cut across a number of Departments and agencies such as the Financial Regulator and others. It would be important for us to ensure that there is one piece of legislation which determines what offences are possible not only for our own sake, but also for the various agencies which examine this type of legislation. There are a number of committees — I will not call them watchdogs — under the various international bodies to which we subscribe that examine the spread of legislation in this area.
To a certain extent, we have inherited the English model and have amended, in a relatively piecemeal way, the legislation over the years. I have done this in a number of areas in the Department. For example, I have asked my officials to introduce consolidated legislation on the bail laws, the sale of alcohol and corruption and white collar crime. It will be a mammoth task because I will be delving into other areas, in particular company law. It is necessary and that work is about to start.
My other question concerned how long the professional bodies would be given to convey the information about the Bill to their members before it is enacted.
Does Deputy Flanagan wish to make a point?
Yes. These amendments will now be approved by the House and the Bill will be enacted. As the Minister said, it represents an important component in the legal framework to combat and deal with money laundering. It also makes reference to the regulation of the gambling industry. I was interested to see the representations the Minister was reported to have made in recent times to Government colleagues on the matter of a gambling-type project in his constituency, something which I thought would be somewhat irregular and inappropriate, having regard to the fact that he, as Minister for Justice, Equality and Law Reform, is now the regulator.
He promised to introduce legislation to regulate the gambling sector, with particular reference to the future of casinos, and whether, as a State, we will broaden the legislation from the current private member club framework, which is somewhat inadequate. The Minister might advise the House on where we stand regarding that legislation. The Minister referred to all-party committees, which did not materialise. This Bill was flagged as having a consequence for those clubs who engage in the practice of gambling in a casino form. Will the Minister inform the House as to his views on the changes in legislation? What is the Government's intention in this regard? What is the timeframe for the introduction of the legislation? What framework will the legislation cover? When might the House have an opportunity of seeing his intentions?
On my own initiative, I included private members' gaming clubs, which have sprouted around the country, under the legislation because they have not been regulated and it was necessary to bring such clubs under some form of regulation, particularly given the large sums that wash through them.
We are steering away from the purpose of the Bill but the Deputy's questions are about money laundering generally. He referred to the issue of casinos. We have debated this many times on Question Time. I have no problem answering questions about the issue publicised last weekend. When a project was originally publicised in my locality approximately 18 months, I was asked for a comment by my local newspaper. I said I very much welcomed a new major leisure and sporting facility, which had the potential to create hundreds of jobs in my locality. My home town, Dundalk, through its local authorities, a task force on economic development and all the other agencies promoting the town, had earmarked two areas in which it could have a future as the lead town in the country. One was renewable energy research. When I served as Minister for Communications, Marine and Natural Resources, I was instrumental in ensuring Sustainable Energy Ireland was decentralised to my home town and it is connected to Dundalk Institute of Technology, which has a fine research facility with a wind turbine that provides 75% of the energy needs of the institute. That is one aspect Dundalk wishes to promote.
The second aspect is we want to become the leisure capital of Ireland. We have the only indoor Olympics sized ice dome in Ireland. The Irish ice hockey association has the franchise for the dome and I was a good supporter of it. We have an all-weather racing and greyhound track. It is the only facility in Europe, if not the world, where greyhounds and horses race together. It is a fine facility and while I do not know one end of a horse from another, I was a tremendous supporter of that facility, as were the former Minister for Agriculture and Food, Joe Walsh, and the former Minister for Arts, Sport and Tourism, Deputy John O'Donoghue.
This proposed project fitted easily into that. The planning application for this makes no mention of a casino for the simple reason that no legislation is in place to regulate casinos. When I was appointed to this portfolio, a major report was on my desk regarding our gambling architecture. It was commissioned by one of my predecessors, Michael McDowell, and I was informed when I became Minister that there had been an agreement that there would be an all-party approach to dealing with the report but the Labour Party clearly indicated that it was against that unless there was a commitment that fixed odds betting terminals, FOBTs, would not be included. I indicated I was not in favour of FOBTs and I would not legislate for them as Minister but I was disinclined to remove references to them because they were part of the consideration of the report.
Fine Gael was an enthusiastic supporter of an all-party approach. Deputy Barrett had been nominated as the agreed chairman of the all-party committee.
That is in dispute. That does not accord with the facts.
The Deputy will be sorry for asking these questions by the end of this.
The Minister knows that does not accord with the facts. We have been through all this previously.
When the Labour Party decided on a contrary view to that originally expressed by Fine Gael, I was lobbied by Deputy Barrett and others within the party to proceed with the all-party group, which I wanted to do.
The Minister has not stated that previously.
However, because I could not secure the Opposition's agreement, I then asked the primary official in the Department dealing with this to examine how we could proceed with legislation because governments of every colour since 1956 had shied away from amending the gaming and gambling laws for whatever reason. Perhaps vested interests were the reason but I do not know. I saw it as my obligation, given people spent a great deal of time on this report, to move on with it. I delegated my official to commence a consultation process and more than 70 submissions were received. People have asked to meet me regarding submissions they might make. The group in Dundalk did not discuss with me good, bad or indifferent the issue of a casino. I understand the group did not make a submission but others who asked to meet me did. However, I told anyone who asked me to meet him or her or any Deputy who asked me to meet groups about this that I would not meet them as it was a matter for consultation and they should contact the official involved.
Let the hare sit.
With regard to Deputy Flanagan's question on legislation relating to casinos, my party has not discussed it nor has there been discussion at government level regarding whether we will proceed to have resort style casinos or Las Vegas-type casinos in this country. That would be a major decision, which would have to be made by the Government and the Oireachtas. The Government has had no discussion on this and no decision has been made in this respect.
Some people favour them while others — I fit into this category — feel resort style casinos are not needed in the State. However, as Minister, I must have an open mind. Given that I have rarely put on a bet in my life and I do not know much about this area, it is necessary to have a discussion. One of the reasons I was in favour of the Dundalk project was that originally it included an indoor ski slope and other leisure facilities. I am an adventure sports enthusiast, not a gambling enthusiast.
The Minister could have had a nice official adventure yesterday afternoon. He could have done his duty.
The Deputy also had a little adventure yesterday because word had it he was haring down to Limerick and then he had to hare back.
The Minister should confine his remarks to the amendments. I would like to deal with them before proceeding with the next business.
I did not hare anywhere.
Dundalk is halfway between Dublin and Belfast in probably one of the most pivotal areas in the country and the provision of sports and leisure facilities there would be a great addition to the desire of my town to be the leisure capital of Ireland.
Resort-style casino legislation is not on the horizon. There will be legislation on gaming generally but heads of a Bill and so on are not ready because my official is still going through the 70 submissions that have been made in this respect.
The Deputy wanted all the information and, as usual, he was first out when the former Minister of State at the Department of Agriculture, Fisheries and Food, Deputy Sargent, resigned. He was not man enough to apologise when he pointed the finger at me and here he is again——
I chose my words carefully. I will revisit the issue on the publication of the Minister's report.
The Deputy is barking up the wrong tree.
We have gone miles away from the amendment. I have given tremendous latitude to both sides.
The Minister has been allowed particular latitude. I will briefly sum up what he said. He said that he has an open mind on the matter. According to correspondence to his two colleague Ministers, the former Deputy, Martin Cullen, and Deputy Coughlan, he is minded in a certain direction which is far from open. He said that no legislation is on the horizon but, nevertheless, he confirmed that his Department is engaged in a review of the gaming laws. The sole objective of such a review is the introduction of legislation. We now have a situation where the open-minded Minister, first, is seen by way of correspondence on departmental notepaper to be minded of a certain persuasion and, second, he is not in a position either on Question Time, in the course of this important debate or otherwise, to outline his views on it to the Dáil. He would have us believe his mind is so open as to be empty. The Minister is on record as outlining his support for a Las Vegas-style winter sports development in his constituency which includes——
Did I say that?
Yes. It says that the Minister is in favour of it.
No, it does not.
I have not seen the Minister's correspondence but he might like to place it on the record at some stage. His letter expressed "full, active support for this proposal". I would have thought that amounted to backing, but I admit I have not seen the correspondence.
In fairness, we should confine our remarks to the two final amendments.
Let us conclude the debate in that regard.
I accept what the Chair has said.
Tremendous latitude has been allowed to both sides.
We will have a further opportunity to discuss the matter but it is somewhat insufficient that we in the House have yet to hear the views of the Minister for Justice, Equality and Law Reform on his intentions in that regard, yet he is prepared to commit full and active backing in writing for a specific proposal.
To answer the Deputy, if he is to extend his logic, I would not discuss the licensing laws with any publican or hotel owner in my constituency whom I support. If that was the case I would never go outside the door for fear I might meet someone with whom I might have a connection in my Department. When I supported that proposal, it was in the context of a leisure and sports facility.
Does the Minister have a response to Deputy Tuffy's question?
As I said at the weekend, if I were to introduce legislation to allow for a Las Vegas-type casino, in the event of the Government deciding to do so, which it has not, if I am still Minister I would ensure that the licensing of it would be done independently of any political input. Therefore, it is academic whether I support such a proposal.
Is there a response to Deputy Tuffy? Could we finish this please?
The Bill will be commenced in various Parts in the coming months in order to give adequate time to the various people involved, including the professions. At least three months notice will be given of the first commencement which will provide a good opportunity to inform members.
Before we finish, I thank——
I am afraid to engage the Minister again in case he——
This will all be complimentary.
I was moving very quickly because the Minister got tremendous latitude.
I thank the Members opposite. Despite all the things I might say about Deputy Flanagan I thank him and Deputy Tuffy for their assistance with the Bill. It was important that the Bill would pass expeditiously through the Oireachtas. I thank them for their understanding in that respect and for the input they made to the Bill, which is better for the discussion we had not just in this House but in the other House. I made the point on other legislation — I do not make it in a political way given that proposals are floating around on the abolition of the Seanad, but as someone who has put much legislation through that House, especially in this Ministry — that having two Houses and being required to go back to the House in which the Bill commenced is very important in that it provides for a better examination of legislation.
I thank my officials for their work on this complex legislation. I thank also the Acting Chairman and his staff for their work in this respect.
I agree. I thank the Minister.
Seanad amendments reported.