Joint Committee on Justice and Equality díospóireacht -
Wednesday, 20 Jun 2018

Protocol 21 of the Treaty of Lisbon: Minister for Justice and Equality

Chairman

The purpose of today's session is to consider a proposal by the Government to opt in, pursuant to Protocol 21 of the Lisbon Treaty, to a proposal for a directive laying down rules facilitating the use of financial and other information for the prevention, detection, investigation or prosecution of certain criminal offences and repealing Council Decision 642JHA.

I welcome the Minister for Justice and Equality, Deputy Charles Flanagan, and his officials here today.

Before we begin I must read the caution to all members, the Minister included. Under the salient rulings of the Chair, members should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable. Again, for the benefit of the Minister and his officials, I ask them to please ensure that their mobile phones are switched off for the duration of this session.

I invite the Minister to make his opening statement.

Minister for Justice and Equality (Deputy Charles Flanagan)

I am pleased to join the committee this morning with my officials from the Department of Justice and Equality, Mr. Mark McDermott and Ms Sarah Sheppard.

I welcome the opportunity to address the committee this morning on Ireland's opt-in to a new proposal on facilitating the use of financial and other information for the prevention, detection, investigation or prosecution of certain criminal offences. Ireland has an option, provided for in Article 3.1 of Protocol 21 annexed to the Treaty of Lisbon, to opt in to individual proposals in the area of freedom, security and justice. The protocol provides that Ireland has three months, from the date a proposal or initiative is presented to the Council, to notify the Presidency of the Council in writing of its wish to take part in the negotiation, adoption and application of any such measure. The three-month period for this proposal is due to end on 16 August. The exercise of this opt-in is subject to the approval of both Houses of the Oireachtas.

Ireland can also accept a proposal at any time after it has been adopted, but in such a case, it will not have been in a position to vote on the final content of the proposal. It must also be noted that Ireland made a declaration appended to the Treaty of Lisbon of its intention to opt in to measures in the area of freedom, security and justice to the maximum extent it deems possible.

This proposal, as published, has a number of key elements relating to the fourth and fifth anti-money laundering directives. These include: access to the bank account registries to be set up under the fifth anti-money laundering directive, by the competent authorities in each member state responsible for law enforcement, and in Ireland's case this will probably be the financial investigation unit, FIU, and the Criminal Assets Bureau, CAB; the sharing of information by the FIU with other law enforcement competent authorities in Ireland; an exchange of information between FIUs of different member states; access by Europol to bank account information and exchange of information between Europol and FIUs; and procedures and data protection safeguards relating to the exchange of information processes to be created. My officials have consulted the Office of the Attorney General. They have been advised that there is no legal impediment to Ireland opting into this proposal.

While the proposal broadly reflects existing law and practice in Ireland, both the financial investigation unit and the Criminal Assets Bureau have indicated to my officials that this proposal, as part of the broader anti-money laundering framework, will further enhance the effectiveness of the fight against money laundering, terrorist financing and associated predicate offences in providing for increased co-operation in a timely manner between FIUs, law enforcement authorities, including Europol, and other competent authorities.

Chairman

Go raibh maith agat. I appreciate that the Minister's opening statement was not lengthy. However, I wish Members to note that the secretariat was not sent a copy of his statement prior to the meeting so Members did not receive it. I know such a situation can be an impediment to Members picking up on the points that the Minister has just shared.

I shall open up the debate to Members and call Deputy O'Callaghan.

Deputy Jim O'Callaghan

I thank the Minister and his officials for coming here. I, too, will be similarly brief.

The function of this committee is to give consideration to the directive. Having read the document that was circulated, I suppose by the Council of European Union, but it was given to us, I would be supportive of us opting in, in respect of this proposal. Financial crimes have become more complex and multijurisdictional. Therefore, we need to constantly upgrade our laws to ensure that we keep up with the people who engage in financial crime.

I have two questions for the Minister on Brexit and realise that they may be difficult to answer. We must be extremely careful because we have a land border on this island. Obviously a lot of crime is also perpetrated between Ireland and the UK. What is the Minister's apprehension, concern or belief as to what will happen in respect of co-operation between the two jurisdictions and the money laundering directives that exist at present, irrespective of this new directive? Is he satisfied that co-operation will continue with the United Kingdom afterwards?

Deputy Charles Flanagan

I thank the Deputy for his support. While obviously it is difficult for one to predict with certainty what the final outturn of the UK negotiations on the withdrawal or, indeed, the consequent future relationship between the UK and the European Union in the justice and home affairs area I must acknowledge an intent, on the part of the UK authorities, as far as possible, to continue with the very high level of co-operation that exists in the security and crime areas. I would hope that that would continue, notwithstanding.

As I am sure Deputy O'Callaghan will be aware, one of the challenges that we have, in terms of our legal system, will be on the withdrawal of the UK from the European Union. We will, in all likelihood, be the sole common law member. That will present a challenge to us. It is one that we are aware of. It is one that, in terms of our engagement with our UK colleagues, will in all likelihood give rise to a greater level of concentration on the part of Ireland. I am sure there will be resource implications too, in terms of our continued participation with EU colleagues, notwithstanding the withdrawal of our colleagues in the common law jurisdiction of the UK.

Deputy Jim O'Callaghan

I thank the Minister.

Chairman

I advise Deputy Jack Chambers that Deputy Ó Laoghaire is next to speak.

Deputy Donnchadh Ó Laoghaire

I thank the Minister for his presentation. My party supports this proposal. It is absolutely right and true that financial crime of this kind has become more complex and that more resources will be required by the relevant authorities over time.

I was not in a position to participate in the Second Stage debate and Deputy Quinlivan participated on my behalf. He raised a number of questions but some of them were not answered and these matters relate to the legislation that we are dealing with subsequently. Today, we are not discussing the legislation. However, these matters are closely linked to the fourth and fifth anti-money laundering directives and it is better that I ask my questions here rather than speak to amendments. One question was partially answered but I seek clarity on it and another question was not answered. The first question was where we raised our concerns about the fact that there is discretion available to member states, in terms of the obligation under Article 31. The article outlines that states must apply a full public register of beneficial ownerships of trusts, as per the directive. The Minister, in his response, outlined the fact that the legislation for beneficial ownership registers is being developed by the Department of Finance. I know that the Minister for Justice and Equality does not have responsibility for that matter but it is obvious that there has been some correspondence. He said that it will apply to special purpose vehicles, that is, body corporates.

Although the list will be initially viewable by An Garda Síochána and other appropriate authorities, the fifth money-laundering directive provides for wider access to parts of the beneficial ownership information. He then goes on to state that we will be in full compliance with the fourth and the fifth money-laundering directives. Can I take it from that that the State is not exercising any discretion in regard to Article 31 but, rather, will apply it in its totality?

Deputy Charles Flanagan

The Deputy is correct insofar as this involves intense negotiation and ongoing monitoring with the Department of Finance. However, in terms of access to registers, the intention is that the articles will be transposed in accordance with the fourth directive, which means that there will be access to the companies register by competent authorities, the financial intelligence unit, FIU, and anyone who can show what is termed a legitimate interest. The FIU and competent authorities will have access to the trust register. That may be subject to modification, taking account of the further requirements of the fifth directive, which will come into force in late July.

Deputy Donnchadh Ó Laoghaire

Is discretion being exercised? No.

Deputy Charles Flanagan

The Department of Finance is currently drafting the statutory instruments which will allow for the transposition of the remaining elements of Articles 30 and 31. It is expected that the transposition in its entirety will soon be concluded.

Deputy Donnchadh Ó Laoghaire

My other question relates to a matter raised by Deputy Quinlivan at my request, namely, the latitude which the Government has under the directive in regard to which sectors are considered to carry substantial risks domestically. The issue was raised in regard to the gambling sector and the potential for the gambling and bookmaking sector to be used for money laundering. There is latitude and discretion here. Does the Government consider that this sector may carry substantial risks?

Deputy Charles Flanagan

The 2010 Act, which is the current legislation, applies to private member gaming clubs and those clubs currently have certain obligations under law. They are obliged to take all measures under the Act into account, including the ongoing issue of due diligence as regards their relationship with their customers, as required by the directive. Further legislation to bring other gambling service providers within the scope of the legislation is needed. That will include sectors that have not been deemed to be low risk and it is currently being prepared by my Department and the Office of the Attorney General. The committee is aware that broader legislation on gambling is being dealt with by the Minister of State, Deputy Stanton, and a broader gambling control Bill is currently under consideration for drafting. However, the existing gaming clubs are familiar with their obligations and duties under the current legislation.

Deputy Donnchadh Ó Laoghaire

The risk extends far beyond private member gambling clubs. It is not difficult to imagine that a bookmaker could be used to launder money using a certain combination of bets, although some of the money may be lost. This area must be considered and the Minister has indicated his intention to do so. It goes beyond the issue of gambling control. That is good legislation and must be supported but we must also address this area in the context of the risk of money laundering. Aside from private member gaming clubs, we must look more broadly at the sector and give that further consideration in ongoing legislation.

Deputy Charles Flanagan

That is being done, in particular by the ongoing risk assessment engaged in by the Department of Finance. Our position has been informed by one such assessment recently published by the Department.

Chairman

I call Deputy Jack Chambers.

Deputy Jack Chambers

When does the Minister expect this to be implanted and fully transposed across all member states?

Deputy Charles Flanagan

By the end of July. It is expected that the directive will come into force 20 days after publication in the Official Journal of the European Union, which is expected by the end of June or early July. Agreement was reached at political level at the end of last year. The timeline is linked directly to the transposition deadline for the fifth directive.

Deputy Jack Chambers

Deputy Ó Laoghaire raised some valid points in regard to the general issue of money laundering and tax evasion. Has the Minister looked at models being implemented in central European countries? The Netherlands has considered a move towards efinancing of all public services by removing the cash element in order to avoid money laundering. We need to consider whether we could advance legislative proposals to be ahead of the curve not only in the public sector but also high risk areas such as gambling because money laundering is taking place, in particular in that sector. That could be done by greater utilisation of efinance such that there is a formalised transactional component. The Department should consider being ahead of the curve on this issue because in ten years' time we will be a cashless society. The world is moving towards paying by mobile and general efinance. We need progressive legislative measures to help combat money laundering.

Deputy Charles Flanagan

In terms of our agencies, the criminal assets bureau has been a significant success to the extent that many other European countries have used it as a template for their organisations. The Revenue Commissioners and the Department of Finance, among others, keep in regular contact in conjunction with their colleagues throughout Europe. Of course, we at all times seek to comply with best international practice and standards in regard to money laundering. This fifth directive will further enhance our laws and we are happy to intensively engage with other European countries in order to ascertain best practice. In the area of gambling specifically referred to by Deputy Chambers, all members of the committee acknowledge that further work must be done in that regard in terms of our domestic legislation I hope that there will be progress on both the legislation and the setting up of an independent regulator this year.

Deputy Jack Chambers

I agree with the Minister in that regard. We can be ahead of the curve in terms of international best practice by moving private and public services away from current methods. Compliance generally would be enhanced by allowing for electronic transactions. Some European states are conducting pilot projects to which we should have regard.

We can look at some of the pilots that have happened there. The Netherlands, for example, is moving most of its public services to electronic transactions, which removes the potential for people who are avoiding tax or are not compliant. We need to be ahead of the curve on this. I recognise that the Criminal Assets Bureau has done excellent work but I think the day-to-day transactions need to be focused on this too.

Deputy Peter Fitzpatrick

Coming from a Border area, there is uncertainty about Brexit. There are 200 Border crossings. The relationship that the Republic of Ireland has with Northern Ireland is great. A fantastic relationship has been built over the last number of decades with the Police Service of Northern Ireland, PSNI. Even the Minister, in his former job as Minister for Foreign Affairs and Trade, made connections. We are talking about prevention, detection, investigation and prosecution. Every one of those words is a connection that we have between the North and South. There is much uncertainty there. I know October will be a very important time, with Brexit and such. Are we ready for this? We all know that the UK will eventually leave the EU. It is important that the EU and Ireland keep this close relationship. I come from a Border area, as I said. Over the last few years, there has been a big stop to the criminal activity going in the last decade. The last thing we want to do is see this happen again. It is important that we pull all the stops out with the EU and UK and keep it going the way it is.

Deputy Charles Flanagan

The Deputy is right and I believe it is essential that we continue to intensify what is a very constructive and positive relationship between the law enforcement agencies, both North and South, east and west. I recently had the opportunity, visiting the Border area with Deputy Fitzpatrick, to see first-hand the challenges faced by An Garda Síochána in a Border area. As I said earlier in response to Deputy O'Callaghan, we are not in a position now to say with certainty what the final outcome will be. Suffice to say that there is contingency planning right across the agencies, but in particular with An Garda Síochána. I met Garda management last week, specifically about its Brexit plan and strategy. I am satisfied that every effort is being made to ensure that we continue to have the type of relationship between An Garda Síochána and PSNI that we currently have and that our laws post-Brexit will be reflective of an intent on the part of both jurisdictions to ensure that criminal activity is not only investigated but prosecuted in a successful manner.

Chairman

I have a last question on the line management, departmental oversight and where accountability rests, with regard to both the financial investigation unit and Criminal Assets Bureau. Are they both answerable to the Minister's Department and the Minister?

Deputy Charles Flanagan

The Criminal Assets Bureau is. We keep in regular contact with it, with the lead being An Garda Síochána, which is answerable to my Department.

Chairman

And the financial intelligence unit?

Deputy Charles Flanagan

That is also part of An Garda Síochána, with the same line responsibility and relationship with the Department of Justice and Equality.

Chairman

Does it operate separately from the Criminal Assets Bureau?

Deputy Charles Flanagan

Yes.

Chairman

And it comes back to the Minister's Department?

Deputy Charles Flanagan

Through An Garda Síochána.

Chairman

I thank the Minister. Are there are any other questions or points that members wish to make? We are going on to the Bill in the select committee after a short break. Does the Minister have nothing further he would like to add?

Deputy Charles Flanagan

I thank members for their support and I acknowledge the importance of transposition of these directives. I expect to be back to the committee at an early opportunity with further information.