I move amendment No. 103:
In page 53, to delete lines 42 to 48, in page 54, to delete lines 1 to 51, in page 55, to delete lines 1 to 53, in page 56, to delete lines 1 to 52, in page 57, to delete lines 1 to 53 and in page 58, to delete lines 1 to 39 and substitute the following:
33AK.-(1) (a) This subsection applies to the following persons:
(i) the Governor and every former Governor;
(ii) every Director and every former Director;
(iii) every member, member's deputy appointed under paragraph 4 of Schedule 3, former member and former member's deputy who had been so appointed, of the Regulatory Authority;
(iv) the Chief Executive and every former Chief Executive;
(v) the Consumer Director and every former Consumer Director;
(vi) the Registrar of Credit Unions and every former Registrar of Credit Unions;
(vii) every other officer or employee and every other former officer or employee of the Bank;
(viii) every person who is or was formerly employed as a consultant, auditor or in any other capacity by the Bank or any constituent part of the Bank.
(b) A person to whom this subsection applies shall not disclose confidential information concerning-
(i) the business of any person or body whether corporate or incorporate that has come to the person's knowledge through the person's office or employment with the Bank, or
(ii) any matter arising in connection with the performance of the functions of the Bank or the exercise of its powers,
if such disclosure is prohibited by the Rome Treaty, the ESCB Statute or the Supervisory Directives.
(2) (a) If requested by the Bank, the directors or those charged with the direction of a supervised entity shall, in accordance with paragraph (b), inform the Bank on the extent of any disclosure duly made by or on behalf of them or the entity to any authority, whether within the State or otherwise.
(b) Where a request is made under paragraph (a), the directors or those charged with the direction of a supervised entity shall give to the Bank all the information so requested that is in their possession or under their control, within-
(i) 30 days of receipt of the request, or
(ii) such longer period as the Bank may allow when making the request or subsequently.
(c) In responding to a request for information under this subsection, the directors or those charged with the direction of the supervised entity concerned shall exercise due diligence and shall not, by any act or omission, give or cause to be given to the Bank false or misleading information.
(3) (a) Subject to subsection (1)(b) and paragraph (b), the Bank shall report, as appropriate, to-
(i) the Garda Síochána, or
(ii) the Revenue Commissioners, or
(iii) the Director of Corporate Enforcement, or
(iv) the Competition Authority, or
(v) any other body, whether within the State or otherwise, charged with the detection or investigation of a criminal offence, or
(vi) any other body charged with the detection or investigation of a contravention of-
(I) the Companies Acts 1963 to 2001, or
(II) the Competition Act 2002, or in so far as any commencement order under that Act does not relate to the repeal of provisions of the Competition Acts 1991 and 1996, which would otherwise be subsisting those Acts,
any information relevant to that body that leads the Bank to suspect that-
(A) a criminal offence may have been committed by a supervised entity, or
(B) a supervised entity may have contravened a provision of an Act to which subparagraph (vi) relates.
(b) Paragraph (a) does not apply where the Bank is satisfied that the supervised entity has already reported the information concerned to the relevant body.
(c) Information contained in a report under paragraph (a) may only be used by the body to which it is addressed for the purposes of-
(i) the detection or investigation of a contravention of a provision of an Act to which paragraph (a)(vi) relates, or
(ii) any investigation which may lead to a prosecution for a criminal offence and any prosecution for the alleged offence.
(4) (a) In relation to a supervised entity, where the Bank identifies information——
(i) which it believes is or is likely to be material to an authority concerned with the enforcement of any law, and
(ii) which it believes it is unable, due to the provisions of subsection (1)(b), to disclose to that authority, and
(iii) in respect of which it is not satisfied that the information has been disclosed to that authority by the directors, or those charged with the direction, of the supervised entity,
then, the Bank shall issue to the directors or others duly charged with the direction of the supervised entity a document, to be known as a Disclosure Issue Notice, and the notice shall-
(I) specify the name of the authority concerned, and
(II) identify the information that the Bank has identified as causing it to issue the Disclosure Issue Notice.
(b) The Bank shall advise the authority concerned when a Disclosure Issue Notice is issued.
(c) Where a Disclosure Issue Notice is issued in respect of a company to which section 158 of the Companies Act 1963, applies (which relates to the directors’ report), the directors’ report shall comply with subsection (6A) of that section.
(5) Subject to subsection (1)(b), the Bank may disclose confidential information-
(a) required for the purposes of criminal proceedings, or
(b) with the consent of the person to whom the information relates and, if the information was obtained from another person, that other person, or
(c) where the Bank is or was the agent of a person-made to the person as the person’s agent, or
(d) to an authority in a jurisdiction other than that of the State duly authorised to exercise functions similar to any one or more of the statutory functions of the Bank and which has obligations in respect of non-disclosure of information similar to the obligations imposed on the Bank under this section, or
(e) to any institution of the European Community because of the State’s membership of the Community, or to the European Central Bank for the purpose of complying with the Rome Treaty or the ESCB Statute, or
(f) to an approved stock exchange, within the meaning of the Stock Exchange Act 1995-
(i) in respect of member firms of the exchange for the purpose of monitoring compliance by member firms with stock exchange rules or with conditions or requirements imposed by the Bank, or with both, or
(ii) where the Bank considers it necessary to do so, either for the proper and orderly regulation of stock exchanges and their member firms or for the protection of investors, or for both, or
(g) to a financial futures and options exchange, within the meaning of section 97 of the Central Bank Act 1989, whose rules have been approved by the Bank under Chapter VIII of the Central Bank Act 1989-
(i) for the purpose of monitoring compliance by the members of that exchange with those rules or with conditions or requirements imposed by the Bank, or with both, or
(ii) where the Bank considers it necessary to do so for the proper and orderly regulation of futures and options exchanges and their members, or
(h) to-
(i) an inspector appointed under the Companies Acts 1963 to 2001, or section 57 of the Stock Exchange Act 1995, or
(ii) a Committee appointed under section 65 of the Stock Exchange Act 1995, or
(i) to a body that is a competent authority for the purpose of Council Directive 93/22/EEC of 10 May 1993 or Council Directive 93/6/EEC of 15 March 1993, or
(j) to an approved professional body-
(i) for the purpose of monitoring compliance by investment business firms with rules or with conditions or requirements imposed by the Bank, or
(ii) where the Bank considers it necessary to do so for the proper and orderly regulation of investment business firms, or
(k) to-
(i) a Committee appointed under section 74 of the Investment Intermediaries Act 1995, or
(ii) a person nominated or approved of by a supervisory authority in accordance with section 51(2) of that Act, or
(iii) an inspector appointed by the Court under Part VIII of that Act, or
(l) to a product producer in respect of investment business services or investment advice provided by a restricted activity investment product intermediary who holds an appointment in writing from the producer under section 27 of the Investment Intermediaries Act 1995, or
(m) to an officer of statistics (as defined by section 20 of the Statistics Act 1993) in connection with the collection, compilation, analysis or interpretation of data relating to balance of payments, national accounts or any other financial statistics prepared for those purposes, or
(n) for the purpose of complying with section 57(2) or 57A(3) of the Criminal Justice Act 1994, or
(o) to the Comptroller and Auditor General that is required for the performance of that officer’s functions or to a person employed in the Office of the Comptroller and Auditor General, or
(p) to an auditor to whom section 6H applies, or
(q) to the Minister for the Environment and Local Government in connection with that Minister’s functions under the national housing program with respect to a mortgage lender, or
(r) to the Investor Compensation Company Limited, or to a subsidiary of that company established by the Bank in order to provide administrative services to that company, or
(s) for the purposes of the hearing of an appeal by the Appeals Tribunal, or
(t) for the purpose of complying with a requirement imposed under section 33AM or by or under any other law, or
(u) where the Bank is in receipt of information from an authority in a jurisdiction other than the State duly authorised to exercise functions similar to one or more of the statutory functions of the Bank, made with the permission of that authority, or
(v) to a liquidator, examiner, receiver or any other person or body involved in the liquidation or bankruptcy of a supervised entity in relation to that entity, in accordance with the Supervisory Directives, where applicable, or
(w) to the auditor of a supervised entity in relation to that entity, in accordance with the Supervisory Directives, where applicable, or
(x) to any body established under law for the purposes of overseeing auditors, in accordance with the terms of the Supervisory Directives, where applicable, or
(y) to the Director of Corporate Enforcement for the purpose of any investigation under Part II (as amended) of the Companies Act 1990, or to an officer of the Director for the purposes of the Director’s functions and in accordance with the terms of the Supervisory Directives, where applicable, or
(z) to the Minister in accordance with the terms of the Supervisory Directives in relation to the Minister’s responsibility for legislation on the supervision of supervised entities or to an inspector, appointed by the Minister and acting on the Minister’s behalf, or
(aa) in accordance with Article 25(7) of Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field, to a body which has the function of providing clearing or settlement services for one of the State’s markets where necessary for the performance of its functions, or
(ab) in accordance with the terms of Council Directive 92/49/EEC of 18 June 1992 in respect of insurance undertakings, to bodies which administer compulsory winding up proceedings or guarantee funds, where necessary for the performance of their functions, or
(ac) in accordance with the terms of Council Directive 92/96/EEC of 10 November 1992 in respect of assurance undertakings, to bodies which administer compulsory winding up proceedings or guarantee funds, where necessary for the performance of their functions, or
(ad) to the Pensions Board that is required for the performance of its functions, or
(ae) in summary or collective form, such that individual persons or bodies cannot be identified, in legal proceedings where a supervised entity has been declared bankrupt or is being compulsorily wound up, but only if the information disclosed does not concern the business of any person or body which, to the knowledge of the Bank, may be, or has been involved in attempts to rescue that supervised entity at any stage, or
(af) if the Bank is satisfied that the disclosure is necessary to protect consumers of relevant financial services or to safeguard the interests of the Bank, or
(ag) if the disclosure arises in relation to-
(i) the operations of the Bank in any financial market, or
(ii) the issue by the Bank or the European Central Bank of legal tender, or
(iii) the pursuit by the Bank of the objectives set out in section 6A of the Central Bank Act 1942, or
(ah) to a Tribunal of Inquiry established under the Tribunals of Inquiry (Evidence) Acts 1921 to 2002, or
(ai) to the Revenue Commissioners in relation to their functions in a manner such that no supervised entity can be identified, or
(aj) to the Registrar of Friendly Societies that is required for the performance of the Registrar’s functions.
(6) Any person or entity to whom confidential information is provided under subsection (3)(a) or (5) shall comply with the provisions on professional secrecy in the Supervisory Directives in holding and dealing with information provided to them by the Bank.
(7) The Bank may, for the purposes of subsection (5)(d) or otherwise, require from a supervised entity any information for the purposes of the Bank assisting an authority to which that subsection relates, but the Bank may only require such information where the information requested is, in the opinion of the Bank, to assist the authority in the carrying out of its regulatory functions.
(8) A person who-
(a) contravenes subsection (1)(b), or
(b) contravenes paragraph (a) or (c) of subsection (2), or
(c) fails to comply with section 158(6A) of the Companies Act 1963, for the purpose of a Disclosure Issue Notice issued under subsection (4),
commits an offence and is liable-
(i) on conviction on indictment to a fine not exceeding €30,000 or to imprisonment for a term not exceeding 5 years, or both, or
(ii) on summary conviction to a fine not exceeding €3,000 or to imprisonment for a term not exceeding 12 months, or both.
(9) Notwithstanding anything to the contrary provided for by or under any enactment, where in the opinion of the Revenue Commissioners, or such officer or officers of the Commissioners as they may from time to time designate for this purpose, there is information which may relate to-
(a) the commission of an offence, or
(b) a failure to comply with an obligation,
under the designated enactments or the designated statutory instruments, then the Commissioners or that officer shall disclose the information to the Bank.
(10) In this section-
'approved professional body' has the meaning given by section 55 of the Investment Intermediaries Act 1995;
'product producer' has the meaning given by section 2 of the Investment Intermediaries Act 1995;
'restricted activity investment product intermediary' has the meaning assigned to it by section 26 of the Investment Intermediaries Act 1995;
'Supervisory Directives' means-
(a) Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000,
(b) Council Directive 93/22/EEC of 10 May 1993,
(c) Council Directive 85/611/EEC of 20 December 1985,
(d) Council Directive 92/49/EEC of 18 June 1992,
(e) Council Directive 92/96/EEC of 10 November 1992;
'supervised entity' means any person or body in relation to which the Bank exercises functions under the designated enactments or the designated statutory instruments.".
Deputies will recall that I gave a commitment to the House in July 2002 in relation to the Ansbacher report to bring forward proposals relating to the constraints upon banking regulators arising from the confidentiality provisions contained in European and national legislation. As I said at the time, I propose to make radical changed to the compliance environment in which supervised entities must operate.
It is not acceptable that financial institutions should deliberately break the law of the land, as some have done in the past. Neither is it acceptable that the State body charged with supervising these institutions should be inhibited from taking action if it discovers breaches of tax or other laws in the course of its supervisory duties. Current legislation in this area is based upon the premise that information can only be shared amongst State authorities in very limited circumstances. It is right that, as a general rule, banking and other supervisory authorities should not abuse their privileged access to confidential information by revealing this information to third parties. This general principle in enshrined in the EU directives governing the supervision of financial institutions throughout the Single Market.
The directives also recognise that this principle may be over-written where there are broader public policy issues involved, specifically, where breaches of the criminal law or of general company law arise or where it is necessary to share information with other supervisory authorities. The present section 33AK, as its title, "Prohibition on disclosing certain information", implies, mainly focuses upon the obligation not to disclose information to third parties. I propose in this amendment to replace section 33AK with an entirely new section entitled "Disclosure of information", in which the emphasis is on the obligation to disclose information to other statutory bodies where there is a suspicion that the law is being broken.
Subsection (3) of the section is the core provision. This provides that the bank must report to the relevant authority, for example, the Garda, the Revenue Commissioners, the Director of Corporate Enforcement or the Director of Consumer Affairs, if it comes across any information that leads the bank to suspect that a criminal offence, under statute or otherwise, or a breach of the Companies Acts 1963 to 2001 or of the Competition Act 2002 has been committed. The bank need not, as a general rule, report if it is satisfied that the institution concerned has reported the information to the relevant authority.
As tax evasion and failure to report money laundering of the proceeds of tax evasion are criminal offences, Deputies will appreciate the significance of this provision in the light of the DIRT and Ansbacher investigations. Subsection (4) comes into play if circumstances arise where the bank comes across information which it believes may be significant for an authority concerned with enforcing law but is prevented from reporting directly to that authority because of the confidentiality provisions laid down in EU law. In such a case, the bank must put both the financial institution and the enforcement authority concerned formally on notice that it has identified information relevant to that authority. The financial institution concerned must disclose the fact as being put on notice by the bank in the director's annual report. Again, the bank is not, as a general rule, obliged to act if it satisfied that the financial institution has disclosed the information directly to the enforcement authority concerned.
The other subsections are complimentary to these two. Subsection (1) lays down the general principle that the bank may not disclose confidential information if EU law prohibits such disclosure. Subsection (6) obliges authorities to whom information is disclosed to treat it as confidential, in accordance with our EU obligations. Subsection (2) gives the bank a general power to require financial institutions, or any other enforcement or supervisory authority, to report to it on the extent of their disclosure. Subsection (7) provides that the bank may require an institution to provide information required by a supervisory body in another country.
Subsection (5) is an illustrative and non-exhaustive list of the circumstances in which the bank may disclose confidential information to other authorities. The subsection encourages the bank to use these gateways without necessarily limiting disclosure to these gateways. The gateways listed are mainly those already contained in our domestic legislation. Subsection (8) lays down penalties for non-compliance either by a financial institution or by employees of the bank.
Subsection (9) provides that the Revenue Commissioners must report to the bank if they come across information to suggest that a financial institution is in breach of its obligations under the enactments the bank is charged with implementing. Amendments Nos. 105 to 107, inclusive, amend section 33AL, which deals with the obligations of office holders and employees of the bank in order to bring it into line with the revised section 33AK. Amendment No. 152 relates to the obligations of the directors of financial institutions to publish the disclosure issue notice referred to in subsection (4) of section 33AK. It inserts a new subsection into section 158 of the Companies Act 1963, which deals with the directors' reports that must be attached to a company's balance sheet. I wish to correct an error in this amendment. The new subsection should be numbered (6)(b) as subsection (6)(a) already exists. A consequential adjustment is necessary to the reference in subsection (4)(c) of the new section 33AK.
Amendment No. 168 separately provides that wherever a financial institution suspects that the customer is engaged in money laundering, it must make a report to the Revenue Commissioners as well as to the Garda. The significance of this amendment to the Criminal Justice Act 1994 is that tax evasion is encompassed by our legislation dealing with money laundering. This means the Revenue Commissioners would have early notice of any suspicion that the customer of a financial institution is using the institution's services to evade a tax liability. If a financial institution fails to report suspicious transactions or fails to put in place the necessary measures to detect money laundering, both of which are criminal offences, the bank will be obliged to report any such failure of which it becomes aware to the Garda and to the Revenue Commissioners.
Amendments Nos. 172, 204, 233, 235 and 240 are consequential, technical amendments arising from the decision to impose a uniform set of disclosure obligations on the bank. These changes are radical and are part of a general effort by the Government to improve standards in the corporate sector. The establishment of the office of the Director of Corporate Enforcement was an important step in this effort. The companies amendment Bill that will come before the House shortly will impose new compliance obligations on the directors of companies and their auditors. The present Bill and the provisions of the second Bill that I hope to introduce later this year will help to insure that financial institutions fully comply with our statutory tax and other obligations and that the new regulatory authority within the bank plays its part in ensuring that they do so. I commend these amendments to the committee.
