Dáil Second Stage Debate on Private Members Bill - Scrap and Precious Metal Dealers Bill 2011
I would like to thank Deputy McGrath for publishing his Bill and availing of the Friday facilities for Private Members Bills and for providing the opportunity to discuss this matter. The Bill deals with two very distinct areas, the "cash for gold" and the "scrap metal trade".
To be frank, I should say at the outset that while the Bill does provide a useful opportunity to discuss the issues, it does not provide a useful basis on which legislation in this area could proceed. In particular, whatever claims are made for it, it would not provide the Gardaí with effective powers in this area. In practice, it would neither help the Gardaí nor deter those involved in nefarious trading.
I am of course aware that the marked expansion in trade by persons offering to buy gold and precious metal has given rise to concerns that the trade has had an impact on crime, in particular burglaries. The increased level of "cash for gold" trade is clearly fuelled by the high price that gold, and other precious metals, now command and is an international phenomenon. The "scrap metal" trade similarly has given rise to concerns; this trade is somewhat different as there is a level of regulation in this area under waste management legislation.
The informal purchase of gold, jewellery or scrap metal is not specifically regulated in criminal legislation; however the circumstances under which such items are bought and/or sold may indicate the commission of certain offences, for example handling stolen property and / or possession of stolen property under sections 17 and 18 of the Criminal Justice (Theft and Fraud Offences) Act, 2001. The Garda Commissioner has reported that these provisions are adequate to deal with the criminal aspects of cash for gold transactions.
These matters have been kept under close scrutiny by the relevant authorities, including An Garda Síochána and my own Department. A number of relevant reviews of the matters covered by the Bill are at an advanced stage and the conclusions arising will allow for the necessary comprehensive assessment of the matters and the development of any necessary measures. I will return to the Government initiatives in hand in a few moments when I have explained the difficulties that I have with the Bill.
I have given Deputy McGrath’s Bill consideration and whereas I am sure that it presents an earnest attempt to deal with the issues, the Government is opposing the Bill for a broad range of reasons, primarily because its provisions would not be effective. In addition, there is a requirement to carefully examine the resources implications of any proposed roles envisaged for An Garda Síochána in any new regulatory matters and specifically the question of whether it is appropriate for An Garda Síochána to become a trade regulatory body.
There is also the point that the legislation that Deputy McGrath is attempting to introduce could impact adversely on jewellery and antique businesses throughout the country. Any measures that I may decide upon must not unfairly interfere with normal trade and legitimate businesses. There must be a targeted, proportionate and balanced response by Government to ensure that opportunities for criminals to obtain cash for stolen metal goods are eliminated whilst not affecting legitimate trade because of the criminal actions of a few. The objective of any actions decided upon must aim to ensure that such businesses are not unknowingly open to abuse by criminal elements.
The Criminal law elements in this Bill would not give any additional meaningful power to the Gardaí.
There are a number of critical matters that the Bill does not make provision for which could be regarded as fundamental and I will make reference to some of these shortfalls very briefly.
No provision is made for power of entry, power to demand name, address and identification of business owners, managers, employees or other persons associated at the premises.
No provision is made for power to examine, copy or take away documents.
No provision is made to direct that products found at the place may not be sold or moved or to secure for later inspection any place or part of any place in which a precious metal is found.
No Provision is made to search or cause to search any person present or to seize any machinery associated with preparation, handling, storage, transport or sale of precious metal.
No provision is made for offences of obstruction, failing or refusing to comply with a request or requirement of a member of An Garda Síochána, failure or refusal to answer a question or to provide false or misleading information.
No provision is made for the power of arrest and all the offences are summary and therefore neither arrestable nor detainable. The fact that the Bill deals only with minor offences means it does not recognise the seriousness of what is at issue.
The regulatory framework proposed is deeply flawed and simply would not work.
The definitions under Section 2 do not appear to be expansive enough and may not adequately provide for all types of metal.
I have particular difficulties with section 5 which would require metal dealers to register with An Garda Síochána. As I have already stated there is a requirement to carefully examine the resources implications of any proposed roles envisaged for An Garda Síochána in any new regulatory matters. It is not practical to tie up valuable Garda time and resources with registration issues more appropriate to another body.
The requirement to keep records for two years is inadequate, particularly where there may be a complex Garda investigation. A more appropriate period would be five years, which is the norm in other areas, but account would also need to be taken whether there is an ongoing business relationship which could require a longer period of retention.
Section 3 (1) which covers precious metals recording of transactions does not provide for penalties for not applying the requirements. Provision should also be made for monitoring transactions as part of an ongoing business relationship. Overall the diligence measures require substantial development.
There are a number of existing structures that provide models that could be looked to. One area I will further examine is the existing provisions for pawnbrokers contained in the 1964 Pawnbrokers Act as amended. This legislation provides for the regulation of the activities of pawnbrokers including record keeping requirements relating to pledges of gold, silver and precious metals.
In my own Department a system of monitoring compliance has been developed for monitoring compliance of "designated persons" with their obligations under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010. Under that Act, any person trading in goods who accepts payments in cash of at least €15,000 (whether in one transaction or in a series of transactions that are, or appear to be, linked to each other) is considered to be a "designated person". This category of "designated person" includes businesses such as jewellers, dealers in precious stones, or any other business that trades in luxury goods - for ease of reference these are referred to as High Value Goods Dealers. The Act places a number of obligations on "designated persons" (businesses), including High Value Goods Dealers, to guard against their businesses being used for money laundering or terrorist financing purposes. The principal obligations for designated persons can be broadly grouped under the following three headings Customer Due Diligence (CDD), Suspicious Transaction Reporting and Internal policies and procedures which include training and record keeping.
Customer Due Diligence requires designated persons at specified times and in particular circumstances to identify and verify the customer’s identity, be alert to suspicious activity and monitor ongoing business relationship. Suspicious Transaction Reporting requires designated persons to report suspicions of money laundering or terrorist financing to An Garda Síochána and Revenue Commissioners. There are also provisions prohibiting "Tipping Off" a customer that a report has been made. The required internal policies and procedure include compliance policies, training, record keeping of customer due diligence and transactions, risk assessment of the threat of money laundering or terrorist financing.
With regard to the "cash for Gold" trade my Department is examining the criminal justice aspects of the "Cash for Gold" trade and this report will assist me in defining precisely the measures that are needed. It should be said that the Commissioner of An Garda Síochána has indicated no identifiable increase in crime as a result of the increase of cash for gold trading.
It is imperative that those involved in these businesses are fully aware of their responsibilities in accepting gold items and that they discharge these responsibilities fully. In this regard the Garda Commissioner has informed me that all "Cash for Gold" premises in the State have been visited by An Garda Síochána and the operators have been made aware of their responsibilities and obligations with regard to purchasing gold/jewellery. Garda contact information provided to operators will facilitate the reporting to the Garda Síochána of any suspicious activity. Any new premises that may be identified will be visited by An Garda Síochána. In addition the Revenue Commissioners are focusing on the 'cash for gold' sector with a view to assessing income tax and business tax liabilities.
An Garda Síochána is targeting high-volume crimes including burglaries and theft-related crimes under the recently launched initiative, 'Supporting Safer Communities' particular emphasis is being placed on burglary prevention and reduction, and a targeted response to burglary regarding locations, times, offenders and victims.
While I am satisfied there is adequate criminal justice legislation in place concerning receiving or handling stolen property and important enforcement steps have been taken by An Garda Síochána, I am of the view that there may be a case for tighter requirements specifically in the cash for gold sector focused on the identification of those offering items for sale, and indeed the items themselves, the recording of the transaction, retention for a period of the precious item and for accessibility to transaction records by An Garda Síochána in the event of any suspicion of criminality.
In the area of metal thefts, a number of initiatives have been developed by An Garda Síochána National Crime Prevention Unit. As a result of analysis of crime trends the Garda National Crime Prevention Unit has met with stakeholders particularly affected by this type of criminality including the energy supply, communications, transport, brewery, farming sectors and with the Department of Environment, Community and Local government. The Metal Theft Forum under the Garda National Crime Prevention Unit was subsequently established. The Forum is working on detailed metal theft crime prevention and reduction plan focusing on prevention, the Garda operational response and an examination of the regulation of the scrap metal industry is expected to be finalised by the end of this month. In addition the National Crime Prevention Unit has raised awareness of the issue within the Garda organisation and published a farm security prevention booklet.
A Farm Security initiative, supported by the Irish Farmers Association, was launched outlining steps to secure vulnerable metal farm equipment.
I look forward to the outcome of the Metal Theft Forum and the development of a Metal Theft Crime Prevention and Reduction Plan. And in that context I await the recommendations of An Garda Síochána in respect of the law in this area.
As part of my considerations into defining precisely the measures that are needed I will be consulting with stakeholders, relevant agencies and with my ministerial colleagues with a view to determining whether further legislative action is necessary. It is my intention that the development of any necessary measures will be achieved in consultation with all relevant stakeholders.
I thank Deputy McGrath for the opportunity to discuss this Bill. As I have previously said as Minister for Justice and Equality, it is my obligation to carefully legally analyse any proposal that comes before the House.
The unfortunate reality is that it would not be an efficient way to proceed to attempt to make countless amendments to Deputy McGrath’s Bill.
I hope that Deputy McGrath will understand that for the reasons given I cannot support its proceeding from Second Stage to Committee Stage. But I give this House an assurance that the issues will be addressed in a considered and effective way.