ANNEX
Visit of the Northern Ireland Affairs
Committee to the Republic of Ireland 5-6
February 2002
Meeting with officials of the Criminal Assets
Bureau
1. The Criminal Assets Bureau was established
by Act in 1996. This followed widespread public concern over the
growth in organised crime in the Republic of Ireland; these concerns
were heightened by a number of gangland style murders, culminating
in the murders of Detective Garda Gerry McCabe in Adare on 6th
June 1996 and of the investigative journalist Veronica Guerin
on 26th June 1996. The Irish Government introduced a programme
of legislation to address the growing influence of organised crime
including drug trafficking. The new Acts passed included the Proceeds
of Crime Act 1996 and the Criminal Justice Act 1996, which provided
the statutory framework for the new Agency.
2. In 1994 the Irish Government had introduced
legislation to criminalise money laundering and to permit the
confiscation of assets proved to be the proceeds of drug trafficking
and other criminal activity. This was Ireland's implementation
of EU Directive 91/308. However, as this legislation could not
operate confiscation procedures except after a criminal conviction
it did not affect the most serious criminals who were able to
insulate themselves from prosecution. They did this by intimidating
witnesses or by operating their criminal enterprises through the
use of intermediaries. The new civil confiscation system tackled
this problem by adopting the procedures of civil recovery. The
Act provided that once the Bureau established on a low threshold
(civil standard) of proof that the property was the proceeds of
crime, the burden shifted onto the respondent to prove that the
asset did not derive directly or indirectly from criminal activity;
if the respondent did not do so by evidence the property would
be frozen.
3. Prior to 1996, there had been difficulties
in sharing information between various Government agencies. This
had enabled some criminals to avoid the force of the law. The
new Criminal Assets Bureau adopted a multi-agency approach, bringing
together officials from the Garda Siochana (Police); the Revenue
Commissioners; Customs; and the Department of Social Community
and Family Affairs. While the Agency was established as an independent
body, the CAB Act provided for officials of the various agencies,
once appointed to the Bureau, to retain the powers afforded to
them by their membership of those agencies. This provided the
Bureau with the powers vested in those individuals: for example,
police powers of arrest, search and seizure. It also provided
the Bureau with immediate access to the databases of those organisations,
enabling very effective cross-referencing and sharing of information.
4. The inclusion of the Department of Social
Community and Family Affairs was said to be very important as
social welfare fraud was often associated with other forms of
crime. Social Welfare savings of IR£1.25 million had been
achieved by the Bureau between 1996-2001, partly through the disentitlement
of individuals found to be engaged in criminal activity, and partly
through recovery of overpayments through the courts. The database
of the Department of Social Community and Family Affairs, to which
the Bureau had access through its officers, was always particularly
comprehensive and had greatly enhanced the Bureau's effectiveness
in preparing cases and in tracing assets.
5. While the Agency was able to draw on the
skills of legal, financial and IT experts, the forensic nature
of financial investigations carried out by CAB was outside the
previous experience of many staff. The Bureau had invested heavily
in training staff in financial investigation and awareness of
money laundering. It employed both tax officers and specialist
forensic accountants.
6. In setting up the Bureau it was considered
important that the new agency should have internal access to legal
advice. A statutory position of Bureau Legal Officer was created.
That person was appointed by the Minister for Justice after consultation
with the Minister for Finance and the Attorney General. The present
Bureau Legal Officer, Mr Barry Galvin and the Chief Bureau Officer,
Detective Chief Superintendent Felix J. McKenna are the only two
individuals working for the Bureau who are excluded from most
of the anonymity provisions and the prohibitions on publication.
Mr Galvin was seconded from the private sector.
7. The statutory remit of the Bureau was to
trace the proceeds of criminal activity and deprive the persons
involved of enjoyment of the benefit of that activity. Action
by the Bureau, whether under the Proceeds of Crime Act, the Revenue
Acts or under the Social Welfare Acts, was not dependent upon
a criminal conviction. When targeting individuals the Bureau had
two underlying requirements which were, firstly, suspected criminal
activity and secondly, assets. Once the Bureau's investigations
and inquiries were complete, or during the course of inquiries
if the need should arise, appropriate action would be taken either
by way of civil confiscation or by applying the Revenue Acts,
according to the level of evidence available.
8. In its investigative work the Bureau co-operated
closely with the Police Service Northern Ireland, and with agencies
in Great Britain, the Channel Islands and the Isle of Man. It
had co-operated to a lesser extent with agencies in the United
States of America, Spain and Portugal. It had also traced assets
to Europe, the United States of America, Spain and Mexico. It
had taken civil confiscation action on assets which had been channelled
into Ireland from Europe, the USA, Australia and the United Kingdom.
9. The way in which the Bureau chooses targets
was discussed. When the Bureau was formed there was considerable
information available to the Irish Police, Customs and Revenue
services as to persons who were known to be wealthy and whose
wealth was suspected to be derived from criminal activity. These
were a fruitful source of work for the Bureau at the outset. Targets
continued to come from information supplied by these agencies
on an ongoing basis. Part of the continuing police information
was the forwarding of suspicious transaction reports received
from financial institutions. The Bureau had enjoyed wide public
support and a significant number of targets had arisen from what
had been called a "CCR" (Concerned Citizen Report),
through which a member of the public had submitted information.
In other cases the investigation of one individual's financial
affairs had quite often led to further investigations of others
involved in transactions. An example was given showing how the
investigation of an underground bank had led to the targeting
of a number of its customers.
10. Officials of the CAB stressed that anonymity
of the Bureau's staff had proved very important in the agency's
effectiveness. In the past some organised criminals had avoided
attention from government agencies by using extreme violence to
intimidate officials. Anonymity had therefore been provided statutorily
to all non-police staff of the Bureau excluding the Bureau Legal
Officer and the Chief Bureau Officer. There were strict statutory
prohibitions on the identification of families of Bureau Officers.
Assessments for tax and demands for tax did not need to be signed
by individual officers. This anonymity made it possible to pursue
serious criminals without endangering staff. Disclosure of the
identity of a member of CAB staff was a serious criminal offence.
Similarly, offences had been created of obstructing, intimidating
or assaulting Bureau Officers.
11. Equally, however, it was possible under
the Proceeds of Crime Act 1996 for an individual who claimed to
have been wrongly subjected to a Freezing Order to receive compensation.
Section 16 of the Proceeds of Crime Act provided that the Minister
for Finance would compensate any person who could prove to have
suffered a loss where orders had been wrongly obtained or set
aside. On a wider basis some individuals backed by organised crime
money had endeavoured to obstruct and challenge the Proceeds of
Crime Act and the Bureau through the courts. None of the cases
had succeeded. Recently the Supreme Court had upheld the constitutionality
of the civil confiscation procedures set out in the Proceeds of
Crime Act.
12. The Bureau took approximately fifty Proceeds
of Crime cases through the courts between 1996 and 2001. All of
the cases had been successful, or were pending before the courts.
There was a seven year time scale between the Interlocutory Freezing
Order and the ultimate transfer of the relevant property to the
state, so no case had as yet been fully completed. Officials said
that there was considerable community support for the Bureau,
particularly where the confiscation of criminal assets was visible
to the community through, for example, the sale of a house. It
was believed to be often the case that the criminal lifestyle
of the individual was well known within the community and the
confiscation of assets, sometimes after many years of an individual
operating without hindrance from the police, gained a positive
reaction. The Proceeds of Crime Act targeted the assets, rather
than the individual; the Respondent was only named to give him
an opportunity to contest the action.
13. One problem which had been encountered by
the Bureau (and which was a reflection of what had happened in
other jurisdictions) was the propensity of lawyers to seek to
dissipate the frozen funds through legal fees, and the willingness
of respondents to permit this to happen rather than allow those
assets to go to the benefit of the state. The Proceeds of Crime
Act 1996 provided for interim payments out of frozen assets for
various purposes including legal expenses. The High Court in Ireland
had a conceptual difficulty in paying out what had already been
found to be the proceeds of crime for legal expenses. In order
to solve the situation the Irish Government had established an
ad hoc CAB civil legal aid scheme which provided payment
for defendants' costs on a parity with the costs paid to state
lawyers, and to protect the assets. This had worked extremely
well.
14. The Revenue arm of the Bureau had been most
successful in recovering financial assets. The Criminal Assets
Bureau Act provided that the Revenue Acts should be applied "fully"
to the proceeds of suspected criminal activity. The clientele
were suspected and/or convicted criminals: it was for this reason
that tax officials working for the Bureau did so anonymously.
In dealing with respondents, Bureau tax officials worked strictly
in accordance with the letter of the tax laws. The Bureau did
not apply the Revenue Acts to persons other than those suspected
of criminal activity, although proof of criminal activity was
not necessary to process the tax issues. After investigations,
which encompassed police and social welfare information, tax assessments
were issued. There was a high rate of statutory interest charged
on unpaid tax bills, which increased the value of the assets recovered
and provided a strong incentive to the clients to pay. In the
early days of the Bureau all of the tax cases were vigorously
contested. The persons involved were mainly professional criminals,
some of whom had almost achieved respectability within the community.
The High Court in Ireland upheld the Revenue activities of the
Bureau and even though appeals were pending, a number of prominent
respondents settled for large tax payments. These got wide publicity
in the national press and as a result a significant number of
persons targeted had now demonstrated a willingness to submit
information and to make voluntary settlements. Where appropriate,
Revenue cases were pursued vigorously through the courts.
15. The majority of Bureau Revenue cases involved
Income Tax. However, to a lesser extent Capital Gains Tax and
VAT had been targeted. Since 1983, in Ireland, it had been possible
to levy tax without having to identify a specific source for the
funds and/or in circumstances where it was known that the funds
were from an illegal or unlawful source. The Bureau applied the
ordinary principles of tax law and procedures found in the Revenue
Acts as they applied to every citizen of Ireland, and was proactive
in the collection of tax found to be due. Mareva injunctions were
taken at an early date where it was feared that assets would be
removed from the jurisdiction. Attachment notices could be sent
to banks where funds in accounts were located, to require assets
to be sent by the bank directly to the Bureau. In instances where
the individual had left the jurisdiction leaving assets behind,
the Bureau continued to pursue the assets.
16. Officials stressed that the persons being
targeted by the Bureau were modern style upwardly mobile criminals
who had the benefit of extensive legal and accountancy advice
to hide their assets and their activities. In order to counter
this situation and to be effective the Bureau had been provided
with a new Statutory Search Warrant, under s14 of the CAB Act.
This was an advance in Irish Jurisprudence in that it permitted
- on a low threshold - a search warrant to be issued by a Judge
of the District Court for any place where assets or evidence of
the whereabouts of assets might be found. It also permitted persons
other than police to attend to assist in the carrying out of those
searches. It had been established that the assistance of Revenue,
Social Welfare and Customs Officers in searches had been significant.
17. The warrant issued by a District Judge remained
in force for seven days. In emergency situations (such as the
discovery during a search that another place needed to be searched
and either a District Judge was not available or there would not
be time to prepare an application to the District Judge to prevent
the evidence being moved or destroyed) a police Bureau Officer
having the rank not less than Superintendent might issue a search
warrant in similar terms which would remain in force for 24 hours.
18. While it might be suggested that recovery
of tax was not, from an enforcement point of view, as desirable
as prosecution of serious organised criminals or the application
of civil confiscation procedures to their assets, it had proved
a very valuable tool in instances where there was otherwise insufficient
evidence. In some cases individuals who had been targeted, upon
realising the extent of the case against them, had volunteered
to pay tax upon their assets rather than go through the courts.
For example, one leading criminal had volunteered to pay IR£1.2
million in instalments. Subsequently other criminals with links
to him had also volunteered payments. Tax recovery was used in
70 per cent of cases investigated by the Bureau: in many instances
the individuals targeted had always previously evaded pursuit.
It was believed that the Bureau's work was profoundly psychologically
unsettling for such individuals as well as disruptive of their
criminal activity.
19. The majority of work carried out by the
Bureau had focused on individuals. In many instances these individuals
were members of criminal organisations. Assets of corporate bodies
could be frozen under Offences Against the State Acts if the organisation
were to be convicted of scheduled offences. Corporate bodies (ie.
private limited companies) had been made defendants under the
Proceeds of Crime Act, and under tax legislation, where they had
been operated by suspected criminals. However, officials commented
that in the majority of cases assets would be held by an individual
on behalf of an organisation and therefore, in terms of recovering
the assets, the pursuit of the individual under the CAB Act was
as effective as targeting the organisation itself. It was sometimes
difficult to prove that assets arose from crime where an individual
- even a well-known criminal - also carried out entirely legal
business.
20. While similar operations in some countries,
most notably America, made provision for assets seized to be shared,
or used for social and community projects, the view had been taken
by the Irish Government that all assets seized should be returned
to the Exchequer. This was because it was feared that giving the
Bureau any benefit from assets seized would introduce a 'profit
motive' which might prove detrimental to its activity.
21. In spite of the absence of asset sharing
arrangements, considerable international co-operation had developed
formally through bilateral and multi-lateral agreements, and less
formally through workshops and conferences. The Bureau had found
that it was often useful to send an official to a jurisdiction
where it was suspected that an individual was hiding assets, or
from which assets found in Ireland had originated, in order to
develop diplomatic channels. As a consequence it was now possible
to exchange information between jurisdictions very rapidly when
necessary. Co-operation was especially strong between the Republic
of Ireland and agencies in Northern Ireland such as the Police
Service Northern Ireland and Customs and Excise. There was a bilateral
agreement between the Republic of Ireland and the UK in respect
of money laundering. Links were also well established with the
Isle of Man, the Channel Islands and the United States. Links
were developing in the Cayman Islands and the West Indies.
22. Between 1996 and 2001 the Bureau had carried
out over 600 searches and obtained over 800 production orders.
It had frozen IR£21 million through actions under the Proceeds
of Crime Act, and IR£4 million through Mareva Injunctions.
IR£56 million of tax had been demanded, of which £28
million had been recovered.
Meeting with officials of the Department of Justice,
Equality and Legal Reform
23. Officials provided an introduction to the
Criminal Assets Bureau.
24. The Criminal Assets Bureau is a statutory
multi-agency body with officers from the Gárda Síochána
(national police), the customs authorities, the Revenue Commissioners
(tax collection authorities) and the Department of Social, Community
and Family Affairs (social assistance and benefits authorities).
The Chief Bureau Officer is a member of the Gárda Síochána
holding the rank of Chief Superintendent.
25. Bureau officers retained their original
powers to exercise and perform duties as officers of the agency
from which they had been nominated and the exercise of such powers
was performed in the name of the Bureau. Information and material
could be disclosed to other Bureau officers. A Bureau Legal Officer
assisted the Chief Bureau Officer in the pursuit of his statutory
objectives and functions.
26. Following public concern arising from a
number of murders between 1994 and 1996, many of them drug related,
but especially the murders of Detective Garda McCabe and Veronica
Guerin, the Irish Government enacted legislation in 1996 concentrating
on the identification of the proceeds of crime and the taking
of appropriate action to deny persons such proceeds. The legislation
was intended to provide a remedy for a situation where persons
involved in drug trafficking and other serious crime were openly
enjoying the proceeds of their crimes and where sufficient evidence
to prosecute and/or convict was not available. The core legislation
enacted in 1996 to give effect to the new strategy consisted of:
- the Criminal Assets Bureau Act 1996;
- the Proceeds of Crime Act 1996;
- the Disclosures of Certain Information for Taxation
and Other Purposes Act 1996; and
-amendments to the Revenue and Social Welfare Acts.
27. The overall effect was to provide a statutory
mechanism to deny criminals the proceeds of serious criminal activity
and to charge the Criminal Assets Bureau with primary responsibility
for enforcement. On application, the High Court could make orders
which effectively "froze" property which could be shown,
on the civil standard of proof (ie. the balance of probabilities)
to be the proceeds of crime and which had a value of no less than
£10,000. The effect was to freeze the property for a period
of seven years unless the Court was satisfied that all or part
of the property was not the proceeds of crime.
28. The mechanism for recovering criminal assets
following a conviction had been available to the Irish authorities
since 1994. However the establishment of the Criminal Assets Bureau,
and the enactment of the Proceeds of Crime Act, for the first
time created a body with an appropriate, statutorily based, mechanism
for the recovery of criminal proceeds without the need for a criminal
conviction to be obtained. The real significance of the Bureau
was that it represented a multi-agency approach to the targeting
of criminal assets. It was also able to operate anonymously, which
had increased its effectiveness in dealing with serious criminals.
Previously, there had on occasion been a real element of personal
risk for officials dealing with serious organised criminals, particularly
in respect of decisions to withdraw benefits, and subsequent consideration
of appeals. In some cases extreme violence had been threatened
and even used against officials in order to intimidate them.
29. While crimes would normally be investigated
by the Gárda Síochána, the Criminal Assets
Bureau investigated the assets of individuals, seeking to identify
evidence of crimes. Although the actual benefit from the Proceeds
of Crime Bill lay in the seizure of criminal assets, there was
a strong intangible advantage in the psychological effect of Bureau
investigations on organised criminals, who might at any time find
their assets subject to confiscation.
30. The reason why there was a discrepancy between
the amount of tax claimed, and the amount recovered was because
of the appeals process, which could be lengthy. The Bureau quite
often claimed very significant sums in tax: this arose in part
because the proceeds of crime had been taxable in the Republic
of Ireland since the mid 1980s. If the Bureau were able to identify
assets which had been in existence since that time, it was able
to claim tax covering the entire period: with interest and other
penalties the sums could become substantial.
31. In general terms, the work of the Bureau
appeared to be accepted by the general public, although it had
very significant powers. While some concerns had been voiced over
civil liberties, there had not been strong opposition to the Bureau's
establishment. The Bureau had faced legal challenges, but had
its constitutionality upheld by both the High Court and the Supreme
Court. Certain remedies were provided by the legislation if the
Court took the view that there was a risk of injustice: an important
section of the Act provided for compensation in certain circumstances.
32. The Criminal Assets Bureau was empowered
under the Proceeds of Crime Act to target assets over a £10,000
threshold in value, including assets held for organisations or
individuals, where those funds could be seen to be directly or
indirectly the proceeds of crime. The Offences against the State
Acts 1939-1998 made separate provision for the forfeiture of the
property of unlawful organisations subject to suppression orders,
including provision whereby the Minister for Justice could order
the forfeiture of funds held by a person for the use or benefit
of such an organisation. The £10,000 threshold had been inserted
into the Proceeds of Crime Act in order to enable the Bureau to
concentrate on serious rather than petty crime.
33. The main focus of the Bureau since its inception
had been the proceeds of drug trafficking. However, the statutory
remit of the Bureau covered all forms of criminal activity and
a number of actions had been taken against the proceeds of criminal
activity other than drug trafficking. Property targeted included
cash, transportation and real and personal property. While in
some cases there could be a paramilitary connection it was often
difficult to determine with certainty that criminal activity was
being carried out in order to fund future paramilitary activity.
34. Five years on from the establishment of
the Bureau, a further bill was being brought forward to fine tune
its approach. The Bill would enable the Bureau to take proceedings
in its own name rather than in the name of the Chief Superintendent
of the Bureau as previously. Provision was also being made for
variations to orders, and for more effective use of affidavits
and oral evidence. These improvements were being sought as a consequence
of the Bureau's previous experience in the courts.
35. The role of the courts in the assets recovery
process was considered to be very important. The fact that the
Bureau's objective was primarily to target criminal assets, rather
than those controlling them, had helped satisfy the courts as
to the Bureau's constitutionality. The courts provided further
safeguards as they could also refuse or vary orders where there
was a danger of injustice. It was conceivable that on occasion
an individual with a criminal background would enter into business
with an entirely innocent party, whose assets might then fall
under suspicion. The Proceeds of Crime Act therefore allowed a
person affected by an order (whether or not that person was the
defendant or another such as a business associate) to prove to
the courts that some of the money being considered for confiscation
was legitimate. The courts could then separate out the legitimate
assets and prevent that individual being unfairly punished.
36. A further power under the Act enabled the
High Court on appeal to demand that an individual make a declaration
of property acquisitions dating back ten years. This was a very
significant power, which provided the court with the information
necessary to separate out legitimate and illegitimate assets.
37. The events of 11th September 2001 had had
a significant impact, and had prompted a review of all existing
legislation relating to terrorism. Legislation was being prepared
to ratify the pre-existing UN Convention on the Suppression of
the Financing of Terrorism. Existing legislation provided for
the seizure of assets arising from the proceeds of crime, but
did not make provision for legitimately acquired money which might
be used in future for terrorism; the future legislation would
create a new offence of funding terrorism, and allow the seizure
of assets which might in future finance terrorist acts.
38. These provisions would still require evidence
to be produced in the courts to justify confiscation. Under the
proposed legislation, the standard of proof required to determine
whether a person held funds which were subject to confiscation
due to the commission of a terrorist act and, if so, the value
of such funds, would be that applicable in civil proceedings.
39. The Government was also considering amendments
to the Offences Against the State Acts, whose focus was primarily
domestic, with a view to making any further changes necessary
for the purposes of dealing with international terrorism.
40. The recently enacted Criminal Justice (Theft
and Fraud Offences) Act 2001 strengthened the law relating to
dishonesty in general. It provided that stolen property included
property which had been unlawfully obtained and also created an
offence of making a gain or causing a loss by deception. The Act
also amended the money laundering provision of the Criminal Justice
Act 1994 so that a person would be guilty of money laundering
where that person, knowing or being reckless as to whether property
was, or represented, criminal proceeds, did any one of a number
of things in relation to it. It would also be an offence to acquire,
possess or use such property. Under the new provision the penalty
for money laundering would be an unlimited fine or imprisonment
for up to 14 years or both.
41. It was believed that the Irish Government
had been able to establish the Bureau and the surrounding co-operative
network without major organisational change as the various agencies
involved were centrally administered: for example, there was only
one police force, which also handled intelligence and security
matters. There had been initial difficulties to overcome in the
traditional proprieties of information protection within agencies
such as the Revenue Commissioners; the multi-agency approach of
the Criminal Assets Bureau had helped to overcome these barriers.
42. Officials said that there were very positive
relations between the Department of Justice and the Northern Ireland
Office of the UK Government, and that co-operation between the
Garda Siochana, the Police Service Northern Ireland and the Customs
officers of both jurisdictions had led to very effective joint
operations. The Belfast Agreement and the Patten Report provided
a range of recommendations relating to police co-operation, which
were under discussion by the two governments. Further enhancements
of joint working were being developed.
43. Memoranda of Understanding existed between
the Customs and Excise agencies of the two jurisdictions, and
a framework for co-operation in this area existed at European
and wider levels. A new international Customs and Excise convention
on tobacco smuggling was under discussion, and if ratified would
significantly enhance Customs' powers.
44. The events of September 11th
2001 had prompted Governments to re-evaluate their response to
the problem of terrorism at both the national and international
levels. Both the United Nations and the European Union were playing
an active part in the international response by creating increased
opportunities for international co-operation. UN Security Council
Resolution 1373 and the European Union Framework Decisions on
combatting terrorism and a European arrest warrant were examples
of measures adopted in the aftermath of September 11th
which were intended to improve the ability of States to respond
to terrorism.
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