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Saturday, 13th April 2024
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Investigating trans-national corporate crime - impact for financial services directors Back  
The proposed Criminal Justice Mutual Assistance Bill, if passed into law, will make it easier for foreign investigative agencies to question Irish financial services companies and their executives who have associations with possible criminals, writes JOE KELLY. He warns that businesses should take notice of this proposed law and seek to protect themselves and their business interests.
Many Irish business people are probably not aware that there is a new piece of legislation currently before Dáil Éireann which, if passed into law, will significantly increase the powers of regulators and law enforcement agencies from other EU countries and from the US in pursuing investigations in Ireland.

The Criminal Justice Mutual Assistance Bill is intended to enhance international co-operation in the investigation of alleged criminal activity, whether or not that activity owes its origins to corporate activity or indeed to terrorism. The shocking terrorist attack that was mounted in the US in 2001 naturally provided a significant impetus to getting legislation such as this on the statute books.

While the treaty that was signed between Ireland and the US providing for mutual assistance in criminal matters pre-dated the '9/11' attack, there is no doubt that this incident highlighted the need for legislation to tackle trans-national criminal activity.

Irish companies and Irish business executives engaged in normal trading activity may find themselves unwittingly drawn into investigations pursued by other states. For instance, banks and financial institutions will find themselves compelled to hand over documentation pursuant to the new legislation, assuming it is passed into law.

In addition, Irish business executives will need to be aware that their telecommunications may be intercepted, again pursuant to a criminal investigation initiated in the US or in another EU country.

A key message to come out of this legislation is that the level of confidentiality one might ordinarily attach to communications with a financial institution will be significantly undermined, should this legislation pass into law.

Any Irish business, aware that this legislation is coming down the tracks, will need to be even more vigilant to ensure that it trades only with businesses in other countries that are completely law abiding. If an Irish company (under this new law) trades with a company in the US, or in another EU country, that is under criminal investigation, then the Irish trading partner is most likely to feel the effects of that criminal investigation. That will have a number of implications.

First and foremost, the company and its executives will need to consider hiring lawyers both in Ireland and in the country which requests assistance with its criminal investigation. Dealing with the US criminal justice system is not for the faint hearted and very few people engage with that system without being fully advised before doing so.

Taking into account the requirement for legal advice in two jurisdictions, Irish companies and their executives would be well advised to check that appropriate insurance policies are in place to cover the eventuality of being a witness or a reluctant participant in a criminal investigation which is initiated in more than one country.

In today's legal climate, there is a range of corporate activity which one could easily imagine would lead a company or its executives to deal with criminal justice system, not just in Ireland but, pursuant to this new Bill, also with authorities in other countries. Employee fraud, unwitting breaches of Competition Law, breaches of Intellectual Property Law or technical breaches of company or securities laws, either in Ireland, in the US, or in other EU countries, could all lead to criminal investigations, and having to deal with regulators/investigators from countries where the imposition of serious sanctions happen as a matter of course. While this new legal regime will not make it easier for a person to be extradited from Ireland, it does make it easier for the evidence to be gathered which would provide the foundation for an extradition application.

In effect, this new legislation throws a longer shadow for Irish business people fearful of facing extradition to another country in respect of an alleged business offence committed (often unwittingly) in that other country. The so-called 'Natwest 3', were extradited from the UK to the US to answer charges of alleged fraud in relation to the collapse of Enron. Had the 'Natwest 3' been Irish citizens resident in Ireland, and were this legislation on the statute books at the time that the 'Natwest 3' were being investigated, the US authorities would have been in a very strong position to pursue a criminal investigation in Ireland. It is this spectre of an increasing encroachment by the regulators and investigators from other countries in the EU, and in the US, that will perhaps give the greatest unease to Irish business executives and companies and encourage them to take protective measures.

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