Criminal Justice (Theft and Fraud Offences) (Amendment) Act 2021

1. Definition

1. In this Act “Principal Act” means the Criminal Justice (Theft and Fraud Offences) Act 2001.

2. Interpretation (Part 6)

2. The Principal Act is amended by the substitution of the following section for section 40:

“40. (1) In this Part—

‘Act of 2018’ means the Criminal Justice (Corruption Offences) Act 2018;

‘corruption offence’ means an offence under section 5 of the Act of 2018;

‘Directive’ means Directive (EU) 2017/1371 of the European Parliament and of the Council of 5 July 2017 on the fight against fraud to the Union’s financial interests by means of criminal law, the text of which is, for convenience of reference, set out in Schedule 1A;

‘fraud affecting the financial interests of the European Union’ has the same meaning as ‘fraud affecting the Union’s financial interests’ in Article 3(2) of the Directive;

‘misappropriation’ has the same meaning as it has in Article 4(3) of the Directive;

‘money laundering offence’ means an offence under Part 2 of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010;

‘national official’, for the purposes of the application of Article 4(4)(a) of the Directive, means an Irish official within the meaning of section 2(1) of the Act of 2018;

‘public official’ means—

(a) a Union official within the meaning of Article 4(4)(a)(i) of the Directive,

(b) a national official,

(c) a foreign official within the meaning of section 2(1) of the Act of 2018, or

(d) a person referred to in Article 4(4)(b) of the Directive.

(2) A word or expression that is used in this Part and that is also used in the Directive has, unless the context otherwise requires, the same meaning in this Part as it has in the Directive.”.

3. Fraud affecting financial interests of European Union

3. The Principal Act is amended by the substitution of the following section for section 42:

“42. (1) Subject to subsection (2), a person who intentionally commits any fraud affecting the financial interests of the European Union is guilty of an offence and is liable on conviction on indictment to a fine or to imprisonment for a term not exceeding 5 years or both.

(2) Where an offence under subsection (1) relates to acts or omissions to which Article 3(2)(d) of the Directive applies, the offence is not committed unless such acts or omissions are connected with the territory of two or more Member States and involve a total damage of not less than €10,000,000.”.

4. Misappropriation

4. The Principal Act is amended by the insertion of the following section after section 42:

“42A. A public official who intentionally commits misappropriation is guilty of an offence and is liable on conviction on indictment to a fine or to imprisonment for a term not exceeding 5 years or both.”.

5. Liability for offences by body corporate, etc. (Part 6)

5. The Principal Act is amended by the insertion of the following section after section 42A (inserted by section 4):

“42B. (1) Where a relevant offence is committed for the benefit of a body corporate by a relevant person and the commission of the relevant offence is attributable to the failure, by a director, manager, secretary or other officer of the body corporate, or a person purporting to act in that capacity, to exercise, at the time of the commission of the relevant offence and in all the circumstances of the case, the requisite degree of supervision or control of the relevant person, the body corporate shall be guilty of an offence.

(2) In proceedings for an offence under subsection (1), it shall be a defence for a body corporate against which such proceedings are brought to prove that it took all reasonable steps and exercised all due diligence to avoid the commission of the offence.

(3) Where an offence under section 42 or 42A, or an offence of inciting, aiding and abetting, or attempting the commission of such an offence, is committed by a body corporate and it is proved that the offence was committed with the consent or connivance, or was attributable to any wilful neglect, of a person who was a director, manager, secretary or other officer of the body corporate, or a person purporting to act in that capacity, that person shall, as well as the body corporate, be guilty of an offence and shall be liable to be proceeded against and punished as if he or she were guilty of the first-mentioned offence.

(4) Where the affairs of a body corporate are managed by its members, subsection (3) shall apply in relation to the acts and defaults of a member in connection with his or her functions of management as if he or she were a director or manager of the body corporate.

(5) Subsection (1)—

(a) is without prejudice to the other circumstances, under the general law, whereby acts or omissions of a natural person are attributed to a body corporate resulting in criminal liability of that body corporate for those acts or omissions, and

(b) does not exclude criminal proceedings against natural persons who are involved as perpetrators, inciters or accessories in an offence referred to in that subsection.

(6) A person guilty of an offence under subsection (1) is liable on conviction on indictment to a fine.

(7) In this section—

‘relevant person’, in relation to a body corporate, means—

(a) a director, manager, secretary or other officer of the body corporate, or a person purporting to act in that capacity, or

(b) an employee, subsidiary or agent of the body corporate;

‘relevant offence’ means—

(a) an offence under section 42 or 42A,

(b) a money laundering offence involving property derived from the proceeds of an offence referred to in paragraph (a), (c) or (d),

(c) a corruption offence that damages, or is likely to damage, the financial interests of the European Union, or

(d) an offence of inciting, aiding and abetting, or attempting the commission of an offence referred to in paragraph (a), (b) or (c);

‘subsidiary’, in relation to a body corporate, has the same meaning as it has in the Companies Act 2014.”.

6. Amendment of section 45 of Principal Act

6. Section 45 of the Principal Act is amended—

(a) by the substitution of the following subsection for subsection (1):

“(1) An Irish citizen who engages in conduct in a place outside the State that, if engaged in in the State, would constitute an offence under section 42, 42A or 42B, or would constitute an offence of inciting, aiding and abetting, or attempting the commission of such an offence, shall be guilty of an offence.”,

(b) by the insertion of the following subsection:

“(1A) A—

(a) company formed and registered under the Companies Act 2014, an existing company within the meaning of that Act, or any other body corporate established under the law of the State, or

(b) person who has had his or her principal residence in the State for the period of 12 months immediately preceding the doing of the act concerned,

who engages in conduct in a place outside the State that, if done in the State, would constitute—

(i) an offence under section 42, 42A or 42B, or

(ii) an offence of inciting, aiding and abetting, or attempting the commission of an offence referred to in paragraph (i),

shall be guilty of an offence.”,

and

(c) by the substitution of the following subsection for subsection (3):

“(3) A person guilty of an offence under this section is liable on conviction to the penalty to which the person would have been liable had the person engaged in the conduct that constitutes the offence in the State.”.

7. Amendment of section 58 of Principal Act

7. Section 58(1) of the Principal Act is amended, in paragraph (a), by the substitution of “this Act (other than Part 6)” for “this Act”.

8. Amendment of Principal Act - Schedule

8. The Principal Act is amended by the insertion of the text set out in the Schedule as Schedule 1A to that Act.

9. Amendment of Criminal Justice Act 1994

9. The Criminal Justice Act 1994 is amended, in paragraph 10 of Part 2 of Schedule 1A, by—

(a) the substitution of “section 38(1);” for “section 38(1).” in subparagraph (p), and

(b) the insertion of the following subparagraphs after subparagraph (p):

“(q) section 42(1);

(r) section 42A.”.

10. Amendment of Criminal Justice Act 2011

10. The Criminal Justice Act 2011 is amended, in paragraph 23 of Schedule 1, by the insertion of “42A,” after “42,”.

11. Amendment of European Union (Passenger Name Record Data) Regulations 2018

11. The European Union (Passenger Name Record Data) Regulations 2018 (S.I. No. 177 of 2018) are amended, in paragraph 7 of Schedule 2, by the insertion of “42A,” after “42,” in the list of sections of the Principal Act.

12. Repeals

12. The following provisions of the Principal Act are repealed:

(a) section 41;

(b) section 46(4);

(c) section 47;

(d) Schedules 2 to 9.

13. Short title, collective citation and commencement

13. (1) This Act may be cited as the Criminal Justice (Theft and Fraud Offences) (Amendment) Act 2021.

(2) The Criminal Justice (Theft and Fraud Offences) Act 2001 and this Act may be cited together as the Criminal Justice (Theft and Fraud Offences) Acts 2001 and 2021.

(3) This Act shall come into operation on such day or days as the Minister for Justice may by order or orders appoint either generally or with reference to any particular purpose or provision and different days may be so appointed for different purposes or different provisions.

SCHEDULE

Section 8

“SCHEDULE 1A

DIRECTIVE (EU) 2017/1371 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 5 July 2017

on the fight against fraud to the Union’s financial interests by means of criminal law

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 83(2) thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the Committee of the Regions ([^2])

Acting in accordance with the ordinary legislative procedure ([^3]),

Whereas:

(1) The protection of the Union’s financial interests concerns not only the management of budget appropriations, but extends to all measures which negatively affect or which threaten to negatively affect its assets and those of the Member States, to the extent that those measures are of relevance to Union policies.

(2) The Convention drawn up on the basis of Article K.3 of the Treaty on European Union, on the protection of the European Communities’ financial interests of 26 July 1995 ([^4]), including the Protocols thereto of 27 September 1996 ([^5]), of 29 November 1996 ([^6]) and of 19 June 1997 ([^7]) (the ‘Convention’) establishes minimum rules relating to the definition of criminal offences and sanctions in the area of fraud affecting the Union’s financial interests. The Member States drew up the Convention, in which it was noted that fraud affecting Union revenue and expenditure in many cases was not confined to a single country and was often committed by organised criminal networks. On that basis, it was already recognised in the Convention that the protection of the Union’s financial interests called for the criminal prosecution of fraudulent conduct injuring those interests. In parallel, Council Regulation (EC, Euratom) No 2988/95 ([^8]) was adopted. That Regulation lays down general rules relating to homogenous checks and to administrative measures and penalties concerning irregularities with regard to Union law while, at the same time, referring to sectoral rules in that area, fraudulent actions as defined in the Convention and the application of the Member States’ criminal law and proceedings.

(3) Union policy in the area of the protection of the Union’s financial interests has already been the subject of harmonisation measures such as Regulation (EC, Euratom) No 2988/95. In order to ensure the implementation of Union policy in this area, it is essential to continue to approximate the criminal law of the Member States by complementing the protection of the Union’s financial interests under administrative and civil law for the most serious types of fraud-related conduct in that field, whilst avoiding inconsistencies, both within and among those areas of law.

(4) The protection of the Union’s financial interests calls for a common definition of fraud falling within the scope of this Directive, which should cover fraudulent conduct with respect to revenues, expenditure and assets at the expense of the general budget of the European Union (the ‘Union budget’), including financial operations such as borrowing and lending activities. The notion of serious offences against the common system of value added tax (‘VAT’) as established by Council Directive 2006/112/EC ([^9]) (the ‘common VAT system’) refers to the most serious forms of VAT fraud, in particular carrousel fraud, VAT fraud through missing traders, and VAT fraud committed within a criminal organisation, which create serious threats to the common VAT system and thus to the Union budget. Offences against the common VAT system should be considered to be serious where they are connected with the territory of two or more Member States, result from a fraudulent scheme whereby those offences are committed in a structured way with the aim of taking undue advantage of the common VAT system and the total damage caused by the offences is at least EUR 10 000 000. The notion of total damage refers to the estimated damage that results from the entire fraud scheme, both to the financial interests of the Member States concerned and to the Union, excluding interest and penalties. This Directive aims to contribute to the efforts to fight those criminal phenomena.

(5) When the Commission implements the Union budget under shared or indirect management, it may delegate budget implementation tasks to the Member States or entrust them to bodies, offices or agencies established pursuant to the Treaties or to other entities or persons. In the event of such shared or indirect management, the Union’s financial interests should benefit from the same level of protection as they do when under the direct management of the Commission.

(6) For the purposes of this Directive, procurement-related expenditure is any expenditure in connection with the public contracts determined by Article 101(1) of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council ([^10]).

(7) Union money laundering law is fully applicable to money laundering involving property derived from the criminal offences covered by this Directive. A reference made to that law should ensure that the sanctioning regime introduced by this Directive applies to all serious cases of criminal offences against the Union’s financial interests.

(8) Corruption constitutes a particularly serious threat to the Union’s financial interests, which can in many cases also be linked to fraudulent conduct. Since all public officials have a duty to exercise judgment or discretion impartially, the giving of bribes in order to influence a public official’s judgment or discretion and the taking of such bribes should be included in the definition of corruption, irrespective of the law or regulations applicable in the particular official’s country or to the international organisation concerned.

(9) The Union’s financial interests can be negatively affected by certain types of conduct of a public official who is entrusted with the management of funds or assets, whether he or she is in charge or acts in a supervisory capacity, which types of conduct aim at misappropriating funds or assets, contrary to the intended purpose and whereby the Union’s financial interests are damaged. There is therefore a need to introduce a precise definition of criminal offences covering such conduct.

(10) As regards the criminal offences of passive corruption and misappropriation, there is a need to include a definition of public officials covering all relevant officials, whether holding a formal office in the Union, in the Member States or in third countries. Private persons are increasingly involved in the management of Union funds. In order to protect Union funds adequately from corruption and misappropriation, the definition of ‘public official’ therefore needs to cover persons who do not hold formal office but who are nonetheless assigned and exercise, in a similar manner, a public service function in relation to Union funds, such as contractors involved in the management of such funds.

(11) With regard to the criminal offences provided for in this Directive, the notion of intention must apply to all the elements constituting those criminal offences. The intentional nature of an act or omission may be inferred from objective, factual circumstances. Criminal offences which do not require intention are not covered by this Directive.

(12) This Directive does not oblige Member States to provide for sanctions of imprisonment for the commission of criminal offences that are not of a serious nature, in cases where intent is presumed under national law.

(13) Some criminal offences against the Union’s financial interests are in practice often closely related to the criminal offences covered by Article 83(1) of the Treaty on the Functioning of the European Union (TFEU) and Union legislative acts that are based on that provision. Coherence between such legislative acts and this Directive should therefore be ensured in the wording of this Directive.

(14) Insofar as the Union’s financial interests can be damaged or threatened by conduct attributable to legal persons, legal persons should be liable for the criminal offences, as defined in this Directive, which are committed on their behalf.

(15) In order to ensure equivalent protection of the Union’s financial interests throughout the Union by means of measures which should act as a deterrent, Member States should provide for certain types and levels of sanctions when the criminal offences defined in this Directive are committed. The levels of sanctions should not go beyond what is proportionate for the offences.

(16) As this Directive provides for minimum rules, Member States are free to adopt or maintain more stringent rules for criminal offences affecting the Union’s financial interests.