knowledge | 26 January 2021 |
Disputes – Investigations and White Collar Crime: EU Fraud Offences set for Irish Implementation
The Criminal Justice (Theft and Fraud Offences) (Amendment) Bill 2020 is continuing its course through the Oireachtas.
The Criminal Justice (Theft and Fraud Offences) (Amendment) Bill 2020 was initiated in January 2020 to give further effect to remaining elements of Directive EU 2017/1371 (“PIF Directive”).1 This Directive aims to fight fraud against the EU’s financial interests. It establishes minimum rules on the definition of criminal offences and sanctions in this regard.
The new Act will create an offence of “fraud affecting the financial interests of the European Union”. The definition of this offence is set out in Article 3(2) of the PIF Directive. It is widely defined and covers a range of activities in and around financial and revenue misconduct involving EU funds or assets with certain areas such as procurement and serious cross-border VAT fraud given express mention.
The Act will also create a new offence of misappropriation. “Misappropriation” is defined in Article 4(3) of the PIF Directive. It means the action of a “public official”, who is directly or indirectly entrusted with the management of funds or assets, to commit or disburse funds or appropriate or use assets contrary to the purpose for which they were intended in any way which damages the EU’s financial interests. “Public official” is also widely defined.
Both offences must be committed intentionally. A person found guilty of either of these offences will be liable on conviction on indictment to an unlimited fine or a term of imprisonment not exceeding 5 years, or both.
In addition, where a “relevant offence” is committed for the benefit of a body corporate by a “relevant person” and the commission of that offence is attributable to a failure within the company to exercise the requisite degree of supervision or control over the person concerned, then the body corporate will be guilty of an offence.
A “relevant offence” can be either of the two new offences but also includes a corruption offence that damages, or is likely to damage, the financial interests of the EU, as well as an offence of inciting, aiding and abetting, or attempting any of those offences or laundering their proceeds.
A “relevant person” in relation to a body corporate, means a director, manager, secretary or other officer of the body corporate, or a person purporting to act in that capacity, or an employee, subsidiary or agent of the body corporate.
It will be a defence for a body corporate to prove that it took all reasonable steps and exercised all due diligence to avoid the commission of the offence.
If the corporate is convicted of an offence, secondary liability may follow for management in certain circumstances.
There will be extraterritorial jurisdiction for offences committed abroad by Irish citizens, corporates and residents. This means that relevant misconduct committed abroad may be prosecuted in Ireland. This will extend to inciting, aiding and abetting, or attempting the commission of the offence abroad.
The Criminal Justice Act 1994 will also be amended to add the offences of fraud affecting the financial interests of the European Union and misappropriation to the list of offences considered as extended confiscation offences, for the purposes of seeking a confiscation of the proceeds of crime under section 8F of that Act.
The Criminal Justice Act 2011 is also updated to take account of the new offences and apply mandatory reporting obligations to them.
How can we help?
This legislation is currently before the Oireachtas and should become law in the coming months. Now is the time to carry out appropriate risk assessment and update relevant policies and procedures.
Our Investigations and White Collar Crime Team have significant experience in advising clients on a variety of issues in and around risk assessment and follow-up and would be pleased to provide further information. Alternatively, your usual contact in McCann FitzGerald would be happy to assist.
- 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 OJ L 198, 28.7.2017, p. 29–41. Aspects of this Directive have already been implemented in Ireland by way of the Criminal Justice (Corruption Offences) Act 2018.
This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.