CONSULTATION DOCUMENT ON THE REGULATION OF THE TRADE IN PRECIOUS METALS AND STONES

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1 CONSULTATION DOCUMENT ON THE REGULATION OF THE TRADE IN PRECIOUS METALS AND STONES 1

2 Call for submissions This document calls for submissions in regard to policy options for addressing potential criminality in the second hand trade in precious metals and stones, often referred to as the cash for gold trade. Submissions are welcomed from all interested parties. Businesses likely to be affected by any regulatory changes, include, but are not limited to the following: Cash for gold outlets Jewellers Antique dealers 2

3 Introduction The purpose of this document is to set out the policy options to tackle potential criminality in the trade in precious metals and stones, often referred to as the cash for gold trade, and facilitate a broad consultation in this regard. Background There has been concern expressed at the possibility that the establishment of cash for gold outlets in recent years has adversely impacted on the rate of burglaries with these outlets being used as a means to dispose of stolen items of jewellery (precious metals and stones), etc. However, while the focus has primarily been placed on cash for gold outlets these are only one of a number of businesses trading in second hand precious metals and stones which includes jewellers and antique dealers amongst others. There were also concerns raised at the rate of metal theft involving the theft of large amounts of industrial metal which is then being sold on to Scrap Metal merchants. Measures have been taken in this regard by the Department of the Environment, Community & Local Government. A public consultation process was undertaken following which regulations were issued on 7 July These regulations entitled Waste Management (Facility Permit and Registration) (Amendment) Regulations 2014 under the Waste Management Act 1996 are designed to address this matter by improving the traceability of scrap metal as set out in Appendix 1. Developments to date on cash for gold and scrap metal Two Private Members Bills were introduced concerning the issue of cash for gold and scrap metal in 2011 and again in These Bills did contain a number of worthwhile provisions for addressing issues concerning the trade in second-hand precious metals and stones but were defeated on the grounds that they were considered to be deficient in legal and practical terms. During the period between the two Bills, the Department of Justice and Equality published a Report in June 2012 on the Criminal Justice aspects of the cash for gold trade. The Report, which covered actions undertaken by An Garda Síochána and the Department of Justice and Equality, also included: an appraisal of the relevant law; relevant crime trends; the role of other agencies; and the position in other jurisdictions. In January 2013, the Oireachtas Library and Research Service also published a Report on the second-hand trade in precious metals, jewellery and scrap metal. The Report paid particular attention to issues regarding: the identification of the seller, the object being sold and the valuation of goods. 3

4 The Report also noted the limited data on the issue of burglaries and cash for gold and the difficulties in using this information to support widely held concerns regarding the relationship between these two issues. The Joint Oireachtas Committee on Justice, Defence and Equality, given its role in considering policy in the field of justice, was asked to examine the cash for gold issue, review the available information and take account of any submissions it received on the matter. The Committee provided their observations in May 2013 indicating that there was a need to develop a relatively uncomplicated but effective approach to controls in the area and made a number of suggestions to be considered in this regard. Following receipt of the Committee's observations the Department of Justice and Equality commenced work on the development of draft Heads of a Precious Metal (Cash Dealers) Bill. These draft Heads provided for a regulatory regime based on registration and compliance monitoring of precious metal cash traders i.e. businesses trading in precious metals and stones. Such businesses may include jewellers, antique dealers, etc as well as cash for gold outlets. The views of An Garda Síochána on these Heads were received, in addition to updated intelligence on precious metal theft in general. This approach is seen as one of a number of possible options by which this issue might be addressed. Policy options Notwithstanding the views of the Oireachtas Committee and the fact that draft Heads of the Bill that have been developed in the Department, it is important to recognise that any regulatory regime in this area is likely to have a potentially significant impact, in terms of resources and processes, on both the State and the broad range of businesses impacted upon. It is therefore important to examine a number of policy options to facilitate the choice of an approach which is effective, efficient and proportionate to the matter being addressed. In addition to a process of consultation with groups likely to be affected by the introduction of any measures (legislative or other) there will need to be further engagement with An Garda Síochána; the Office of the Revenue Commissioners; other relevant Departments and State Bodies. This document sets out three main policy approaches as follows: 1. A minimalist approach involving the use of existing legislation and resources. 2. A comprehensive and resource intensive response requiring, registration of businesses, monitoring, powers for An Garda Síochána and the introduction of penalties for non-compliance. 3. A mid-way approach focused on regulations and penalties for noncompliance without a requirement for businesses to register or monitoring to be conducted. 4

5 While these approaches are seen as the primary policy options for addressing this issue, other variations on these may also be feasible. It should be noted that these policy options relate only to the disposal of stolen precious metal and/or stones rather than goods in general. Therefore, when the term stolen goods is used throughout this document, it is with reference to precious metal and/or stones alone. While it can reasonably be argued that many other goods such as electronic devices, bicycles, etc may also be stolen and disposed of, precious metal and stones are seen as particularly high risk given their size, value and the ease by which precious metals for example can be melted down and made untraceable. In this regard it is important to point out that the Department s remit extends only to criminal justices matters i.e. the significant role envisaged for An Garda Síochána in enforcing any new regulations, and not the regulation of the trade. Option A: Utilise existing legislation and resources This option facilitates precious metal and stones traders continuing to operate in their current fashion - utilising existing legislation and resources to address the risk of their businesses being used to facilitate the disposal of the relevant stolen items. The Criminal Justice (Theft and Fraud Offences) Act 2001 already contains a range of offences which may be used by An Garda Síochána to tackle the disposal of stolen goods via trade in precious metals and stones. Offences addressed by the 2001 Act include, in addition to a range of others, Theft and Related Offences. Making gain or causing loss by deception. Making off without payment. False accounting. Suppression of documents. Burglary. Robbery. Possession of certain articles and Handling Stolen Property and other Proceeds of Crime. As an additional measure, the Department of Justice and Equality may consider, perhaps in conjunction with other State or Private Sector organisations, to engage in awareness raising initiatives to highlight this issue. Such a measure would require additional resources to implement. Advantages Option A has the advantage of placing a relatively small financial burden on the State without the need for further regulation. Similarly, this approach is likely to have a minimal impact on precious metals and stones traders. 5

6 Disadvantages It is unlikely that this approach will significantly reduce the risk posed by persons seeking to dispose of stolen goods via precious metals and stones traders. An Garda Síochána will continue to encounter difficulties when attempting to trace stolen items disposed of in this manner. Sources of such difficulties include: the absence of a registration system; the lack of retention period; and/or the absence of a mechanism to report suspicious transactions. These difficulties are further exacerbated in the case of precious metals by reason of the fact that they can be quickly melted down thereby making them effectively untraceable. Equally, retailers purchasing precious metals or stones continue to be vulnerable to those seeking to dispose of stolen goods. Option B. Introduce a comprehensive range of measures This would involve the provision of a comprehensive response which would include: A Registration system; Regulations; Compliance monitoring; Extended powers for An Garda Síochána; and New penalties for non-compliance. Registration Businesses involved in the purchasing of precious metals or stones would be required to register with a State organisation the appropriate arm of the State to be agreed. In putting a registration system in place consideration will need to be given to the introduction of a registration fee for companies registering as precious metal cash traders and in the event of such a fee structure being put in place the level of that fee. In order to ensure that the relevant businesses are aware of their obligations to register it is also likely that awareness raising initiatives would need to be undertaken by the registering authority. Regulations Regulations regarding the purchase of precious metals or stones would need to be introduced with the aim of preventing businesses being used to dispose of the relevant stolen goods. Potential regulations could include: proof of identity of the seller (passport or driver s license), recoding identification of items (photograph and recording of any relevant markings), 6

7 recording of transactions (electronically or paper based), proof of ownership of item (receipt and or declaration of ownership), reporting of suspicious transactions (report to An Garda Síochána), regulations regarding purchase of items via post and the internet, retention of purchased items for a set duration, prohibition of certain transactions (buying items from persons under 18 years of age or persons who are under the influence of alcohol or drugs). Compliance monitoring In order to properly ensure that the aforementioned regulations are adhered to the regulating organisation would need to appoint officers for the purpose of conducting inspection to ensure compliance. The range of powers that would be available to these appointed officers could include: issuing of directions to registered businesses. entry to premises, with a warrant if necessary. inspection of premises. request access to records. inspection of documents, etc. removal of items. securing premises. provision of offences for obstructing, etc. an appointed officer. Powers for An Garda Síochána In order to properly ensure that the aforementioned regulations are adhered to additional powers would also need to be given to An Garda Síochána primarily in the areas of search and entry to premises. Such powers may include: entry to premises. search of premises. seizure of documents, items, etc. search of persons. securing premises and retention of items. powers of arrest for offences under the Bill. Offences and penalties for non-compliance Any new regulations will need to be supported by a corresponding range of penalties for non-compliance. Penalties may be introduced in regard to: Failure to register as a precious metal cash trader. Failure to apply identification requirements. For obstructing, interfering with, etc. the appointed officer. For obstructing, failing to comply with a request, etc. and providing false or misleading information to a member of An Garda Síochána. Failure of a registered trader to report suspicious transactions. 7

8 Failure by a registered trader to display information required for the sale of precious metal/stones. Knowingly selling precious metal/stones to a registered dealer without the consent of the owner. For a registered trader knowingly purchasing precious metal/stones without the consent of the owner. The offences listed above also relate to transactions conducted via post, internet or other electronic means. Advantages Putting in place a register of businesses would assist An Garda Síochána in tracing precious metal or stones reported as stolen by enabling them to contact registered businesses when seeking to locate such items. As a result of the introduction of regulations the task of locating precious metal or stones disposed of via precious metal cash traders is likely to become easier if there is a requirement on such businesses to make a record of the purchases, in terms of both the seller and the object, while also retaining such items for a set period of time. The reporting of suspicious transactions may also help alert An Garda Síochána to potential criminal activity. The establishment of a compliance monitoring function within a State organisation is likely to increase compliance with any potential regulations as compared with a self regulatory system. Similarly, giving An Garda Síochána further powers of search, seizure and arrest in conjunction with specific penalties for non-compliance with any potential regulations would likely have a positive impact on the rates of compliance. Disadvantages From the perspective of the State a comprehensive approach of this nature is likely to be very costly in terms of funding, staffing and time. Furthermore, given that an analysis of the available data does not support a link between burglaries and the disposal of precious metal and stones via precious metal and stones traders it could reasonably be argued that such a costly and resource intensive approach is excessive given the lack of evidence supporting these concerns. In terms of the implications of this approach for businesses, registering and putting in place the required transaction recording systems will likely incur some cost. The scale of the costs involved will depend on the registration fee and the type of transaction recoding system already in place, if any. Similarly, there will also be time costs involved in completing registration forms and recording transaction details. Option C. Introduce regulations, further powers to An Garda Síochána in additional to new penalties. This would involve taking some provisions set out in Option B, namely, the introduction of regulations concerning the purchase of second-hand precious metal or stones, powers for An Garda Síochána, in addition to penalties for non- 8

9 compliance. However, under Option C there would be no requirement for businesses to register as precious metals and stones traders or for any State organisation to conduct compliance monitoring in regard to such businesses. Advantages The range of new measures provided for under Option C would be a significant improvement on the present situation. Provisions including improved regulations, additional powers for An Garda Síochána and the introduction of penalties would likely go some way towards addressing the key issue of traceability while also acting as a deterrent to those seeking to dispose of stolen goods through precious metals and stones traders. From the perspective of both businesses and the State, the measures contained in Option C are also likely to be far less costly and complex to implement in comparison to a system involving registration and compliance monitoring. Furthermore, Option C is commensurate with the approach taken by the Department of Environment, Community and Local Government in addressing the risks in the scrap metal trade. Disadvantages Option C is likely to have lower levels of compliance compared with a more comprehensive regime as set out in Option B. Option C will involve putting in place a transaction recording system that is adequate to meet the requirements of the proposed regulations. This will likely incur some cost depending on the type of recording systems businesses already have in place. Similarly, there will also be time costs associated with recording transaction details. 9

10 Appendix 1 Waste Management (Facility Permit and Registration) (Amendment) Regulations 2014 Statutory Instrument Number 320 of 2014 Department of the Environment, Community & Local Government These regulations include the following requirements the production of proof of identity and current address of the person supplying the material, that records to be kept of the registration number and waste collection permit number of the delivery vehicle, that records be kept describing the materials, time and date of sale, weight and amount paid etc. that a signed statement by the person supplying the material that they are the lawful owner of the material or have the consent of the lawful owner to sell the material. 10