District Court revokes ex parte freezing orders where applicant proves no evidence supports money laundering suspicion.

THE DISTRICT COURT DUBLIN METROPOLITAN DISTRICT

SABINA MURPHY APPLICANT -AND- DETECTIVE GARDA ALAN CARBERY RESPONDENT Judgment delivered by Judge Brian O’Shea on 30 July 2018

1. This is an application pursuant to subsection 19(1) of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (“the 2010 Act”) wherein the applicant seeks to revoke orders (“the Orders”) made by a judge of the District Court pursuant to subsection 17(2) of the Act on an ex parte basis. Save for permission to make lodgements, the Orders have in effect frozen a Bank of Ireland savings account and a Credit Union account in the applicant’s name. The total sums contained therein is €130,282.43.

2. Subsection 17(2) of the 2010 Act provides that: “A judge of the District Court may order a person not to carry out any specified service or transaction during the period specified in the order, not exceeding 28 days, if satisfied by information on oath of a member of the Garda Síochána, that – (a) there are reasonable grounds to suspect that the service or transaction would, if it were to proceed, comprise or assist in money laundering or terrorist financing, and (b) an investigation of a person for that money laundering or terrorist financing is taking place.”

3. When an ex parte application is made for an order pursuant to subsection 17(2) of the 2010 Act the applicant garda must satisfy the judge of the District Court both in relation to paragraph 17(2)(a) and 17(2)(b). It follows inextricably that when an application to revoke that order is brought the applicant must satisfy the court, at most, that either 17(2)(a) or 17(2)(b) does not or no longer applies. Indeed, this is borne out in the wording of subsection 19(1) itself. It provides that: “At any time while a direction or order is in force under section 17, a judge of the District Court may revoke the direction or order if the judge is satisfied, on the application of a person affected by the direction or order, as the case may be, that the matters referred to in section 17(1) or (2) do not, or no longer, apply.” It is accepted as a fact by the respondent that the applicant is “a person affected by the direction or order”.

4. It is accepted as a fact by the applicant that “an investigation of a person for that money laundering or terrorist financing is taking place.” Accordingly, in order to succeed in this application to revoke the Orders the applicant must prove to this court that there are no “reasonable grounds to suspect that the service or transaction would, if it were to proceed, comprise or assist in money laundering or terrorist financing”. It is agreed between the parties that the standard of proof is the balance of probabilities.

5. In order to fully understand the basis upon which the respondent obtained the Orders it is necessary to consider what is meant by “money laundering”. Subsection 7(1) of the 2010 Act provides that: “A person commits an offence if – (a) the person engages in any of the following acts in relation to property that is the proceeds of criminal conduct: (i) concealing or disguising the true nature, source, location, disposition, movement or ownership of the property, or any rights relating to the property; (ii) converting, transferring, handling, acquiring, possessing or using the property; (iii) removing the property from, or bringing the property into, the State, and (b) the persons or believes (or is reckless as to whether or not)

the property is the proceeds of criminal conduct.” Other sections within the 2010 Act expand the definition, in particular in relation to matters occurring outside the State and inchoate offences, neither of which are relevant for present purposes. Section 6 of the 2010 Act defines “criminal conduct” as “(a) conduct that constitutes an offence …”. Subsection 2(1) defines “property” as “all real property or personal property, whether or not heritable or moveable, and includes money …” The essence of the complaint by the respondent regarding the monies in the frozen accounts does not relate to the money in the accounts themselves but rather, amongst other things, that the applicant has displayed an ability to sustain both herself and her children outside of those accounts without a sufficiently detailed explanation.

6. In her two recently sworn affidavits the applicant sets out that she works as an Executive Officer for the Revenue Commissioners. She has worked in the civil services for 14 years.

She has 5 children including triplets born in 2011, a daughter born in 2012 and a son born in 2016. She sets out in great detail the source of almost every transfer of money into both accounts in issue. She gave voluntary interviews to the Garda Síochána and answered all of its questions. None of these facts are in dispute.

7. During the interview she set out the following sources of income: (1) €600 bi-monthly in maintenance from Michael Conway, from whom she is separated; (2) €1,120 monthly in children’s allowance; (3) €141 weekly in family income supplement; (4) €474 in wages from her employer. She also explained a loan of €10,000 that she gave to a friend, which was repaid quickly and utilised for renovations to a dwelling house.

8. The applicant also avers that she is saving money for a mortgage and has taken certain steps in this regard both in relation to the accounts in issue and opening a Permanent TSB account in order to establish a credit rating with that bank. To say the least, she is upset that the “freezing” of the accounts in issue is preventing her from achieving her aims regarding obtaining a mortgage and has caused damage to her physical and mental health.

It is an accepted fact that she has no convictions and she was not challenged in relation to her assertion that she was also investigated by her employer and no action was taken against her.

9. The applicant is of the view that she has been unable to avail of a promotion to Higher Executive Officer owing to having failed the garda vetting process, which she perhaps not unreasonably attributes to the ongoing investigation being undertaken by the Respondent.

Notwithstanding that the respondent is a garda employed within the same organisation that operates the garda vetting section he avers that he is a stranger to this proposition.

Counsel for the respondent informed the court that there are many reasons why a person might fail vetting, including consideration of those with whom a person might associate.

This submission is not contained in the respondent’s affidavit. Even though no evidence has been presented to the court as regards the actual reason for such failure, which is undoubtedly ought to be within the procurement of the respondent, he seeks to rely upon the applicant’s failure of the vetting process to bolster his resistance to the current application. While being cognisant of the fact that there is no onus on the respondent in relation to the application before the court, at least legally if not evidentially, this court is of the opinion that the respondent’s argument is a cyclical and nonsensical one that has fundamental unfairness at its core.

10. The respondent is detective garda at the Criminal Assets Bureau (“CAB”). He avers that he is investigating the accounts in issue. He initially declined to engage with the applicant’s affidavit as he opined that to do so would compromise an ongoing criminal investigation, the details of which he concluded are privileged. He also averred that the information provided in her affidavits was considered by CAB but was insufficient to bring the investigation to an end, and that several lines of inquiry remain outstanding. Having declined to engage, he nonetheless avers that in his belief there are reasonable grounds to suspect that a transaction on the account would, if it were to proceed, compromise or assist in money laundering.

11. Fifteen days later he swore a significantly more detailed supplemental affidavit. In that affidavit he avers that between 2009 and 2016, in addition to his regular policing duties, he was a firearms officer and a CAB profiler. In February 2016 he was assigned to the investigation team into the murder of David Byrne at the Regency Hotel. In July 2016 he was assigned to the Special Crime Task Force – Drugs and Organised Crime Bureau which was established to combat serious and organised crime groups and to police the Hutch/Kinahan feud. In December 2017 he was appointed to his current role.

12. In relation to the monies frozen he avers that the explanation given for the source of the funds in the two accounts must be considered in the context of the applicant’s personal circumstances and the wider investigation. He is concerned that she has not provided any summary of her total income or expenditure. In particular he relies on the following matters: (1) the applicant is a single parent with five young children for which she receives a children’s allowance; (2) she receives €474 per week from her employer for a three-day working week; (3) she receives a relatively small sum of maintenance money; (4) she has received social welfare payments that are means tested and are designed to provide

subsistence level income only, yet she has been on three foreign holidays (the times and dates of which are unspecified); (5) she loaned the sum of €10,000 to a friend; (6) she recently traded a relatively expensive car for a newer relatively expensive car and during the respective transaction utilised €5,000 and a bank draft in the amount of €9,450; (7) she fell into rent arrears of €300 despite having more than €120,000 in accounts in her name at the time; and (8) in 2017 she saved 34% of her income and in 2016 she saved 69% of her income. The supplemental affidavit also contains an averment to the effect that the respondent believes there are reasonable grounds for the requisite suspicion under the 2010 Act and that the activities being investigated come within the definition of “criminal conduct”

thereto.

13. The supplemental affidavit also exhibits two heavily redacted versions of the original informations upon which the Orders were granted. There was no application before this court regarding the extent of the disclosure made or the extent of the extensive redactions to the sworn informations disclosed to the applicant and presented to the court. This may have been a tactical decision by the applicant, but the fact is that there was no application.

It is clear from the dicta of Barr J in Cassidy v Commissioner of An Garda Siochana and Ors [2014] IEHC 386 (at paragraph 55) that this court has jurisdiction to decide whether or not an applicant is entitled to a full version of the sworn information. In the absence of such an application the applicant was confined to, or perhaps sought to benefit from, what the respondent disclosed, or perhaps did not disclose, rather than what the court may have ordered were it asked to do so. In any event, the informations assert, amongst other things, that there are reasonable grounds to suspect that a service or transaction on the relevant accounts would, if it were to proceed, comprise or assist in money laundering or terrorist financing. The very next paragraph apparently sets out the grounds for such assertion but is redacted in its entirety. The next unredacted paragraph of the informations refer to the fact that the respondent and his colleagues in the CAB are investigating the Kinahan organised crime gang and that there is information, including confidential information, in their possession in this regard. The respondent sets out the names of the leading members of the gang, the fact that they have their origins in Ireland but live in Spain, and that they have a large distribution network for the sale and supply of illegal drugs within Ireland. A further unredacted portion of the informations refer to the fact that the respondent’s investigations have included the examination of a number of garda files and reports, and confidential discussions with gardai involved in criminal investigations. The informations also state that the applicant is an employee of the Revenue Commissioners, and then goes on to set out matters already previously averred to in the aforementioned affidavits relating to her income. There is no unredacted material relating to the “lines of inquiry” referred to in the affidavit, or any link between the applicant and either the investigation, the lines of inquiry, or the “criminal conduct”.

14. Counsel for the respondent submits that because only relevant information should be contained in a sworn information this court can draw an inference favourable to the

respondent’s position arising from the mere fact of the applicant being referred to in the same information as the references to the criminal conduct pertaining to the Kinahan organised crime gang. This court has tried hard to read the material contained in both the affidavits and the exhibited redacted informations provided to the court by the respondent in a manner that would allow it to draw the inference sought to be drawn. Having done so the court is driven to the conclusion that it is simply not possible without speculating regarding the redacted portions of the informations. On the evidence before this court it is not reasonably possible to draw an inference that would establish the fact of any nexus between the accounts or the applicant’s lifestyle and the alleged criminal conduct.

15. Finally, it is well established in law, on the line of authority including Byrne v Grey [1988] IR

31 and People (DPP v Kenny) [1990] ILRM 569, that a court cannot rely on the oath of a garda per se that there are reasonable grounds for the requisite suspicion. Rather the garda must be in a position to satisfy the court that there are reasonable grounds for his suspicion.

In the instant case, there is insufficient evidence contained in either the respondent’s affidavits and/or the redacted informations to allow this court to conclude that there are reasonable grounds for the requisite suspicion. The purportedly reasonable grounds upon which the respondent relies for his suspicion are redacted from the exhibited informations.

The court cannot assess whether or not the grounds are reasonable if it does not know what they are. Having already concluded that the court cannot infer the facts sought to be inferred the result is that there is no evidence before the court upon which it could conclude that there are “reasonable grounds to suspect that the service or transaction would, if it were to proceed, comprise or assist in money laundering or terrorist financing”.

16. However, that is not the end of the matter. An unusual feature of the current state of the law is that the judge of the District Court who granted the Orders had an unredacted written sworn information available to him upon which he must have concluded there were reasonable grounds for the respondent’s suspicion or else he could not have granted the Orders. And yet this court, only one day later, is being asked to revoke those Orders because, owing in part to significantly redacted versions of the informations, there is no evidence that there are reasonable grounds for the requisite suspicion. The reason the documents are so heavily redacted is that the respondent claims public interest privilege, and this was not contested. Ironically therefore the judge who issued the Orders could have been entirely correct in doing so in that there were reasonable grounds for the requisite suspicion contained within the information, and yet this court could also be entirely correct in revoking the Orders if it concluded that there are no reasonable grounds for the requisite suspicion, as the later decision is based in part on much less information, because the respondent has chosen, of subjective necessity, to carry out such redactions. The court was not informed whether legal advice was taken by the respondent in relation to the extent of the redactions.

17. Purely given the strong public policy considerations associated with the legislation in issue this court asked itself whether there was any other basis upon the application to revoke ought to be refused. It occurs to the court that the following might reasonably be argued.

The first affidavit of the applicant was sworn on 17 May 2018 and her second affidavit on 28 June 2018. The first affidavit of the respondent was sworn on 11 July 2018 and his second on 26 July 2018. The Orders were issued on 26 July 2018, it being the most recent iteration of an order that has been, in effect, reissued a number of times. Both Orders in this case are properly before this court and were put before it without objection. They are signed by a very experienced judge of the District Court and dated the 26th day of July 2018.

They recite that he was satisfied on the basis of the information of the respondent on oath and in writing before him that on that date there were reasonable grounds for the requisite suspicion. Accordingly, he granted the Orders. As judges are presumed to act in a judicial manner this court could be satisfied that reasonable grounds for the requisite suspicion subsisted on 26 July 2018, that is to say, one day before this application was brought. It is necessary therefore for the applicant to furnish evidence to this court to cause it to conclude that there had been some change in circumstances since the Orders were made such as to cause this court to conclude on the balance of probabilities that there were or are no longer reasonable grounds for the requisite suspicion. That has not been done. Accordingly, it could be argued that the application must fail. While this line of argument might seem well founded it is in fact only superficially attractive. The reason for that conclusion is that the argument is premised on the fallacy that the applicant must present something new to this court in circumstances where this is not an appeal, nor should it be mistaken for an appeal, and certainly not a de novo appeal. Rather, it is a revocation hearing by a court of equal jurisdiction to the one that granted the Orders and is the first time that the applicant has had an opportunity to put forward her case. In Cassidy, Barr J determined (at paragraph 40) that “when hearing an application under s.19 of the 2010 Act, there must be equality of arms”. This indicates that the section 19 procedure is an entirely different process from the ex parte section 17 process. It does not shift the burden of proof but neither does it necessarily require the applicant to produce additional evidence to the court. Whether evidence in required must be determined on a case-by-case basis.

18. To succeed in her application the applicant must prove on the balance of probabilities that there are no reasonable grounds for the requisite suspicion. In this regard the applicant points to the extent of the redactions in the informations, or more correctly what remains after those redactions, coupled with the lack of evidence to support the various links that the respondent has asked the court to infer.

19. In the opinion of this court it is sufficient for the applicant to point to the fact that there is no evidence before this court upon which it could conclude, including by inference, that there are reasonable grounds to support the requisite suspicion. This court accepts that there is no such evidence. Accordingly, the application for revocation must by granted.