1

“Cash for gold”: second-hand trade in precious metals, jewellery and scrap metal No. 1 2013

Editorial

In Ireland, there has been anecdotal reporting of increased criminal trade in the sale of stolen precious metals, jewellery and scrap metal. The subject area has also received attention on an international level.

The reasons for the current focus are the economic downturn, increased metal prices worldwide, and the relative ease of securing cash from second-hand trade.

The primary issue is identification, both of person selling and the object they are selling. Tied to this is recording of details by dealers. A secondary issue is valuation of goods.

However, data on the extent of the problem is limited, and what exists does not always support reported concerns.

In response, there has been a Private Members Bill, Parliamentary Questions, Department of Justice cash for gold report, and draft regulations on sale of scrap metal.

Date 16 January 2013 Library & Research Service

Central Enquiry Desk: 618 4701/ 4702

Contents

Editorial 1

Executive summary 2

Introduction 2

Current legislation 6

Comparisons with other countries 8

Proposed developments in Ireland 13

Key lessons and conclusions 16

No liability is accepted to any person arising out of any reliance on the contents of this paper. Nothing herein constitutes professional advice of any kind. This document contains a general summary of developments and is not complete or definitive. It has been prepared for distribution to Members to aid them in their Parliamentary duties. Authors are available to discuss the contents of these papers with Members and their staff but not with members of the general public.

2

Precious metals/stones (―cash for gold‖) and scrap metal can be seen as similar trades in the second-hand sale of metals.

Public concern has been expressed about rising levels of theft, fuelled by rising metal prices. There have been numerous media pieces about theft of scrap metal and anecdotal reporting of theft for ―cash for gold‖.

Statistics on burglaries and theft of precious metals/stones do not appear to support a theory of rising levels in this area.

There are no official statistics on levels of scrap metal sales or thefts.

Second-hand trade is not regulated legislatively in Ireland, with the exception of pawnbroking. However, pawnbroking is not the same as a ―cash for gold‖ business. Cash for gold businesses are currently not registered and are not specifically legislated for.

This means that general criminal law on stolen goods is used for such cases.

Reflecting public concern, numerous Parliamentary Questions and a Private Members Bill on the topic have been drafted in the previous year on issues.

Regarding an official response, the Department of Justice released a ―Report on the Cash for Gold Trade in June 2012‖. It has also set up a Metal Theft Forum, involving the Gardaí and stakeholders, which is due to report and develop a Prevention and Reduction Plan.

Regulation of scrap metal is currently focussed on environmental impacts, and not on the possibility of theft and second-hand sale. However, in late 2012 the Minister for the Environment proposed regulations to deal with identifying where scrap comes from.

Such issues are not confined to Ireland. Internationally there have been problems regarding the sale of stolen precious metals/stones and scrap metal. Further, there have been concerns about the online trade in cash for gold, and in particular unverified (and low) pricing by dealers.

Legislatures have responded in different ways, with some providing regulations requiring identification and records.

This section will examine what is meant when referring to precious metals and scrap metal. It will outline what are the surrounding problems with such business.

The industries

Second-hand sale of precious metals/stones (―cash for gold‖) and scrap metal can generally be divided into two similar industries:

Why now?

The precious metals/stones and scrap metal trades are similar industries and the reasons why issues surrounding both have currently come to public and political attention are the same: the increase in second-hand trade due to:

Economic downturn;

Increased metal prices worldwide;

The relative ease of securing cash from second-hand trade.

Gold and precious metals /

stones

High street stores

Online stores

Scrap metal

Waste facilities

Introduction

Executive summary

3

It should be noted that despite media coverage emphasising second-hand trade being a means of getting cash for stolen goods, such industries are used by legitimate owners of such goods as well, and for the reasons outlined above.

Using the start of 2006 as a base, metal prices have increased overall, though with fluctuations.1 Graph 1 shows that prices have increased 50% since 2009. However, Graph 2 shows that metal prices are volatile through the period.

Graph 1: Metal prices: Price Index

Graph 2: % change in metal prices

Precious metals and precious stones

Legally, there is little definition of such materials in Ireland, except when dealing with VAT:2

1 Collated from IndexMundi‘s Commodity

Metals Price Index. Includes Copper, Aluminum, Iron Ore, Tin, Nickel, Zinc, Lead, and Uranium Price Indices. Available at http://www.indexmundi.com/commodities/?commodity=metals-price-index 2 Section 87(1), Value-Added Tax

Consolidation Act 2010. Available at

Box 1: Definition of precious metals and stones

―precious metals‖ means silver (including silver plated with gold or platinum), gold (including gold plated with platinum), and platinum, and all items which contain any of those metals when the consideration for the supply does not exceed the open market price of the metal concerned;

―precious stones‖ means diamonds, rubies, sapphires and emeralds, whether cut or uncut, when they are not mounted, set or strung;

Within the trade in precious metals and precious stones, two distinct areas and problems are relevant:

Thus far in Ireland, the emphasis in popular discussion has been upon the identification of stolen goods being sold on.

In June 2012 the Garda Commissioner and the CSO provided the Department of Justice with statistics on burglaries, and those involving jewellery and antique gold.3

These would not appear to support a theory that burglaries for precious metals/stones are on the increase and that they are contributing to increased levels of crime.

http://www.irishstatutebook.ie/2010/en/act/pub/0031/sec0087.html#sec87 3 Department of Justice, ―Report on the Cash

for Gold Trade‖, June 2012, at page 5. Available at http://www.justice.ie/en/JELR/Pages/PB12000175

50

100

150

200

2006

Q1

2006

Q4

2007

Q3

2008

Q2

2009

Q1

2009

Q4

2010

Q3

2011

Q2

2012

Q1

2012

Q4

-40%

-30%

-20%

-10%

0%

10%

20%

30%

200

6 Q

1

2006

Q4

200

7 Q

3

200

8 Q

2

200

9 Q

1

200

9 Q

4

201

0 Q

3

201

1 Q

2

201

2 Q

1

201

2 Q

4

Identification Member of public

Person attempting to sell the goods

What measures are in place to make sure the person is not selling stolen

goods?

Valuation Retailer/business

Person giving money for the

goods

What measures are in place to ensure a fair valuation is given by the

retailer?

4

Table 1: Official statistics on burglaries

Year Burglaries (GC)

Jewellery & gold (GC)

Burglaries & related (CSO)

2011 27,439 2010 24,845 2,835 25,420 2009 27,831 3,016 26,911 2008 25,782 2,702 24,683 2007 24,211 2,612 23,603 2006 25,315 3,034 24,788 2005 27,067 3,519 26,381

In the words of the Garda Commissioner: ―[It] is difficult to subscribe to the proposition that the increase in cash for gold trading has had an adverse effect on the incidences of burglary offences…. that is not to say that outlets which purchase gold do not buy stolen goods".

While less prominent in Ireland, valuation has been focussed upon internationally as an area where legitimate customers, selling due to need, are in danger of being exploited given current economic conditions. No data is available to evaluate this.

Parts of the industry are regulated: there is specific pawn brokering legislation and money laundering legislation for large transactions.

Scrap metal

Scrap metal is mentioned in Irish legislation in terms of waste management, exports, and trade under VAT. Under section 59 of the Finance Act 2011, the following definitions apply to scrap metal:

Box 2: Definition of scrap metal

‗scrap metal‘ includes scrapped metal and metal waste originating from, or extracted from, the processing of metals, metal derived from vehicles, metal derived from construction and demolition waste, machine parts and metal items no longer useable in their original form due to their breaking, obsolescence, shearing, wearing or the like, and also includes goods listed in paragraphs (1) to (3) of Annex VI of the VAT Directive.

The problem with the scrap metal industry is that, so far regulation has focussed on waste management concerns and not on identification. There are no rules regarding the sale and recording of transactions involving scrap metal. Increased prices and reports of theft would tend to indicate that this is an increasing problem.

No official statistics are available on the sale of scrap metal. On pricing, an Association of Irish Risk Management seminar included sample scrap metal prices on 10th October 2012 compared to 2008-2009.4 For example, O‘Reilly Recycling in Dublin estimates their prices are 20% higher now than in 2008-2009.

Table 2: Sample scrap metal prices

Valuation of scrap metal has not been identified as an issue of concern.

4 Integrity Risk & Claims Management

Services, ―Scrap Metal Thefts‖, 17th October

2012. Available at http://www.airm.ie/system/download_images/40/original/Scrap%20Metal%20Thefts.pdf?1351078595

O‟Reilly Recycling, Dublin

Erin Recyclers, Sligo

Clearcircle Metals, Limerick

„12 „08-„09 „12 „08-„09 (Approx.)

„12 „08-„09

General scrap metal mix / ferrous Metals

€120/t Approx. 20% less

€150/t €90/t €150/t Approx. 15% less

Copper €4500/t €4000/t €2800/t €4200/t

Brass €2500/t €2000/t €1500/t €2500/t

Aluminium €750/t 75c/kg 60c/kg €750/t

Lead €1/kg €1/kg 80c/kg €1/kg

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Public concern and high profile cases of theft There have been numerous media reports on metal thefts of public utilities, public buildings, public art, churches and industrial premises.5 Below are selected examples:

Public utilities

In January 2013 it was reported that RTE towers, masts and telecommunication infrastructure properties had been targeted by criminal gangs.6

In August 2011, seven steel gates from railway level crossings in the north-west (counties Sligo and Roscommon) were stolen at night-time.7

Public buildings

In March 2012, the roofing of bandstands in the National Botanic Gardens and the Phoenix Park Hollow was stripped.8

At the Ballymun regeneration project, steel doors were stolen.9

Public art

In November 2011, a bronze, copper and brass sculpture was taken from its foundations on the banks of the River

5 ―Burglar alarm‖, Irish Examiner, 3

rd January

2012. Available at http://www.irishexaminer.com/ireland/kfqlididcwgb/rss2/ 6 ―Gangs of thieves target RTE towers for scrap

metal‖, Irish Independent , 3rd

January 2013. Available at http://www.independent.ie/national-news/gangs-of-thieves-target-rte-towers-for-scrap-metal-3341957.html 7 ―Seven level-crossing gates stolen in

northwest‖, RTE News, 31st August 2011.

Available at http://www.rte.ie/news/2011/0831/iarnrodeireann.html 8 ―Valuable lead roofing stolen from Dublin

bandstands‖, Irish Times, 21st March 2012.

Available at http://www.irishtimes.com/newspaper/ireland/2012/0321/1224313642797.html 9 Other Questions – Waste Disposal, Dáil

Debates, Vol. 744 No. 3 at p. 21 (20 October 2011). Available at http://oireachtasdebates.oireachtas.ie/debates%20authoring/debateswebpack.nsf/takes/dail2011102000021?opendocument

Nore in Co Laois.10 The sculpture commemorated young persons in the area who had died.11

In March 2011, the sculpture ―Grainne Óg‖ (also known as ―The Bronze Lady‖) was stolen from beside the M6 slip road approaching Moate in Co Westmeath.12 It was valued at €64,000.13

Churches

In August 2012 a 16th century bell was stolen from a converted church in Co. Kerry (though later recovered).14

During October and November 2011, gold, among other items were stolen from churches in Munster. The Gardaí subsequently recovered a large of amount of the items in raids.15

Industrial premises

Other suspected incidents of theft to sell on metal include scrapyards and industrial premises being stripped or copper, and empty beer kegs (stainless steel) being stolen.16

10

―Laois village appeals for return of monument‖, RTE News, 25

th November 2011.

Available at http://www.rte.ie/news/2011/1114/castletown.html 11

―Families horrified as monument to tragic young deaths stolen‖, Irish Independent , 15

th

November 2011. Available at http://www.independent.ie/national-news/families-horrified-as-monument-to-tragic-young-deaths-stolen-2934325.html 12

See footnote 9 13

―Bronze sculpture stolen from side of road in Moate‖, Irish Times, 24

th March 2011.

Available at http://www.irishtimes.com/newspaper/ireland/2011/0324/1224292955329.html 14

―Metal theft crime prevention plan in final stages‖, thejournal.ie, 26

th August 2012.

Available at http://www.thejournal.ie/metal-theft-crime-prevention-plan-in-final-stages-571517-Aug2012/ 15

―Gardaí recover valuable haul as thieves target 17 churches across four counties‖, Irish Examiner, 10

th November 2011. Available at

http://www.examiner.ie/ireland/gardai-recover-valuable-haul-as-thieves-target-17-churches-across-four-counties-173484.html 16

―Metal thieves turn steel, brass, copper and aluminium into gold‖, Irish Times, 19

th

November 2011. Available at

6

“Scrap Saturdays”

A phenomenon has been ―Scrap Saturdays‖. These have been run by the GAA as a means of funding clubs. People bring their scrap, and the club sells it on to raise funds.17 These events can be lucrative, providing clubs with up to €20,000, though as clubs did not have waste permits, local authorities banned the holding of such events,18 and the GAA has stated that club insurance did not extend to such activities.19

Currently, under Irish law, concerns about stolen scrap metal or gold are primarily dealt with by the Criminal Justice (Theft and Fraud) Offences Act 2001.20 There are several offences that could be invoked:

Box 3: Relevant offences under the

Criminal Justice (Theft and Fraud) Offences Act 2001

Making gain or causing loss by deception (section 6);

Handling and possession of stolen property (sections 16-23).

http://www.irishtimes.com/newspaper/weekend/2011/1119/1224307810543.html 17

―GAA warned over ‗Scrap Saturday‘ collections‖, Donegal Democrat, 20

th November

2011. Available at http://www.donegaldemocrat.ie/news/local/gaa_warned_over_scrap_saturday_collections_1_3254358 18

―Common sense approach to Scrap Saturday – Minister‖, Limerick Leader, 6

th November

2011. Available at http://www.limerickleader.ie/community/common_sense_approach_to_scrap_saturday_minister_1_3213649 19

―GAA clamp down on 'Scrap Saturday‘‖, Irish Independent, 25

th February 2011. Available at

http://www.independent.ie/sport/gaelic-football/gaa-clamp-down-on-scrap-saturday-2555784.html 20

Criminal Justice (Theft and Fraud) Offences Act 2001. Available at http://www.irishstatutebook.ie/2001/en/act/pub/0050/index.html

There are provisions about commercial practices under Part 3 of the Consumer Protection Act 2007.21

These are general and focus more on pricing and description of goods. Thus their significance in terms of scrap metal or gold trade is ambiguous. This would appear to be confirmed in a letter by the National Consumer Agency (29th February 2012) to the Department of Justice in relation to a Report on the cash for gold trade where it was stated that ―selling precious metals to a trader would not be covered by consumer legislation.‖22

Under the Criminal Justice (Money Laundering and Terrorist Financing) Act 201023 there are responsibilities for

dealers of precious metals/stones where a customer pays for goods worth more than €15,000, and uses cash. This legislation does not apply to transactions where a person is selling second-hand goods to a dealer. It is primarily intended to prevent serious organised and international crime.

Pawnbrokers

Pawnbrokers are required to be licenced and registered under the Pawnbrokers Act 1964.24 This

encompasses the taking of goods in return for a sum of money, where the goods can be redeemed or purchased back at a later date.

The Pawnbrokers Act 1964 does not regulate the mere purchase and sale of scrap metal or precious metals, just

21

Consumer Protection Act 2007. Available at http://www.irishstatutebook.ie/2007/en/act/pub/0019/index.html 22

Department of Justice, ―Report on the Cash for Gold Trade‖, June 2012, at Appendix 4. Available at http://www.justice.ie/en/JELR/Pages/PB12000175 23

Criminal Justice (Money Laundering and Terrorist Financing) Act 2010. Available at http://www.irishstatutebook.ie/2010/en/act/pub/0006/index.html 24

Pawnbrokers Act 1964. Available at http://www.irishstatutebook.ie/1964/en/act/pub/0031/index.html

Current legislation used

to tackle the problem

7

where it is intended that the pawned object will be bought back at a later date.

The pawn ticket consists of a special contract over the goods. ID and proof of address are necessary to pawn an object.

Under section 37, a pawnbroker is required to inquire into suspicious circumstances and, if necessary, report these to the Gardí. Failure to do so is an offence.

Under section 23, a person who gives false information relating to a pawn or attempts to redeem a pawn is guilty of an offence.

Under section 47, if a person is found guilty of an summary offence, they are liable to a Class E Fine (not exceeding €500, imprisonment for a term not exceeding 12 months, or to both. Continuing contravention results in a fine of IR£150 (€190) per day.

A March 2009 RTE report25 stated that at the time, only three ―traditional‖ pawn brokers still existed, all in Dublin. Nevertheless, the report noted the rise in ―modern money‖ shops, such as Cash Converters, which combine pawnbroking, buying/selling and limited financial services. This rise has been confirmed by the Gardaí, who stated in June 2012 that there are as many as 124 cash for gold outlets

25

RTE, The Afternoon Show: ―Consumer – the A-Z of Money Shops‖, 31

st March 2009.

Available at http://www.rte.ie/tv/theafternoonshow/2009/0331/consumer735.html

operating in Ireland, and perhaps more postal and internet traders.26

Scrap metal

The focus of existing legislation on scrap metal has been on waste management and the environment. It has not been on the identification of sellers or where scrap metal comes from.

Under the Waste Management Acts 1996 to 201127 and in particular Waste Management (Facility Permit and Registration) Regulations 200728 (as

amended),29 facilities handling waste require a permit. Activities are monitored by the local authorities. The

―reception, storage and recovery‖ of scrap metal is a Class No. 4 Activity under the regulations, and requires a permit.

Needing a permit does not equate to ―registration‖. The Minister for Jobs,

26

Department of Justice, ―Report on the Cash for Gold Trade‖, June 2012, at page 18. Available at http://www.justice.ie/en/JELR/Pages/PB12000175 27

Waste Management Act 1996. Available at http://www.irishstatutebook.ie/1996/en/act/pub/0010/index.html 28

Waste Management (Facility Permit and Registration) Regulations 2007 S.I. 821/2007. Available at http://www.irishstatutebook.ie/2007/en/si/0821.html 29

Waste Management (Facility Permit and Registration) (Amendment) Regulations 2008 S.I. 86/2008. Available at http://www.irishstatutebook.ie/2008/en/si/0086.html

Box 4: Relevant Irish legislation

Consumer Protection Act 2007;

Criminal Justice (Money Laundering and Terrorist Financing) Act 2010

Criminal Justice (Theft and Fraud) Offences Act 2001;

Pawnbrokers Act 1964;

Waste Management Acts 1996 to 2011

Waste Management (Facility Permit and Registration) Regulations 2007

Waste Management (Facility Permit and Registration) (Amendment) Regulations 2012 [draft]

8

Enterprise and Innovation has stated that the Department does not have figures (nor details) for the number of scrap, iron and metal yard companies. The Department does not have any sector specific regulations in relation to such companies.30

The permit system is maintained by individual local authorities and as such there is no centralised system in place.

Registration is required for certain activities (such as storing batteries or hazardous household waste), but not for handling scrap metal.

The problems faced in Ireland regarding precious metals/stones and scrap metal are also being faced in other countries.31 Again, these appear to primarily focus on identification in light of the sale of stolen goods, though other considerations such as valuation and money laundering have been identified.

Jamaica, South Africa and New South Wales (Australia) would appear to be the closest in terms of focus to Ireland. All have regulations regarding the relevant industries where traders have to records details about the customer and the goods they are trying to sell.

Some countries are concerned with issues of valuation, which focus more on the actions of dealers than the possibility of criminals using such establishments to sell stolen goods. This includes the U.S.

30

Written Answers – Organised Crime, Dáil Debates, Vol. 744 No. 4 at p. 179 (25 October 2011). Available at http://debates.oireachtas.ie/dail/2011/10/25/00167.asp 31

http://www.naturalnews.com/034579_metals_thieves_copper.html

Others focus on much bigger-scale operations, for example money laundering and financing of terrorism. Such countries include Germany and Poland.

The Irish experience is typical of the approach in other countries. In general, countries do not have specific legislation on proof of identity when buying and selling second-hand property, which would encompass jewellery, gold, precious metals and scrap metal. Moreoften, there are informal industry standards. This would appear to be the case in most European countries.

Northern Ireland

Given cross-border trade, the Department of Justice has stated that ―The position in Northern Ireland merits particular consideration.‖32

There are no specific regulations on ―cash for gold‖. General consumer legislation, similar to the Irish Consumer Protection Act 2007, exists.

Scrap metal dealers are primarily regulated under waste legislation, as in Ireland.33

If reforms are introduced here, a divergence between Northern Irish and Irish laws could conceivably have an effect on cross-border trade.

United Kingdom

In the United Kingdom, the current focus is on identification and problems with the sale of scrap metal and stolen goods.

32

Department of Justice, ―Report on the Cash for Gold Trade‖, June 2012, at pages 14, 17. Available at http://www.justice.ie/en/JELR/Pages/PB12000175 33

Northern Ireland Assembly Research and Information Service Briefing Paper: "Scrap metal; legislation and responsibilities‖, 14

th

September 2012. Available at http://www.niassembly.gov.uk/Documents/RaISe/Publications/2012/environment/16212.pdf

Comparisons with other countries

9

There is no specific legislation on persons selling second-hand property. Handling stolen property is a crime under section 22(1) of the Theft Act 1968. Nevertheless, there must be

proven knowledge or belief that the goods were stolen. Legal interpretation has suggested that a mere suspicion that the goods were stolen will not suffice.34

Regarding both identification and valuation, there are informal standards under trade associations, such as the National Pawnbrokers Association (NPA).35

Regarding cash for gold and identification, there have been calls by MPs for legislation or regulation.36

In relation to scrap metal, the Scrap Metal Act Dealers 196437 regulates the

area in England and Wales, though does not apply to all dealing in scrap and only requires records to be kept in certain circumstances.

The Legal Aid, Sentencing and Punishment of Offenders Act 201238 introduces a ―cashless offence‖, where scrap dealers cannot pay cash for scrap.

34

Sutton, Hodgkinson and Levi, Handling Stolen Goods: Findings from the 2003 Offending Crime and Justice Survey [2008] Internet Journal of Criminology. Available at http://www.academia.edu/465482/HANDLING_STOLEN_GOODS_FINDINGS_FROM_THE_2003_OFFENDING_CRIME 35

A search for a similar association in Ireland yielded no results. 36

―Jacqui Smith calls for ‗cash-for-gold‘ websites to be regulated, The Telegraph, 15

th

December 2009; available at http://www.telegraph.co.uk/finance/personalfinance/investing/gold/6816806/Jacqui-Smith-calls-for-cash-for-gold-websites-to-be-regulated.html ―Cash for Gold Leads to Increased Crime‖, Credit Window, 28

th October 2010; available at

http://www.creditwindow.co.uk/Cash-for-gold-leads-to-increase-in-crime.html 37

Scrap Metal Dealers Act 1964 [UK]. Available at http://www.legislation.gov.uk/ukpga/1964/69 38

Legal Aid, Sentencing and Punishment of Offenders Act 2012 [UK]. Available at http://www.legislation.gov.uk/ukpga/2012/10/enacted

Currently, the Scrap Metal Dealers Bill

is before Westminster, which would affect England and Wales. Similar concerns have been expressed in the UK as in Ireland, and according to a House of Commons Library Research Paper:

―Incidences of metal theft are thought to have grown in recent years with rising global metal prices. Metal theft is estimated to cost the UK economy some £220-260 million per year—although the total costs could be up to £800 million.‖39

The proposed legislation would require greater levels of regulation and recording of details, both for traders and persons trying to sell scrap to traders.

EU

At EU Level, there is no specific legislation or regulations regarding the ―Cash for Gold‖ sector or procedures for buying and selling scrap.

There is regulation of money laundering, but this would relate to large-scale, international crime. The primary Directive on money laundering is European Council's Directive 91/308/EEC of 10 June 1991 on the prevention of the use of the financial system for the purpose of money laundering (as amended).40 Enhanced by further Directives, it laid down provisions concerning customer identification, reporting suspicious transactions, general standards of due diligence, regular training sessions by

39

House of Commons Library, ―Research Paper 12/39: Scrap Metal Dealers Bill‖, 10

th

July 2012. Available at http://services.parliament.uk/bills/2012-13/scrapmetaldealers.html 40

Council Directive of 10 June 1991 on prevention of the use of the financial system for the purpose of money laundering (91/308/EEC). Available at http://eur-lex.europa.eu/Notice.do?val=172888:cs&lang=en&list=249251:cs,249750:cs,256871:cs,250380:cs,335666:cs,240531:cs,314106:cs,311019:cs,172888:cs,415561:cs,&pos=9&page=2&nbl=21&pgs=10&hwords=91/308/EEC~&checktexte=checkbox&visu=#texte

10

financial institutions and the designated Money Laundering Reporting Officer. All the anti-money laundering provisions extend to principal non-banking institutions, including dealers in high value goods such as metals and gold.

Some Member States have national provisions similar to the obligation to declare outlined above, for cash for gold and/or precious metals and stones: Bulgaria, Germany, Austria, Cyprus, the Czech Republic and Poland.41

Regarding scrap metal, a Reuters report from December 201142 stated that regulations had recently been enacted in:

Belgium (record and identify sellers);

France (cashless transactions);

Spain (licencing of dealers).

The UK Impact Assessment for the Legal Aid, Sentencing and Punishment of Offenders Act 2012, discussed

above, stated there was evidence that throughput into France‘s scrapyards had decreased 30% since, and suggested this was due to metal being transported to other jurisdictions (naming Belgium, Germany and Holland) with lighter regulation.43

41

Report from the Commission to the European Parliament and the Council on the application of Regulation (EC) No 1889/2005 of the European Parliament and of the Council of 26 October 2005 on controls of cash entering or leaving the Community pursuant to article 10 of this Regulation, 12

th August 2010, at page 5.

Available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0429:FIN:EN:PDF 42

―Scrap metal firms oppose bill to ban cash buys‖, Reuters, 5

th December 2011. Available

at http://uk.reuters.com/article/2011/12/05/uk-britain-scrap-idUKTRE7B40Q920111205 43

UK Home Office, ―Impact Assessment: Tackling Metal Theft - prohibit cash payments and higher fines‖, 22

nd February 2012.

Available at http://www.justice.gov.uk/downloads/legislation/bills-acts/legal-aid-sentencing/laspo-metal-theft-ia.pdf

United States

In the United States, there have been two emphases: the first, on valuation and cash for gold traders on the internet. The second is identification in relation to scrap metal and stolen goods.

On a Federal level, in 2009, Representative Anthony Weiner introduced H.R.4501 - Guarantee of a Legitimate Deal Act of 2009.44 This

would have required certain return policies from businesses that purchase precious metals from consumers and solicit such transactions through an Internet website. Thus the emphasis of the Bill is to try and prevent unscrupulous practices by traders when a person legitimately sells their own second-hand property.

The Bill was been passed by the House of Representatives, but was not passed by the Senate.

Regarding identification and scrap metal, the National Conference of State Legislatures has published a document in October 2012 which lists legislation (enacted and pending) in American States dealing with the problem.45

Florida

In June 2009, Florida passed a law outlining specific recordkeeping requirements for mail-in gold buying companies, including what companies must do if the gold is stolen. Part III of Chapter 53846 is designed to regulate

the mail-in gold buying industry.

44

H.R.4501 - Guarantee of a Legitimate Deal Act of 2009. Available at http://www.govtrack.us/congress/bills/111/hr4501 45

Jacquelyn Pless, ―Metal Theft Can Threaten U.S. Energy Security: A Hot Issue in 2012‖, 31

st

October 2012. Available at http://www.ncsl.org/issues-research/energyhome/metal-theft-and-security.aspx 46

Part III of Chapter 538, Florida Statutes. Available at

11

It requires mail-in companies to keep records of all transactions. This includes digital photographs of items received. Such records are published on a secure database that can be accessed by law enforcement.

Washington

In July 2011, HB 1716 Regulating secondhand dealers who deal with precious metal property 47 became

effective in Washington State. The aim behind the Bill is to help burglary victims find their stolen goods, to make it more difficult for criminals trying to sell stolen property and to increase the time available for law enforcement to trace stolen items that have been sold in such stores.

The Bill requires store owners to:

photocopy the ID of a person selling precious metals;

take fingerprints for all items valued at over €100;

hold onto items for 30 days

Another Bill, HB 1213 Regulating pawnbrokers and secondhand dealers who deal with precious metal property48 was drafted and

reintroduced on April 2011, though this Bill has not progressed further.

Australia – New South Wales

New South Wales has legislation regarding identification of second-hand goods, though regulation of scrap

http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0500-0599/0538/0538PartIIIContentsIndex.html&StatuteYear=2011&Title=%2D%3E2011%2D%3EChapter%20538%2D%3EPart%20III 47

HB 1716 Regulating secondhand dealers who deal with precious metal property. Available at http://apps.leg.wa.gov/billinfo/summary.aspx?bill=1716&year=2011 48

HB 1213 Regulating pawnbrokers and secondhand dealers who deal with precious metal property. Available at http://apps.leg.wa.gov/billinfo/summary.aspx?bill=1213&year=2011

metal seems to be only for waste management purposes.

The Pawnbrokers and Second-Hand Dealers Act 199649 aims to reduce the

trade in stolen goods by providing a licensing regime with record keeping and proof of identity requirements. The Director General maintains a register of licenced persons. A licenced person has to keep computer records. Under section 21, goods that they buy/receive have to be retained for 14 days.

The Director General may take disciplinary action against licensees and Police and NSW Fair Trading Officers may impose penalties for non-compliance with the legislation, normally resulting in a fine (determinable via ―penalty units‖ for the breach).

Under section 19 of the Act, a person working in a pawnbrokers or a second-hand dealership has a duty to immediately inform the authorities where they suspect that goods have been stolen. If a ―unique identifier‖ (any symbol, words or code used to distinguish the goods) has been removed from the goods, then the goods are presumed to have been stolen. The New South Wales criminal system works on the basis of penalty units: there is a maximum of 50 penalty units for an offence under section 19.

Under Part 4A (section 32) of the Act, in order to recover goods that have been stolen from them, a person should go to a police station – all licenced second-hand properties should have a sign stating this. The person shows the police evidence or a statutory declaration of ownership. The police can then serve a licenced trader with a Restoration Notice. The licenced trader then has 28 days either

49

Pawnbrokers and Second-Hand Dealers Act 1996. Available at http://www.legislation.nsw.gov.au/fullhtml/inforce/act+13+1996+FIRST+0+N

12

to return the goods or lodge a hearing with the Consumer, Trader and Tenancy Tribunal. In any event, the goods are to be retained by the licenced trader until the matter is resolved.

Under Regulation 12 of the Pawnbrokers and Second-hand Dealers Regulation 2008,50 the following details have to be recorded by the licenced trader in any transaction:

Proof of identification;

Name;

Adddress;

Date of birth;

Contact number;

Date, price and particulars of the sale; and

A description of the goods.

Jamaica The primary focus in Jamaica is on licensing and regulation of second-hand dealers.

In Jamaica, the Metal and Jewellery (Control of Second-Hand) Act51

regulates the sale of second-hand gold. It provides that anyone wishing to run such a business must be licensed.

Under Section 9(1) of the Act, Licensed retailers have to keep records in relation to any dealing as prescribed by law. Regulation 4 of the Metal and Jewellery (Control of Second-Hand) Act Regulations

provides that a licensed person must maintain a Purchases Book and a Sales Book, with the following information recorded:

50

Pawnbrokers and Second-hand Dealers Regulation 2008 [2008-391]. Available at http://www.legislation.nsw.gov.au/fullhtml/inforce/subordleg+391+2008+FIRST+0+N?#pt.2 51

Metal and Jewellery (Control of Second-Hand) Act (1946). Available at http://www.moj.gov.jm/sites/default/files/laws/Metal%20and%20Jewellery%20%28Control%20of%20Second-Hand%29%20Act.pdf

Table 2: Jamaican recording requirements

Purchases Book Sales Book

Nature and quantity of the article purchased

Name and address of the person

Name and address of the person to whom the article was sold

Date and hour when purchase was made

Date and hour when sale was made

Whether the vendor was known or was identified to the licensee and if identified, the name of the person identifying such vendor

Date upon which the article had been purchased by the licensee and the person from whom it was purchased

Price paid for such article

Price paid for such article

Under section 12 of the Act, it is an offence not to pass on information about suspected stolen articles.

Currently, breach of the Act or Regulations can result in a fine ranging from $50 to $200 or up to 12 months imprisonment.

In 2011, in response to an upsurge in the cash for gold trade, the Jamaican Government announced legislation to increase penalties and application fees for licences under the Act. The rationale used was that the penalties were not sufficiently punitive to deter unlicensed traders.52 This legislation would not appear to have been published or passed yet.

52

―Stiffer penalties for unlicensed gold traders‖, The Gleaner, 18

th March 2011. Available at

http://jamaica-gleaner.com/gleaner/20110318/news/news6.html

13

South Africa The Second-Hand Goods Act 200953 was enacted as a response to trade in stolen goods and tackles problems around identification. The Act provides for accreditation, and requires registration with the National Commissioner.

Sections 21 and 22 relate to the keeping of records and to stolen goods:

Section 21 regulates records by dealers. A dealer must keep a register, including details about customers on identity, contact details, description of goods, price and an indexation of goods the dealer holds.

Section 22 regulates false information and stolen goods. If a dealer suspects any information given is false or that any goods are stolen, they are to report to the police.

Depending on the offence, contravention of the Act can result in a fine, or imprisonment for up to ten years.

Numerous Parliamentary Questions and a Private Members Bill on the topic have been drafted in the previous year on issues relating to precious metals and scrap metals. In addition, government Departments and an Garda Síochána have been considering problems surrounding trade in these areas.

There have been calls, public and political, for legislation to be introduced to prevent the sale of stolen metals.54

53

Second-Hand Goods Act 2009. Available at http://www.info.gov.za/view/DownloadFileAction?id=98612 54

―Theft of metal monument sparks call for legislation‖, Irish Times, 15

th November 2011.

Available at http://www.irishtimes.com/newspaper/ireland/2011/1115/1224307582813.html

The Irish Farming Association has called for a metal compliance scheme, similar to WEE and REPAK, to reduce the amount of rural metal theft.55

Recent Oireachtas questions on related matters

There have been numerous questions on related issues during 2011 and 2012 within the Oireachtas. 56 57 58

In answer to these, the following has been stated by Ministers:

The Department of Justice have published a report on criminal justice aspects of the ―cash for gold‖ trade. (see below);

The Garda Commissioner (October 2011) reported that all ―Cash for Gold‖ premises have been visited by An Garda Síochána and the operators of these businesses have been made aware of their responsibilities and obligations with regard to purchasing gold and jewellery. Contact information has been provided to ‗Cash for Gold‘ operators by An Garda Síochána which will facilitate the reporting of any suspicious activity. The Commissioner has also

55

―Scrap Metal Compliance Scheme Needed To Control Metal Theft‖, irishfarming.ie, 6

th

September 2011. Available at http://irishfarming.ie/2011/09/06/scrap-metal-compliance-scheme-needed-to-control-metal-theft/ 56

Written Answers – Cash for Gold Industry, Dáil Debates, Vol. 744 No. 4 at p. 46 (25 October 2011). Available at http://debates.oireachtas.ie/dail/2011/10/25/00046.asp 57

Written Answers – Sale of Scrap Metal, Dáil Debates, Vol. 740 No. 5 at p. 179 (22 September 2011). Available at http://debates.oireachtas.ie/dail/2011/09/22/00179.asp 58

Written Answers – Cash for Trade, Dáil Debates, Vol. 772 No. 2 (Unrevised) at p. 199 (18 July 2012). Available at http://oireachtasdebates.oireachtas.ie/debates%20authoring/DebatesWebPack.nsf/takes/dail2012071800199?opendocument&highlight=gold

Proposed developments in Ireland

14

indicated that any new ‗Cash for Gold‘ premises that may be identified will be visited by An Garda Síochána.59 60

The Department for Jobs, Enterprise and Innovation does not maintain official statistics on the number of cash for gold companies;61

The Department of Jobs, Enterprise and Innovation does not maintain official statistics on the number of scrap, iron and metal yard companies. Nor does it have any sector specific regulations in relation to these companies;

62

The Department of Justice and Equality has no role in relation to the scrap metal industry;63

The scrap metal regime in Ireland is licenced and controlled to regulate the collection, recovery or disposal of waste in order to protect the environment.64 The Gardaí and not the Department of the Environment, Community and

59

Written Answers – Organised Crime, Dáil Debates, Vol. 744 No. 4 at p. 179 (25 October 2011). Available at http://debates.oireachtas.ie/dail/2011/10/25/00167.asp 60

Written Answers – Proposed Legislation, Dáil Debates, Vol. 744 No. 4 at p. 300 (25 October 2011). Available at http://debates.oireachtas.ie/dail/2011/10/25/00300.asp 61

Written Answers – Organised Crime, Dáil Debates, Vol. 744 No. 4 at p. 179 (25 October 2011). Available at http://debates.oireachtas.ie/dail/2011/10/25/00167.asp 62

Written Answers – Organised Crime, Dáil Debates, Vol. 744 No. 4 at p. 179 (25 October 2011). Available at http://debates.oireachtas.ie/dail/2011/10/25/00167.asp 63

Written Answers – Proposed Legislation, Dáil Debates, Vol. 744 No. 4 at p. 300 (25 October 2011). Available at http://debates.oireachtas.ie/dail/2011/10/25/00300.asp 64

Other Questions – Waste Disposal, Dáil Debates, Vol. 744 No. 3 at p. 21 (20 October 2011)

Local Government would deal with allegations of criminality.

Recent Bill before the Oireachtas

Scrap and Precious Metal Dealers Bill 2011 [PMB]65

This Bill was introduced on 2nd November 2011 by Deputy Mattie McGrath. The Bill proposed registration with An Garda Síochána of dealers of both precious metals and scrap metal.

The Bill proposed the implementation of stricter controls relating to the purchasing, selling, trading, consignment selling or otherwise transferring for value, more than three times per year, second-hand property that is a precious or scrap metal.

The Bill provided that all transactions be recorded with:

description of the goods;

price paid

signature,

date,

employee‘s name and business address

for the person selling:

o name,

o date of birth,

o PPS number,

o address

o photographic ID, and

o declaration that the goods are not stolen

and a 30 day waiting period occur before resale/removal of the metals.

At Second Stage on 6th March 2012, a motion that the Bill be read for a Second Time was defeated.

65

Scrap and Precious Metal Dealers Bill 2011 [PMB]. Available at http://www.oireachtas.ie/viewdoc.asp?DocID=19489&&CatID=59

15

Report on the Cash for Gold Trade

In June 2012, the Department of Justice published a report on criminal justice aspects of the ―cash for gold‖ trade.66

Key findings of the report were that:

The Gardaí have visited all known cash for gold traders;

There is still a significant level of public concern;

Such metals are usually melted down;

There is a danger of inconsistency if there are different regulations for pawnbrokers, cash for gold outlets, and other traders in second hand goods;

Cross border implications, particularly affecting legitimate trade, have to be considered;

The Criminal Justice (Theft and Fraud) Offences Act 2001 is

adequate to tackle such issues.

The recommendations of the report were that:

While criminal law is ―adequate‖ and law enforcement had been strong, there were ground for considering controls on purchase;

Controls could include identification of the seller, indentification of the item, a retention period before reselling, and records of transactions.

The Gardaí would need adequate powers of access, questioning, search and arrest, but would not need to register or licence dealers;

66

Department of Justice, ―Report on the Cash for Gold Trade‖, June 2012. Available at http://www.justice.ie/en/JELR/Pages/PB12000175

The law relating to pawnbrokers, explained above, could be used as a template.

The report proposed that in the short-term, the Joint Oireachtas Committee on Justice Equality and Defence should consider the report and the report on metal theft; hold hearings as appropriate (and involving any other relevant Committees), obtain submissions and then report with recommendations to the Oireachtas and Government.

The Committee is considering the Report and invited submissions up to 31st August 2012 in preparation for public hearings.67 Public hearings have not taken place as of December 2012.

Metal Theft Forum

The Metal Theft Forum, established in late-2011,68 is comprised of stakeholders affected by such crime.69 In consultation with an Garda Síochána and the Department of Justice, the Forum has been developing a Metal Theft Crime Prevention and Reduction Plan and preparing a Report on metal theft. The Plan and the Report have not been published as of December 2012.70 71

67

―Committee on Justice, Defence and Equality invites submissions on the Report on the Cash for Gold Trade‖, 12

th July 2012. Available at

http://www.oireachtas.ie/parliament/media/committees/justice/Invitation-for-submissions---Cash-for-Gold.pdf 68

An Garda Síochána Annual Report 2011, at page 13. Available at http://www.garda.ie/Documents/User/Annual%20Report%202011%20English.pdf 69

This includes the ESB, Irish Farmers‘ Association (IFA), the Irish Creamery Milk Suppliers association, telecoms companies, transport companies and relevant government agencies. 70

Though the Gardaí do have a webpage with advice on preventing such thefts at http://www.garda.ie/Controller.aspx?Page=10343 71

Written Answers – Crime Prevention, Dáil Debates, Vol. 774 No. 2 Unrevised at at p. 80 (7 November 2012) [49016/12]. Available at http://oireachtasdebates.oireachtas.ie/debates%20authoring/debateswebpack.nsf/takes/dail2

16

Scrap metal: new waste regulations

On 19th November 2012,72 the Minister for the Environment released proposed Waste Management (Facility Permit and Registration) (Amendment) Regulations 2012.

The regulations would ensure that scrap metal dealers:73

Are banned from paying cash for scrap metal;

Have to keep a record of the identity and address of individuals selling, details of delivery vehicle, materials sold and amount paid;

Have to obtain a signed statement from the seller declaring lawful ownership of the material or stating they have permission to sell it.

Consultation on these regulations was open to the public until 14th December 2012.

In Ireland the precious metals/stones and scrap metal industries are separate but create similar problems. These are part of a wider phenomenon that is the sale of second-hand goods. The problems primarily stem from identification of persons selling goods and the goods being sold, along with recording details of transactions. Another possible problem, less widely discussed, is that of valuation.

012110700080?opendocument#Crime_Prevention 72

―Public consultation on proposed new regulations on trade in scrap metal at waste facility sites‖, Department of the Environment Press Release, 19

th November 2012. Available

at http://www.environ.ie/en/Environment/Waste/News/MainBody,31566,en.htm 73

―New law to control sale of scrap metals would ban cash payments‖, Irish Times, 20

th

November 2012. Available at http://www.irishtimes.com/newspaper/ireland/2012/1120/1224326838977.html

The sale of second hand goods is not specifically legislated for in Ireland. General criminal legislation relating to stolen goods would be used in such cases at present. There is a possibility that consumer protection legislation could be used presently, though this is not clear.

Regarding precious metals/stones, the Pawnbrokers Act 1964 is relevant,

though its provisions are specific and only apply to pawned objects; not to objects that are merely bought or sold.

Regarding scrap metal, there are waste management regulations, however these govern storage and do not mention the sale of second-hand scrap.

Problems with second-hand trade are not limited to Ireland. Such problems have manifested in other countries and several parliaments have either commission reports or enacted regulations in the last few years. Most countries have a similar approach to Ireland.

Several common law countries have enacted legislation to control the sale of second-hand items. In Europe, this would not appear to be the case. The method of dealing legally with such matters is to use general legislation relating to theft and the handling of stolen goods. This is combined with informal industry standards.

In Ireland, the Government and the Oireachtas have recently attempted several initiatives designed to reduce criminality in such sectors. These include a 2011 Private Members Bill that was not read a Second Time, proposed new Waste Management Regulations which will require proof of identity for persons and the materials they are supplying, and a Department of Justice / Garda report on the cash for gold sector.

Key lessons and

conclusions