BILLS DIGEST NO. 75, 2015–16              2 February 2016

Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2015

Cat Barker, Foreign Affairs, Defence and Security Section

Jonathan Mills, Law and Bills Digest Section

Date introduced:  26 November 2015

House: House of Representatives

Portfolio:  Justice

Commencement: Sections 1 to 3 will commence on Royal Assent and Schedules 1 to 4 the day after Royal Assent. Schedule 5 will commence on a day fixed by Proclamation, or six months after Royal Assent, whichever is sooner.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website.

Purpose and structure of the Bill

The purpose of the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2015 (the Bill) is to amend:

•       the Proceeds of Crime Act 2002 (PoC Act) to maintain, in light of recent court decisions, the operation of the provisions that permit the non-conviction based confiscation of assets (Schedule 1)

•       the Criminal Code Act 1995 (Criminal Code) to:

–      insert new offences for false accounting (Schedule 2) and

–      amend the definitions of drug analogue and manufacture for the purposes of the serious drug offences in Part 9.4 (Schedule 3)

•       the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) to enable broader sharing of financial intelligence data and other information obtained under the AML/CTF Act (Schedule 4) and

•       the AusCheck Act 2007 to allow AusCheck scheme personal information to be shared with a broader range of authorities, and directly with state and territory authorities (Schedule 5).[1]

Background

The Bill will amend a range of crime related provisions across several Acts. The amendments in the different schedules are quite separate. For this reason, background relevant to specific measures is provided separately in the analysis of Schedules to the Bill.

The Government has grouped these amendments together under the broad purpose of ‘measures to improve and clarify Commonwealth criminal justice arrangements’.[2]

Committee consideration

Senate Legal and Constitutional Affairs Legislation Committee

The Bill has been referred to the Senate Legal and Constitutional Affairs Legislation Committee for inquiry and report by 3 February 2016. Details of the inquiry are at the inquiry homepage.[3]

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills (Scrutiny of Bills Committee) commented on Schedules 2, 4 and 5 of the Bill in an Alert Digest.[4] The Scrutiny of Bills Committee was satisfied with the justification provided in the Explanatory Memorandum for the departure from the standard imprisonment to penalty ratio in Schedule 2.[5] Its concerns about Schedules 4 and 5 are outlined in the analysis of those Schedules below.

Policy position of non-government parties/independents

The Australian Labor Party supports the Bill.[6] Other non-government parties and independents did not appear to have publicly stated a position on the Bill at the time of writing this Digest.

Position of major interest groups

The views of some stakeholders are set out in their submissions to the Senate Legal and Constitutional Affairs Legislation Committee’s inquiry into the Bill and statements to the media. The inquiry attracted only a small number of submissions, mainly focused on the proposed amendments relating to proceeds of crime in Schedule 1 of the Bill, and to a lesser extent on the proposed false accounting offences in Schedule 2. A brief summary is provided below, with further detail included where relevant in the analysis of those Schedules.

Stakeholder comments on other parts of the Bill are noted where relevant in the analysis of particular Schedules.

Proceeds of Crime Act 2002 amendments

The Australian Human Rights Commission, the Law Council of Australia (LCA), the Victorian Bar and Criminal Bar Association and Families and Friends for Drug Law Reform (ACT) each recommended that the Proceeds of Crime Act 2002 amendments should not be made.[7] The LCA was concerned that the amendments would not be constitutionally valid to the extent that the restrictions on a court’s ability to stay proceedings may require a court to exercise its judicial power in a manner inconsistent with the judicial function of the courts and so breach the separation of powers doctrine.[8]

The other submissions pointed out that the amendments may unduly infringe the right to a fair trial by requiring a person to disclose their defence in forfeiture proceedings before related criminal proceedings are finalised.[9] In this regard, the submissions reiterated the concerns of the High Court as expressed in the decision that prompted the amendment.[10]

The Justice and International Mission Unit of the Uniting Church in Australia’s Synod of Victoria and Tasmania (Uniting Church) supported the proposed amendments and noted that a non-conviction based asset confiscation scheme was an important tool for ‘dealing with the problem of money stolen from developing country governments and shifted to Australia’.[11]

False accounting offences

The LCA and Johnson Winter & Slattery Lawyers both expressed concern at the breadth of the proposed offences, and accordingly, the potential for unintended negative consequences.[12] On the other hand, the Uniting Church welcomed the proposed offences and suggested amendments that would further strengthen them.[13]

Transparency International and corruption expert Professor AJ Brown (of Griffith University) both welcomed the introduction of the proposed false accounting offences, but neither made a submission to the inquiry into the Bill or commented on the detail of the provisions.[14]

Financial implications

In the Explanatory Memorandum, the Government states that Schedule 1 of the Bill ‘will ensure that the Commonwealth’s ability to confiscate the proceeds and benefits of criminal offences via non-conviction based forfeiture proceedings is maintained.’[15]

Schedules 2–5 of the Bill will have not financial impact.[16]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[17]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights had not reported on the Bill at the time of writing this Digest.[18]

Schedule 1: Proceeds of Crime Act 2002 amendments

The proposed amendments in Schedule 1 would amend the PoC Act in an attempt to maintain the operation of the provisions that permit the confiscation of assets without requiring a related conviction. This set of amendments is in response to recent court decisions that affected the order of hearing concurrent proceedings and so altered the circumstances in which criminal proceedings may adversely affect the progress of civil confiscation proceedings under the PoC Act.

The current non-conviction provisions allow a proceeds of crime authority (the Commissioner of the Australian Federal Police (AFP) or the Commonwealth Director of Public Prosecutions (CDPP)) to deal with property in situations involving a reasonable suspicion of that property being criminal profits but where no conviction has been made. To achieve this, the PoC Act allows an authority to apply to the Court for an order to:

•       restrain property where it is suspected of being the proceeds of an indictable offence and

•       have the restrained property forfeited if the court is satisfied, on the balance of probabilities, that the property is proceeds of an indictable offence.

However, the PoC Act provides that a person may apply to the Court for an order to exclude property from either a restraining order or forfeiture order.[19] Such an order will only be granted where the Court is persuaded that interest(s) in question are not proceeds of crime or instruments of unlawful activity of the offence, or any offence, to which the order relates. In addition, in some instances the applicant for an exclusion order relating to property the subject of a restraining order (or restraining order proceedings) will also need to demonstrate that:

•       there are no reasonable grounds to suspect that the interest in question are the proceeds of the offence(s)

•       there is a suspect in relation to the order, but they have not been convicted of, or charged with, the offence(s)

•       the conduct in question was not for the purpose of, in preparation for, or in contemplation of, any other indictable offence and

•       the interest(s) could not have been covered by a restraining order if none of the offences had been serious offences.[20]

As a result, the ‘exclusion order’ regime contained in the PoC Act allows persons subject to restraining or forfeiture orders or proceedings to seek to have property excluded from such orders. The Government has described the rationale for the non-conviction scheme (including the exclusion order regime) as follows:

The non-conviction based forfeiture scheme was introduced in 2002 in response to findings of the 1999 ALRC Report entitled Confiscation that counts, which concluded that Commonwealth conviction-based proceeds of crime laws were inadequate. Earlier laws had failed to impact at all upon those at the pinnacle of criminal organisations, who, with advancements in technology and globalisation, could distance themselves from the individual criminal acts, thereby evading conviction and placing their profits beyond the reach of conviction based laws.[21]

The proposed amendments are in response to two recent court decisions, Commissioner of the Australian Federal Police v Zhao [2015] HCA 5 (Zhao) and In the matter of an application by the Commissioner of the Australian Federal Police [2015] VSC 390 (Zhang), highlighted problems with the interpretation and operation of the non-conviction based confiscation provisions.[22]

Zhang

In Zhang the Victorian Supreme Court considered a case in which the Commissioner of the Australian Federal Police had obtained restraining orders over properties under section 19 of the PoC Act and then applied for forfeiture orders under sections 59 and 49. The respondents had applied for exclusion orders in relation to both the restraining and the forfeiture orders (exclusion orders are described above).

The Court was required to determine the order in which the various matters should be heard, and found that ‘the fairest way to conduct these proceedings … is to hear and determine the forfeiture application first, and then, if necessary, the exclusion applications.’[23]

Existing section 315A provides for the concurrent hearing (and determination) of two or more applications under the PoC Act. The Explanatory Memorandum explains the potential issues that the Zhang approach may cause when applied to applications for exclusion from restraining orders:

A restraining order is an interim measure aimed at preventing a respondent from dissipating property prior to the court having the opportunity to consider the forfeiture of the property. If an exclusion application in respect of a restraining order is not to be heard until after forfeiture has occurred, the more appropriate path would be to make an application for exclusion from forfeiture, as there would be no extant restraining order on foot once forfeiture had been ordered. The amendments do not affect the ability of an individual to make an application for exclusion of property from restraint or forfeiture.[24]

Proposed subsection 315A(2) would clarify the required order of proceedings in response to the Zhang decision and provides that where an authority has applied for a forfeiture order on property and a person has applied for an order to exclude that property from a restraining order, the application for the exclusion order must be determined before the court hears the forfeiture application.

Zhao

In Zhao the High Court dismissed an appeal by the Commissioner of the Australian Federal Police seeking to overturn a stay on confiscation proceedings, pending related criminal proceedings. In this case the same property was subject to restraining, forfeiture and exclusion proceedings, as well as allegedly being proceeds of an offence that was the subject of criminal proceedings. The court found that the forfeiture proceedings and the exclusion proceedings should be stayed until the completion of the criminal matter. As the issues in the forfeiture and the criminal proceedings were substantially identical, there was a risk that the forfeiture proceedings could prejudice the criminal matter. The Court noted that ‘(i)t may be accepted that criminal proceedings are not an impediment to civil proceedings under the PoC Act, but it does not follow that it is intended that forfeiture proceedings brought under the PoC Act will continue where to do so would put a respondent at risk of prejudice in his or her criminal trial.’[25]

The result of these amendments would be to generally permit civil proceedings to continue despite related criminal proceedings, while providing certain safeguards to reduce the chance of the civil proceedings prejudicing the criminal proceedings.[26] As noted above in the ‘Position of major interest groups’ section of this digest, several submissions to the Senate Legal and Constitutional Affairs Legislation Committee’s inquiry into the Bill expressed concerns that the result of the proposed amendments would be to permit the confiscation proceedings to potentially constitute the very prejudice that the court had refused to accept in Zhao.[27]

The PoC Act currently provides, at section 319, that ‘the fact that criminal proceedings have been instituted or have commenced (whether or not under this Act) is not a ground on which a court may stay proceedings under this Act that are not criminal proceedings’. However, in light of the abovementioned court decisions, proposed section 319 would replace existing section 319 to clarify the principles to be considered by a court when granting or refusing a stay.

Proposed subsection 319(1) would provide a level of safeguard by permitting a court to grant a stay of civil proceedings under the PoC Act if ‘the court considers that it is in the interests of justice to do so’.

Proposed subsections 319(2)–(5) would specify the grounds on which a court must not grant a stay, including the existence of criminal proceedings in the same or related matters, or where evidence may be required that may be relevant in the criminal proceedings. It would also provide that a Court must not stay proceedings because proceedings in relation to another person have, or are to be, or may be, stayed.

Proposed subsection 319(6) would provide that, in considering whether a stay is in the interests of justice, a court must have regard to the expeditious resolution of both civil and criminal matters, the cost to the Commonwealth of retaining property without being able to realise its proceeds, the risk of prejudice to a proceeds of crime authority, whether prejudice to another person may be dealt with other than by a stay, and any orders that may address this prejudice.

Taken together, the provisions of proposed section 319 would require a court to consider the circumstances of the particular civil and criminal proceedings in considering the interests of justice, rather than simply granting a stay due to the existence of any related proceedings. The proposed sections would also require a court to consider other options (such as ordering that relevant civil proceedings be heard in closed court[28]) for responding while still allowing a stay to be granted in the interests of justice.

While this may reduce the circumstances in which a stay would be ordered, the Bill includes some safeguards to prevent the potential prejudicing of related criminal matters.

Existing subsection 266A(2) provides a power to disclose evidence obtained under the PoC Act to listed authorities for certain specified purposes. Proposed subsection 266A(2) would further provide that information obtained under the PoC Act cannot be shared with an authority where this would contravene a specific non-disclosure order by the court.

Proposed section 319A would provide another safeguard mechanism by allowing civil proceedings under the PoC Act to be ordered to be heard in closed court, in order ‘to prevent interference with the administration of criminal justice.’[29]

Schedule 2: False accounting offences

Australia ratified the Organisation for Economic Cooperation and Development (OECD) Convention on Combating Bribery of Foreign Officials in International Business Transactions (the OECD Convention) in 1999.[30] The third mutual evaluation of Australia’s compliance with the OECD Convention was completed in 2012, and one of the areas identified as in need of improvement was sanctions for false accounting.[31]

Article 8 of the OECD Convention requires parties to have ‘effective, proportionate and dissuasive civil, administrative or criminal penalties’ in place for engaging in false accounting practices for the purposes of foreign bribery or of concealing foreign bribery. In meeting those obligations, Australia has previously relied upon provisions in the Corporations Act 2001 and state and territory laws.[32] The 2012 evaluation found that the penalties associated with those laws were not effective, proportionate and dissuasive, particularly in relation to legal persons (such as corporations). Accordingly, the OECD Working Group on Bribery recommended Australia either increase the maximum penalties that apply to legal persons for false accounting under Commonwealth law or increase the scope and penalties that apply to state offences.[33]

Schedule 2 of the Bill would respond to that recommendation by inserting Proposed Part 10.9 into the Criminal Code to create new false accounting offences.

The definition of ‘accounting document’ underpins the offences. As set out below, the breadth of the proposed definition has been criticised by some stakeholders. Item 2 of Schedule 2 would amend the dictionary of the Criminal Code to provide that ‘accounting document’ means:

(a)      any account; or

(b)     any record or document made or required for any accounting purpose; or

(c)      any register under the Corporations Act 2001, or any financial report or financial records within the meaning of that Act.

It would be an offence if:

•        a person makes, alters, destroys or conceals an accounting document, or fails to make or alter an accounting document the person is under a legal duty to make or alter and

•        the person intended (under proposed section 490.1) or was reckless as to whether (under proposed section 490.2) the making, alteration, destruction or concealment (or failure to make or alter a document) would facilitate, conceal or disguise the occurrence of:

–      the person or someone else receiving a benefit not legitimately due to him or her

–      the person or someone else giving a benefit not legitimately due to the recipient or intended recipient and/or

–      loss to another person that is not legitimately incurred and

•        one of the circumstances in proposed subsection 490.1(2) applies.

Proposed subsection 490.1(2) lists circumstances that bring the relevant conduct within the Commonwealth’s constitutional powers. These include characteristics of the person (for example, where the person is a constitutional corporation), the location or context of the act or omission (for example, outside Australia or in concealing a Commonwealth offence) and characteristics of the document (for example, it is kept for the purposes of a Commonwealth law). As is usual with an element relating solely to jurisdiction (as opposed to the substance of an offence), absolute liability would apply to that element of the offence.[34]

While the offences are being proposed in the context of a recommendation relating to foreign bribery, they would not be restricted to false accounting for the purpose of committing or concealing a foreign bribery offence. They appear to have been drafted as broadly as possible within constitutional limitations, and would apply to domestic bribery where, for example, the person is a constitutional corporation or a Commonwealth public official acting in the course of his or her duties.

Proposed penalties for false accounting

The maximum penalties for an individual would be:

•        10 years imprisonment and/or a fine of 10,000 penalty units (currently this equates to $1.8 million[35]) where the person intended that their conduct would have a result described above or

•        five years imprisonment and/or a fine of 5,000 penalty units (currently this equates to $900,000) where the person was reckless as to whether their conduct would have a result described above.[36]

The maximum penalty for a body corporate where intent can be proved would be a fine not more than the greatest of:

•        100,000 penalty units (currently this equates to $18 million)

•        three times the value of the benefit that the body corporate or a related body corporate obtained directly or indirectly, and that is reasonably attributable to the conduct constituting the offence (if the court can determine that value) or

•        ten per cent of the annual turnover of the body corporate in the 12 months leading up to when the conduct constituting the offence occurred (if the court cannot determine the value of the benefit).[37]

The maximum penalty for a body corporate where recklessness can be proved is half that which applies where intent can be proved.[38]

Breadth of the offences

The LCA and Johnson Winter & Slattery Lawyers both expressed concern at the breadth of the proposed offences, and accordingly, the potential for negative unintended consequences. Their concerns included:

•       the breadth of the proposed definition of accounting document, which they consider could capture many documents beyond the commonly understood meaning of the term

•       a lack of clarity about (and accordingly the potential for a very broad reading of) what constitutes a ‘benefit’ and when something is taken to be ‘not legitimately due’ and[39]

•       the criminalisation of reckless conduct (proposed section 490.2, as opposed to intentional conduct, covered by proposed section 490.1) in the context of the above noted factors, increasing the possibility that actions ‘not very much more than carelessness’ might be captured.[40]

Johnson Winter & Slattery Lawyers recommended the offences should be expressly limited to conduct relating to foreign bribery to avoid negative unintended consequences.[41]

The Uniting Church took a different view, and considered that proving intent would be very difficult in most cases, meaning the offence criminalising reckless conduct would generally have to be relied upon.[42] It also recommended the inclusion of an express obligation to maintain proper accounting records for the purpose of demonstrating compliance with Australia’s foreign bribery laws, and expansion of the proposed offences to false accounting that would facilitate, conceal or disguise the occurrence of a Commonwealth offence.[43]

Appropriateness of associated penalties

The LCA and Johnson Winter & Slattery Lawyers also noted the high penalties attached to the proposed offences, in the context of the breadth of conduct that may be captured.[44] It is worth noting that these are maximum penalties, meaning a court would have discretion to impose significantly lower penalties where a conviction relates to conduct at the lower end of that which would be captured by the proposed offences. As with most Commonwealth offences, there is no minimum penalty specified.[45]

However, the maximum penalty proposed for the offence in proposed section 490.1 (where a person intends that their conduct facilitates, conceals or disguises a person giving or receiving a benefit not legitimately due or incurring a loss not legitimately due) is the same that applies for the offence of foreign bribery (for which intent must also be proven).[46] The Explanatory Memorandum simply states that the proposed maximum penalties ‘are proportionate to the gravity of each offence’.[47] It does not explain why the Government considers false accounting with the intent to disguise or conceal, for example, the giving or receipt of a bribe, as equivalent to the actual giving or offering of a bribe.

Schedule 3: Amendments to serious drug offences

Part 9.1 of the Criminal Code contains a range of drug related offences, including trafficking, selling, import and export. The offences cover controlled and border controlled drugs, precursors and plants. Schedule 3 of the Bill contains proposed technical amendments to respond to matters that have arisen in two recent criminal cases.

Drug analogues

Commonwealth drug offences rely on lists of ‘controlled drugs’ and ‘border controlled drugs’. A controlled drug is a substance other than a growing plant that is listed as such in the regulations, a ‘drug analogue’ of a listed controlled drug, or determined by the Minister in an emergency determination.[48] A ‘border controlled drug’ is a substance other than a growing plant that is listed as such in the regulations, a ‘drug analogue’ of a listed border controlled drug, or determined by the Minister in an emergency determination.[49] A substance may be listed as a controlled drug without also being listed as a border controlled drug.

‘Drug analogue’ is defined in section 301.9 of the Criminal Code. Analogue provisions are designed to avoid the situation of laws requiring constant amendment to individually include each new substance, by extending prohibitions to substances that share certain structural properties with those already listed. However, some substances that are analogues of listed drugs are themselves also listed. To clarify that the analogue provisions are intended to apply only where a substance is not listed in its own right, subsection 301.9(2) states that ‘a drug analogue does not include a substance that is itself a listed controlled drug or a listed border controlled drug’.

In R v Poulakis (No. 3), the defendant was prosecuted for aiding and abetting the import of a marketable quantity of a border controlled drug.[50] The drug in question was MDEC, which is not itself listed as a border controlled drug, but is an analogue of the border controlled drug, butylone. Accordingly, the prosecution was relying on the analogue provisions to obtain a conviction. However, while MDEC is not listed as a border controlled drug, it is listed in its own right as a controlled drug. The defence argued that based on subsection 301.9(2), the analogue provisions do not apply. While recognising that the outcome of the case might seem ‘a little unusual and perhaps even disturbing’, the court ruled that the wording of subsection 301.9(2) meant that no offence had occurred and ordered the jury to return a verdict of not guilty.[51]

Item 3 of Schedule 3 of the Bill would clarify the intention of the analogue provisions by repealing subsection 301.9(2) and replacing it with proposed subsection 301.9(3), which would state that:

              (a)              a drug analogue of a listed controlled drug does not include a substance that is itself a listed controlled drug; and

              (b)              a drug analogue of a listed border controlled drug does not include a substance that is itself a listed border controlled drug.

Items 1–3 of Schedule 3 would also make other technical amendments to the definition of ‘drug analogue’.

In summary, the proposed amendments clarify that a substance may be a drug analogue of a listed controlled drug even if that substance is also listed as a border controlled drug (and vice versa) and thus will ensure that the serious drug offences in Part 9.1 continue to apply to all relevant substances in the future.

Meaning of manufacture

Section 300.2 of the Criminal Code contains definitions that apply throughout Part 9.1. The section states that manufacture has the meaning given by subsection 305.1(1), which states:

(1) For the purposes of this Part, manufacture means any process by which a substance is produced (other than the cultivation of a plant), and includes the following:

              (a) the process of extracting or refining a substance;

              (b) the process of transforming a substance into a different substance.

The definition has relevance to many of the drug offences in Divisions 305–311 of the Criminal Code.

In Beqiri v The Queen, the defendant’s conviction for manufacture of a marketable quantity of a controlled drug was overturned because the court ruled that the definition of manufacture did not include a process whereby a substance is converted from one form to another with no change to the actual structure.[52] The case concerned cocaine that had been impregnated into towels and clothing, which was then extracted through evaporation. Because the cocaine was extracted, but not ‘produced’, the court found the defendant had not engaged in manufacture.

Item 4 of Schedule 3 would respond to that case by adding to the definition of manufacture so that it also means ‘any process by which a substance is converted from one form to another, including the process of extracting or refining a substance’.

Schedule 4: AUSTRAC information

The AML/CTF Act provides the legislative basis for the Australian Transaction Reports and Analysis Centre (AUSTRAC), Australia’s anti-money laundering and counter-terrorism financing regulator and financial intelligence unit.[53] Schedule 4 would make several amendments to the AML/CTF Act to enable broader sharing of information.

Section 5 of the AML/CTF Act contains definitions that apply throughout the Act. Item 1 would add the Independent Commissioner Against Corruption of South Australia to the definition of ‘designated agency’ in section 5. This will allow officials from that agency to access financial intelligence data held by AUSTRAC, as is currently the case for equivalent organisations in other states (item 3 will amend section 22 to set out who is considered an ‘official’ of that agency).

Item 2 would amend the definition of ‘foreign law enforcement agency’ in section 5 so that in addition to national or sub-national agencies, it will include Europol and Interpol, and any other international body prescribed as such in regulations. This will allow AUSTRAC information to be communicated to those agencies under Subdivision D, Division 4 of Part 11 of the AML/CTF Act. The Scrutiny of Bills Committee has sought more detailed advice from the Minister as to why further international bodies should be able to be added by regulation instead of through amendment of the AML/CTF Act.[54] The Government has not indicated which other agencies it may consider adding by regulation.

Section 49 of the AML/CTF Act allows the AUSTRAC CEO, AFP Commissioner, CEO of Australian Crime Commission (ACC), Commissioner of Taxation, Comptroller of Customs, Integrity Commissioner or the relevant investigating officer to require a person to provide information or documents further to those obtained under sections 41, 43 or 45. Those sections require reporting entities (persons providing designated services) to provide reports to AUSTRAC on certain transactions.[55] Section 122 limits what may be done with that information.

Subsection 122(2) of the AML/CTF Act provides that an ‘entrusted investigating official’ commits an offence (punishable by up to two years imprisonment) if he or she discloses information obtained under section 49 of the Act to another person. An entrusted investigating official includes a person who is or was a taxation officer, an AFP member, a customs officer, an examiner or member of staff of the ACC, the AFP Commissioner, CEO of the ACC, Commissioner of Taxation, Comptroller of Customs or the Integrity Commissioner.[56] Subsection 122(3) sets out various exceptions to the offence.

Item 4 would insert an additional exception into subsection 122(3) to allow such information to be disclosed for the purposes of, or in connection with, the performance of the duties of the entrusted investigating official, other than the Commissioner of Taxation or a taxation officer. This would include use of the information in investigations, such as in an application for a warrant.[57]

Schedule 4 was supported by the Uniting Church and the LCA.[58] The LCA suggested a sunset clause should apply to the power to prescribe additional international bodies as foreign law enforcement agencies by regulation.[59]

Schedule 5: AusCheck information

The AusCheck Act provides the legislative basis for AusCheck, which coordinates criminal and national security background checking services for the purposes of the Aviation Security Identification Card, Maritime Security Identification Card and National Health Security schemes.[60]

AusCheck collects, uses and discloses information for purposes relating to background checking for the above schemes. Section 14 of the AusCheck Act authorises and sets parameters around the retention and subsequent use and disclosure of ‘Auscheck scheme personal information’. This is personal information, within the meaning of the Privacy Act 1988, that is obtained under the AusCheck scheme or that relates to administration of the scheme.[61] It may include, for example, ‘criminal history information, matters relevant to a security assessment under the Australian Security Intelligence Organisation Act 1979 and information relating to an individual’s citizenship status, residency status and entitlement to work in Australia’.[62] Paragraph 14(2)(b)(iii) provides that AusCheck scheme personal information (other than identity verification information) may be used or disclosed for the purposes of:

 (iii) the collection, correlation, analysis or dissemination of criminal intelligence or security intelligence by the Commonwealth, or by a Commonwealth authority that has functions relating to law enforcement or national security, for purposes relating to law enforcement or national security;

Item 3 would repeal that paragraph and replace it with proposed paragraphs 14(2)(b)(iii) and (iiia). This would allow use or disclosure for the purposes of the performance of functions relating to law enforcement or national security by the Commonwealth or a Commonwealth authority, or a State or Territory or a State or Territory authority. These amendments would expand both:

•        the purposes for which information may be shared (it would no longer be restricted to collection, correlation, analysis and dissemination of intelligence) and

•        the agencies with which it may be shared (to include state and territory agencies, and agencies ‘not traditionally considered to be a law enforcement agency but may require access to the information to respond to national security or crime threats’[63]).

Allowing information to be shared directly with state and territory agencies in the same way as Commonwealth agencies appears reasonable (particularly as the Explanatory Memorandum appears to suggest it is already being shared in some circumstances, just not directly[64]). However, neither ‘law enforcement’ nor ‘national security’ are defined in the AusCheck Act. Accordingly, ‘the performance of functions relating to law enforcement or national security’ is a very broad description of purpose, and the sorts of things it may be considered to capture are likely to change over time. Parliament may wish to consider whether it would be preferable to have clearer limits in place either on the agencies with which information may be shared or the purposes for which it may be shared. Examples that could inform such consideration include the definition of ‘criminal law-enforcement agency’ in the Telecommunications (Interception and Access) Act 1979, which lists specific agencies and allows others to be declared by legislative instrument, and the definition of ‘security’ in the Australian Security Intelligence Organisation Act 1979.[65]

The Explanatory Memorandum points to a number of safeguards that will continue to apply to disclosure of personal information under the AusCheck Act, including offences for unlawful disclosure, guidelines issued under regulations, and memoranda of understanding.[66] The Scrutiny of Bills Committee sought the Minister’s advice on whether safeguards could be further improved.[67]

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© Commonwealth of Australia

Creative Commons

With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.

In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.

To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.

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[1].              Proceeds of Crime Act 2002 (PoC Act); Criminal Code Act 1995 (Criminal Code); Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act); AusCheck Act 2007; all accessed 11 December 2015.

[2].              M Keenan, ‘Second reading speech: Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2015’, House of Representatives, Debates, 26 November 2015, pp. 13,826–29, accessed 29 January 2016.

[3].              Senate Legal and Constitutional Affairs Legislation Committee, ‘Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2015’, Australian Parliament website, accessed 11 December 2015.

[4].              Senate Standing Committee for the Scrutiny of Bills (Scrutiny of Bills Committee), Alert digest, 14, 2015, The Senate, 2 December 2015, pp. 3–6, accessed 11 December 2015.

[5].              Ibid., p. 4.

[6].              D Feeney, ‘Second reading speech: Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2015’, House of Representatives, Debates, 2 December 2015, pp. 14553–59; S Jones, ‘Second reading speech: Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2015’, House of Representatives, Debates, 2 December 2015, pp. 14562–65; both accessed 29 January 2016.

[7].              Australian Human Rights Commission (AHRC), Submission to Senate Legal and Constitutional Affairs Legislation Committee, Inquiry into the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2015, 6 January 2016; Law Council of Australia (LCA), Submission to Senate Legal and Constitutional Affairs Legislation Committee, Inquiry into the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2015, 7 January 2016, pp. 5–9; Victorian Bar and Criminal Bar Association and Families, Submission to Senate Legal and Constitutional Affairs Legislation Committee, Inquiry into the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2015, 20 January 2016; Friends for Drug Law Reform (ACT), Submission to Senate Legal and Constitutional Affairs Legislation Committee, Inquiry into the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2015, 12 January 2016; all accessed 28 January 2016.

[8].              LCA, op. cit., pp. 5–6.

[9].              AHRC, op. cit.; Victorian Bar and Criminal Bar Association and Families, op. cit., pp. 4–5; Friends for Drug Law Reform (ACT), op. cit., pp. 3–6.

[10].              AHRC, op. cit., p. 5.

[11].              Justice and International Mission Unit, Uniting Church in Australia, Synod of Victoria and Tasmania (Uniting Church), Submission to Senate Legal and Constitutional Affairs Legislation Committee, Inquiry into the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2015, 8 January 2016, p. 2, accessed 28 January 2016.

[12].              LCA, op. cit., pp. 10–11; Johnson Winter & Slattery Lawyers, Submission to Senate Legal and Constitutional Affairs Legislation Committee, Inquiry into the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2015, 8 January 2016, accessed 13 January 2016.

[13].              Uniting Church, op. cit., pp. 6–9.

[14].              J Thomas, ‘Bribery, false accounting and corruption in Government’s crosshairs as anti-corruption laws proposed’, ABC News, (online edition), 22 December 2015, accessed 13 January 2016.

[15].              Explanatory Memorandum, Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2015, p. 7, accessed 11 December 2015.

[16].              Ibid.

[17].              The Statement of Compatibility with Human Rights can be found at page 9 of the Explanatory Memorandum to the Bill.

[18].              The Parliamentary Joint Committee on Human Rights (PJCHR) deferred consideration of the Bill: PJCHR, Thirty-second report of the 44th Parliament, 1 December 2015, accessed 11 December 2015.

[19].              PoC Act, sections 29–31 and 73–76.

[20].              Ibid., subsection 29(3).

[21].              Explanatory Memorandum, p. 10.

[22].              Commissioner of the Australian Federal Police v Zhao 89 ALJR 331, [2015] HCA 5 (Zhao); Commissioner of the Australian Federal Police v Zhang & Anor (Ruling No 1) [2015] VSC 390 (Zhang); both accessed 1 February 2016.

[23].              Zhang, op. cit., [33].

[24].              Explanatory Memorandum, p. 12.

[25].              Zhao, op. cit., [49].

[26].              Explanatory Memorandum, pp. 11-12.

[27].              AHRC, op. cit.; Victorian Bar and Criminal Bar Association and Families, op. cit., pp. 4–5; Friends for Drug Law Reform (ACT), op. cit., pp. 3–6.

[28].              Proposed section 319A.

[29].              Explanatory Memorandum, p. 17.

[30].              Convention on Combating Bribery of Foreign Officials in International Business Transactions done in Paris on 17 December 1997 [1999] ATS 21 (entered into force for Australia 17 December 1999), accessed 11 December 2015.

[31].              OECD Working Group on Bribery in International Business Transactions, Phase 3 report on implementing the OECD Anti-Bribery Convention in Australia, OECD, October 2012, pp. 15–17. For a brief overview of the report, see C Barker, ‘Australia’s efforts against foreign bribery—an update’, FlagPost, Parliamentary Library blog, 1 November 2012. The Australian Government has since provided a progress report: OECD Working Group on Bribery in International Business Transactions, Australia: follow-up to the phase 3 report & recommendations, OECD, April 2015. All accessed 11 December 2015.

[32].              Phase 3 report, op. cit., pp.15–17. In relation to Commonwealth law, Australia relied on sections 286 (Obligation to keep records) and 1307 (Falsification of books) of the Corporations Act 2001 (accessed 11 December 2015).

[33].              Ibid., pp. 15–17, 49 (Recommendation 4(a)).

[34].              Attorney-General’s Department (AGD), Guide to framing Commonwealth offences, infringements notices and enforcement powers, AGD, Canberra, September 2011, p. 23, accessed 11 December 2015. Applying absolute liability to a physical element of an offence means there are no fault elements to be proven for that physical element and the defence of mistake of fact is not available: Criminal Code, section 6.2.

[35].              Crimes Act 1914, section 4AA, accessed 11 December 2015.

[36].              Proposed subsections 490.1(4) and 490.2(3).

[37].              Proposed subsection 490.1(5) and proposed sections 490.3 and 490.4.

[38].              Proposed subsection 490.2(4) and proposed sections 490.3 and 490.4

[39].              These terms are defined in Division 70 of the Criminal Code for the purposes of the foreign bribery offences, but those definitions will not apply to the proposed offences in Schedule 2. ‘Benefit’ is defined broadly as any advantage and not limited to property; the definition of when a benefit is ‘not legitimately due’ is specific to the context of foreign bribery and not readily applicable to the proposed offences: Criminal Code, section 70.1 and subsection 70.2(2).

[40].              LCA, op. cit., pp. 10–11; Johnson Winter & Slattery Lawyers, op. cit. (quote taken from Johnson Winter & Slattery Lawyers).

[41].              Johnson Winter & Slattery Lawyers, op. cit.

[42].              Uniting Church, op. cit., p. 9.

[43].              Ibid.

[44].              LCA, op. cit., pp. 10–11; Johnson Winter & Slattery Lawyers, op. cit.

[45].              See further Attorney-General’s Department, A guide to framing Commonwealth offences, infringement notices and enforcement powers, Australian Government, Canberra, updated September 2011, pp. 37–39, accessed 13 January 2016.

[46].              Criminal Code, subsections 70.2(4) and (5).

[47].              Explanatory Memorandum, p. 32.

[48].              Criminal Code, section 301.1.

[49].              Ibid., section 301.4.

[50].              R v Poulakis (No. 3) [2015] ACTSC 191 (17 July 2015), accessed 11 December 2015.

[51].              Ibid.; C Knaus, ‘Drug importation trial collapses, legal flaws mean designed drug is not “border controlled”’, The Canberra Times (online edition), 17 July 2015, accessed 11 December 2015.

[52].                             Beqiri v The Queen [2013] VSCA 39 (4 March 2013), accessed 11 December 2015.

[53].              Australian Transaction Reports and Analysis Centre (AUSTRAC), ‘About us’, AUSTRAC website, accessed 11 December 2015.

[54].               Scrutiny of Bills Committee, Alert digest, 14, op. cit., pp. 4–5.

[55].              Section 41 concerns reports of suspicious matters, section 43 concerns reports of threshold transactions and section 45 concerns reports of international funds transfer instructions.

[56].              AML/CTF Act, section 5 (‘investigating officer’) and subsection 122(1).

[57].              Explanatory Memorandum, p. 45.

[58].              LCA, op. cit., pp. 11–12; Uniting Church, op. cit., p. 9.

[59].              LCA, op. cit., pp. 11–12.

[60].                             AGD, ‘AusCheck’, AGD website, accessed 11 December 2015.

[61].                             AusCheck Act, section 4.

[62].              Explanatory Memorandum, pp 15–16.

[63].                             Ibid., p. 48.

[64].              Ibid.

[65].              Telecommunications (Interception and Access) Act 1979 (TIA Act), section 110A; Australian Security Intelligence Organisation Act 1979, section 4; both accessed 1 February 2016. Note also the distinction drawn in the TIA Act between a ‘criminal law-enforcement agency’ and an ‘enforcement agency’ (sections 110A and 176A).

[66].              Ibid., pp. 6–7.

[67].              Scrutiny of Bills Committee, Alert digest, 14, op. cit., pp. 5–6.