Navigation: Previous Page | Contents | Next Page
Serious and organised crime, motivated by greed, power and
money, has serious impacts, threatening the economy, national security and the
wellbeing of Australians. The financial cost to the community is conservatively
estimated to be around $15 billion a year.
In December 2008, the then Prime Minister Kevin Rudd in his National Security
Statement noted the transnational nature of serious and organised crime and its
relevance to national security.
The importance of serious and organised crime had already
been recognised internationally, with a 1997
Interpol resolution recommending that member countries consider adopting
effective laws, that give law enforcement officials the powers they need to
combat money laundering both domestically and internationally, including reversing the burden of proof
(using the concept of reverse onus) in respect of the confiscation of alleged
proceeds of crime.
The idea of confiscation of unexplained wealth in
international agreements can be traced back as far as the United Nations
Convention against Illicit Traffic in Narcotic Drugs and Psychotropic
Substances (1988). The Convention stated that 'each party consider ensuring
that the onus of proof be reversed regarding the lawful origin of alleged
proceeds or other property liable to confiscation.'
Similar recommendations appear in the United Nations Convention Against
Transnational Organised Crime (2000) and the United Nations Convention Against
In 2003, the Financial Action Task Force on Money Laundering recommended that
countries adopt measures laid out in the conventions above, including
confiscation without conviction and requiring persons to demonstrate the lawful
origins of property.
Several nations have introduced legislation in line with
these agreements. The proceeds of crime legislation introduced by Ireland in
1996 has been particularly effective. Many other countries have adopted
proceeds of crime type laws and arrangements, including the United States, the
United Kingdom, and Italy.
Proceeds of crime laws include civil based unexplained
wealth provisions in some cases, which can be used to target serious and
organised crime bosses who arrange their affairs so that they can enjoy the
proceeds of crime, without committing the actual crimes themselves. In
Australia, both Western Australia and the Northern Territory have had such laws
for around a decade and other jurisdictions have followed later.
The committee has previously inquired into legislative
arrangements to address serious and organised crime. The then Chair of the
committee, Senator Steve Hutchins, noted:
One of the things that came through time and time again from
law enforcement agencies throughout the world was that they found that the best
method to deal with serious and organised crime was to target the asset rather
than the person.
The inquiry report was
tabled in August 2009, and the committee recommended the introduction of
unexplained wealth provisions in Commonwealth legislation, noting that:
[I]n the view of the committee unexplained wealth laws appear
to offer significant benefits over other legislative means of combating serious
and organised crime including:
crime from occurring by ensuring profits cannot be reinvested in criminal
activity, as opposed to simply reacting to serious and organised crime;
the profit motive of organised criminal groups; and
that those benefiting most from organised crime – i.e. those gaining profits – are the ones captured by the law, which they are often not under ordinary
criminal laws, and proceeds of crime laws which require a link to a predicate
At the Commonwealth level, proceeds of crime can be
addressed through the Proceeds of Crime Act 2002 (PoCA). Unexplained
wealth provisions were added to the PoCA and enacted through the Crimes
Legislation Amendment (Serious and Organised Crime) Bill 2010, in February
2010. The Attorney-General, the Hon Robert McClelland MP, articulated the
purpose of the Bill during its passage through Parliament:
It is important that we put strong laws in place to combat
organised crime. We need to target the profits of crime and remove the
incentive for criminals to engage in organised criminal activity. We also need
to empower our law enforcement agencies to defeat the sophisticated methods
used by those involved in organised criminal activity to avoid detection, often
with the assistance of highly skilled professionals. Appropriate access to
covert investigative tools, such as controlled operations, assumed identities
and telecommunications interception, will assist police to investigate and
disrupt criminal activities. It is also vital to ensure offences extend to
people who commit crimes as part of a group...
New unexplained wealth provisions will be a key addition to
the Commonwealth criminal asset confiscation regime.
These provisions will target people who derive profit from crime and
whose wealth exceeds the value of their lawful earnings. In many cases, senior organised crime figures who organise and
derive profit from crime are not linked directly to the commission of the
offence. They may seek to distance themselves from the offence to avoid
prosecution or confiscation action. Unlike
existing confiscation orders, unexplained wealth orders will not require proof
of a link to the commission of a specific offence and in that sense they
represent a quantum leap in terms of law enforcement strategy.
Unfortunately however, the unexplained wealth aspects of the
PoCA have not worked as intended by the committee, or in the legislation as
introduced to the Parliament. To date, no cases have been able to be brought
before the courts under the Commonwealth legislation due to a range of
limitations as noted by the Attorney-General's Department in its submission:
No proceedings have been brought under the Proceeds of Crime
Act seeking an unexplained wealth order, although the AFP are investigating two
cases. Accordingly, there has not yet been an opportunity to test the
effectiveness of the provisions in practice.
The inclusion within the Commonwealth unexplained wealth
provisions of links to offences within Commonwealth constitutional power places
some limitations on the operation of those provisions as compared to similar
State and Territory regimes.
The ability of a person to dispose of property to meet legal
costs may weaken the effectiveness of the provisions by allowing the wealth
which law enforcement agencies suspect to have been unlawfully acquired to be
used to contest the proceedings. By contrast, those who are subject to other
proceeds of crime orders have access to legal aid and the legal aid costs are
met from the value of confiscated property.
A court’s power to make costs orders in relation to
unexplained wealth proceedings is more onerous than is the case for other types
of orders under the Proceeds of Crime Act. This may create a disincentive to
seek unexplained wealth orders.
In addition, a court has general discretion as to whether to
make an unexplained wealth order, even when it is satisfied that the relevant
criteria have been met. This is in contrast to other types of proceeds of crime
order, which a court must make if it is satisfied that the criteria have been
Certainly the fact that there have been no cases suggests
that there is something wrong, but whether there is something wrong with the
act or whether there is something wrong with the way in which it is being
approached, at this stage we cannot say. It is disappointing that there have not
been the cases yet.
committee welcomes the changes in the recently passed Crimes
Legislation Amendment Bill (No. 2) 2011, which will allow the AFP-led
Criminal Assets Confiscation Taskforce to take responsibility for litigating
all PoCA actions relevant to investigations undertaken by the Taskforce, and
all non-conviction based PoCA matters (including unexplained wealth matters)
referred by other agencies.
In this report, the committee makes further recommendations
that will significantly enhance the effectiveness of the Commonwealth
unexplained wealth provisions.
In particular, the committee has recommended major reform of
the way unexplained wealth is dealt with in Australia as part of a
harmonisation of Commonwealth, state and territory laws. While complementing
the national strategic approach to organised crime, harmonisation may also
allow the Commonwealth to make use of unexplained wealth provisions that are
not linked to a predicate offence. This approach has been found to be the most
effective, both in Australia and abroad. Harmonisation would help to eliminate
gaps that can be exploited between jurisdictions.
In addition, the committee has recommended a series of
technical amendments that would ensure that unexplained wealth proceedings are
efficient and fair, correcting deficiencies that were identified during the
course of this inquiry.
Unexplained wealth legislation represents a new form of law
enforcement. Where traditional policing has focussed on securing prosecutions,
unexplained wealth provisions contribute to a growing body of measures aimed at
prevention and disruption. In particular, unexplained wealth provisions fill an
existing gap which has been exploited, where the heads of criminal networks
remain insulated from the commission of offences, enjoying their ill-gotten
Effective unexplained wealth legislation can take the profit
out of criminal enterprise, undermining the business model of serious and
organised criminal networks and protecting the community from the damage caused
by these individuals and organisations. I commend this report and its
recommendations, and urge the government to ensure that crime doesn't pay.
Navigation: Previous Page | Contents | Next Page