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Issues with Commonwealth unexplained wealth provisions
This chapter examines a number of issues and suggested enhancements
relating to unexplained wealth provisions in the Proceeds of Crime Act 2002
(PoCA). Many of these issues were included in the committee's discussion paper
in order to attract further evidence. The issues and suggested enhancements
have been grouped under four main headings:
- ensuring that unexplained wealth laws are used against serious
and organised crime networks and their leadership;
- Constitutional requirements and the link to an offence;
- enhancing unexplained wealth investigations; and
improving the effectiveness and efficiency of unexplained wealth
Targeting the beneficiaries of serious and organised crime
While unexplained wealth laws have the potential to be highly effective
against serious and organised crime, they may also represent a significant
intrusion into the affairs of citizens. As such, the committee recognises that
a careful balance must be achieved in delivering workable laws that are
acceptable to the public and appropriate to Australia's democratic system.
In order to achieve this fundamental balance, the committee considered
means by which unexplained wealth provisions would remain targeted at the
beneficiaries of serious and organised crime: specifically, senior members of
criminal networks who receive a large share of criminal proceeds while
distancing themselves from the actual commission of criminal acts.
The committee received evidence noting the potential effectiveness of
unexplained wealth in its previous inquiry into legislative arrangements to
outlaw serious and organised crime groups.
During the current inquiry, the committee received further evidence supporting
these views. For example, Western Australia Police informed the committee that
the establishment of a nationally consistent unexplained wealth regime would
enable them to penetrate the high or upper echelons of organised crime.
As Assistant Commissioner Nick Anticich, Western Australia Police noted:
It will send a clear message to those involved in organised
crime at the upper levels that they are not untouchable and that, in fact, law
enforcement has the capacity to engage them.
While there was generally agreement amongst law enforcement agencies
that unexplained wealth laws would be used against high level organised crime
figures, organisations including the Law Council of Australia (Law Council) and
Civil Liberties Australia (CLA) expressed concern about the potential for
The Law Council objected to the reversal of the onus of proof within the
unexplained wealth regimes, arguing that it ran contrary to established common
law principles and runs counter to the presumption of innocence, a point
discussed further in Chapter 2.
The Law Council submitted that unexplained wealth provisions remove the
safeguards that have evolved to protect innocent parties form the wrongful
forfeiture of their property, providing some possible scenarios were this may
As the Law Council has stated in previous submissions, the
reverse onus means that the respondent may lose legitimately obtained assets if
he or she cannot show that they have been lawfully obtained. The respondent may
be unable to show that assets were lawfully obtained because of a lack of capacity
to explain how they acquired particular assets due to age, cultural and
linguistic background or physical or mental incapacity, or a lack of skills in record
Dr David Neal SC, Law Council, was concerned about the discretionary use
of far-reaching powers by law enforcement agencies, particularly if such
measures were delinked from the need to prove an offence, stating:
Every day they do make decisions but when we see them in the
courts—and there is a particularly bad example going on in Victoria at the
moment—it turns out they are making mistakes. It is a quality control issue.
You said earlier that these will be persons of interest because we know that
they are Mr Bigs. If it is in fact known that these are the people and then
there can be a connection made between their criminal activity and this wealth,
I feel a lot more comfortable with that because there is a good deal more
precision. The evil we are talking about here is simply that they have got
wealth that they cannot explain. If it is that in connection with criminal
activity then it makes more sense and it is less prone to error.
CLA gave in principle support to unexplained wealth legislation, on the
grounds that serious and organised crime itself significantly harmed civil
liberties. As Mr Bill Rowlings, CLA, observed in most cases, criminal profit is
derived from removing or interfering with the civil liberties of normal
Nevertheless, CLA was particularly concerned about the potential for individuals
who should not be considered serious or organised criminals to be targeted by
such laws. Mr Rowlings used the example of a proceeds of crime case from the
Northern Territory where a man was caught growing 20 cannabis plants in a
shipping container and pursued under proceeds of crime legislation.
To ensure that unexplained wealth provisions were not used in such a
manner, one of CLA's recommendations was that they be limited to addressing
serious and organised crime:
[W]hatever legislation or amendments come out of this
process, they must address 'serious and organised crime'—the Mr Bigs—and not be
able to be used to target the Mr and Mrs Littles of Australia. CLA believes
judges must be able to exercise discretion based on the seriousness of the
crime. Any mandatory provisions as to how judges will act should be removed, we
The committee considers that unexplained wealth laws represent a
powerful and intrusive tool, and are most appropriately targeted towards
serious and organised crime. The committee was informed by the AFP that, in
practice, this would already occur as resource constraints were likely to
ensure that Commonwealth unexplained wealth provisions would only be used in
As Commander McCartney observed:
I think the issue of the AFP utilising this legislation on
the wrong people has been raised before. When I say the wrong people, I mean
mothers and fathers who have cash under the bed. I think it is important to say
that we have finite resources to deal with the serious and organised crime
problem in Australia at the minute. To be quite frank, we are not going to
waste the resources on those cases; we want to direct our resources to the
serious and organised crime targets.
While the committee accepts that, in practice, resource constraints mean
that unexplained wealth proceedings are only likely to be commenced in serious
cases, it is not comfortable basing significant public policy on this
assurance. The committee is of the view that serious and intrusive law
enforcement provisions should be accompanied by legislative, rather than
A more compelling argument, therefore, is that the AFP (and other
officers of the Criminal Assets Confiscation Taskforce) is already subject to a
suite of significant oversight and accountability mechanisms which act as
checks and balances on the use of all law enforcement tools, including
unexplained wealth provisions. These include:
- the AFP Core Values and Code of Conduct and associated
- statutory provisions for a framework for the internal management
of AFP professional conduct issues;
in cases of PoCA proceedings, scrutiny of the court; and
- oversight by the Commonwealth Ombudsman, Law Enforcement
Integrity Commissioner and Parliamentary committees.
The AFP considered these to be adequate controls to ensure unexplained
wealth provisions were used appropriately.
Nevertheless, the committee was cognisant of the need to consider
mechanisms by which the public might be assured that effective unexplained
wealth laws were accompanied by appropriate safeguards. Three particular
methods, intended to ensure that unexplained wealth provisions were targeted
against serious and organised criminal enterprise, were canvassed by the
- amending the objects of unexplained wealth provisions;
- establishing a monetary threshold for unexplained wealth amounts;
- separating unexplained wealth provisions from PoCA in favour of
Further defining the objects of
unexplained wealth provisions in PoCA
The Proceeds of Crime 2002 Act includes eight principal objects,
including depriving persons of the proceeds of or benefits derived from
offences, and preventing the reinvestment of these funds into further criminal
activity. It does not, however, contain a clear statement of what the committee
has nominated as a primary object: to undermine the business model of serious
and organised crime through eliminating criminal profit.
The ACC recommended providing a statement of clear and unambiguous
objectives in the PoCA to remove doubt regarding Parliament's intention as to
the operation of the unexplained wealth provisions and to provide clarity as to
the basis on which judicial discretion is exercised, in line with those
The Law Council disagreed, submitting that the inclusion of an
additional objects clause was unnecessary given existing objects and the
existence of clear statements of legislative intent in the explanatory memorandum,
second reading speech and parliamentary debate.
The Attorney-General's Department (AGD) warned that a specific objective
relating to serious and organised crime may unintentionally limit the use of
unexplained wealth provisions, stating:
It is important that the objectives are framed broadly in a
way that reflects that the unexplained wealth provisions are not confined only
to serious and organised crime, and that does not restrict the circumstances in
which the laws may need to be used in the future. For example, narrowly
defining ‘serious and organised crime’ may make it more difficult for
unexplained wealth provisions to be used in relation to emerging crime threats
that may not always be linked to criminal groups, such as cyber crime or large scale
fraud. Additionally, linking the application of unexplained wealth provisions
to serious and organised crime could suggest that evidence of specific serious
and organised crime offences is required.
While noting comments by the Law Council and the AGD, the committee
considers that amending the objectives of PoCA is desirable. In particular, the
committee is of the view that a new object stating that unexplained wealth
provisions are intended to be used to undermine the profitability of criminal
enterprise should be included. The committee recognises that such a statement
should be drafted so as not to unduly limit the use of unexplained wealth
3.22 The committee recommends that the objects of the Proceeds of Crime
Act 2002 be amended so as to include a statement about undermining the profitability
of criminal enterprise, including but not limited to serious and organised
crime. Such a statement should be drafted in such a way to avoid causing
unnecessary complication of unexplained wealth proceedings.
Establishment of a threshold below
which unexplained wealth matters cannot proceed
A related suggestion put to the committee was the focussing of
unexplained wealth provisions on serious and organised crime by means of
threshold amounts relating to unexplained wealth, below which unexplained
wealth measures could not proceed. For example the Proceeds of Crime Act
1996 (Ireland) set a threshold of 10,000 pounds initially,
which has later been changed to 13,000 euros.
In the committee's discussion paper on unexplained wealth, issued as
part of this inquiry, the committee asked for comment on the introduction of a
threshold amount, using the amount in the Irish legislation for comparison.
The Queensland Law Society (QLS) expressed support for the proposal, submitting
that it could help to ensure that applications are limited and focus on the
most serious instances of unexplained wealth. QLS was of the opinion that, for
example, subjecting drug traffickers, who traffick small amounts of cannabis,
to unexplained wealth orders would be a wholly disproportionate reaction. QLS
warned that perceived abuse of the provisions risked significant public
AGD noted that the establishment of a threshold could further complicate
proceedings as it would require a greater emphasis on law enforcement agencies
having a comprehensive understanding of a person’s financial affairs prior to proceedings
being commenced. Additionally, the legislation would have to include provisions
to deal with situations in which a matter commences in relation to an amount of
wealth that is above the threshold, but that amount is subsequently reduced so
that the unexplained portion of a person’s wealth falls below the threshold.
The AFP was similarly concerned that a threshold provision could cause further
investigatory burden, for example leading to a greater emphasis on litigating
the value of property rather than leaving the focus on the respondent
establishing that his or her property was not unlawfully obtained.
As Commander McCartney noted:
Our resources are finite and we are not going to focus on
these sorts of targets. In the cases that we do we are talking about millions
of dollars, not thousands of dollars. If the committee and the parliament saw
the need to bring in a threshold, then one issue we have been discussing is the
link to 'may' versus 'must' in the discretion of the court. An option we have
been considering, if the value of the property is less than $25,000, is that
the court continues to have this discretion that it may issue a restraining
order in relation to unexplained wealth.
Furthermore, the AFP argued that if a threshold were to be introduced,
it should be clear that the threshold applied to total accumulated wealth
rather than to the individual value of each item of property.
The committee understands that there are arguments for and against the
introduction of a monetary threshold to limit the applicability of unexplained
wealth provisions. On balance, however, it is the committee's view that the
introduction of a threshold would provide increased public assurance that
unexplained wealth provisions are intended for use against serious and
organised criminal targets.
The committee discusses the issue of the discretion given to the courts
to make an unexplained wealth order later in this chapter. The committee supports
the introduction of a monetary threshold to limit the use of this court
discretion, so that in unexplained wealth cases above $100 000, judicial
discretion is removed. Recommendations 10 and 11 later in this chapter give
effect to this intention.
Separating unexplained wealth
provisions from PoCA and placing them in stand-alone legislation
A further proposal aimed at better targeting the use of unexplained
wealth provisions at serious and organised criminal figures was the separation
of the measures from PoCA, in favour of a stand-alone unexplained wealth act. The
committee considered whether a purpose-built act could further clarify the
unique nature of unexplained wealth provisions and how they were intended to be
used. For example, South Australia created a separate act for its unexplained
wealth provisions, although it is the only jurisdiction to have done so.
There was little support, however, for creating separate Commonwealth unexplained
wealth legislation. The Attorney-General's Department informed the committee
that it was not clear what the benefit of placing unexplained wealth provisions
in stand-alone legislation would bring, while there were a number of benefits
to keeping unexplained wealth provisions within PoCA.
Firstly, evidence for proceedings under the PoCA framework can be
obtained from a broad range of sources due to connections with existing
legislation, including information held by other domestic and international law
enforcement agencies. Secondly, the PoCA contains a number of provisions which
make it relatively simple to change between orders under the PoCA during the
course of proceedings. Finally, AGD noted that unexplained wealth orders share
a common goal with other proceeds of crime orders —to confiscate wealth that
has been, or is suspected to be, unlawfully obtained.
The Law Council also argued that the creation of stand-alone unexplained
wealth legislation was not supported by relevant overseas practice and did not
support the proposal.
Constitutional requirements and the link to an offence
In order for the Commonwealth to have the Constitutional authority to
legislate for a particular matter, there must be a link to a head of power
under Section 51 of the Constitution.
To ensure that unexplained wealth orders have a link to a constitutional
head of power, the making of unexplained wealth restraining orders is
contingent on a court being satisfied either that there are reasonable grounds
to suspect that the person committed a Commonwealth offence, a foreign
indictable offence or a State offence with a federal aspect, or that a part of
a person’s wealth was derived from such an offence. In their submission to the
inquiry, the AFP explained how this Constitutional requirement related to
unexplained wealth proceedings:
Firstly, depending on the type of unexplained wealth order
that is sought, there must be a link between the person and a criminal offence,
or a link between the wealth and a criminal offence. Secondly, the criminal
offence must be a Commonwealth offence, foreign indictable offence or State
offence with a federal aspect (which includes all Territory offences). The
jurisdictional nexus requirements create two key challenges for unexplained
The first challenge is that the need to demonstrate a link
between the person/wealth and a crime may effectively impose an onus of having
to make out a predicate offence (that is, the crime from which money was
originally derived) before unexplained wealth action can be taken. This could
be particularly problematic where there is a disconnect between the illicit
wealth and the criminal activity from which that wealth has been derived. This
is often the case in money laundering offences, in which the facilitators
involved may have no knowledge or involvement in the predicate offence (such as
The second challenge is that the need to demonstrate a link
between the person/wealth and a crime within the Commonwealth’s legislative
power means that wealth derived from State offences that do not have a federal
aspect (such as murder, theft of property etc) will not be captured by the
Similarly, in the final stage of an unexplained wealth proceeding, an
unexplained wealth order can only be made where a court is not satisfied that
the whole of a person’s wealth, or a part of their wealth, was not derived from
an offence linked to a Commonwealth head of power.
The inclusion within the Commonwealth unexplained wealth provisions of links to
offences within Commonwealth constitutional power is a key difference compared
to the operation of state and territory unexplained wealth regimes.
The need to prove a link to such an offence limits one of the key aims
of unexplained wealth provisions, discussed in Chapter 2, which is to target
the assets of senior members of organised crime groups, who may distance
themselves from the actual commission of criminal offences, yet receive the
subsequent profits. As the AFP submitted:
The AFP accepts that unexplained wealth provisions are
currently expressed to operate to the fullest extent constitutionally possible.
Nevertheless, the AFP notes that the jurisdictional nexus requirements
described above operate as an inherent limitation on Commonwealth unexplained
wealth provisions. That is, if the unexplained wealth is not linked to an
offence that is an offence within Commonwealth power, the unexplained wealth
proceeding will fail.
For example, the AFP highlighted the increased prevalence of
'professional' money-laundering syndicates. As Commander Ian McCartney
The challenge for us in terms of the money-laundering
legislation and the proceeds of crime legislation is the ability to show a
nexus between what they are doing and their knowledge of the predicate offence.
The problem that exists is that they will always be removed from that predicate
offence; they will know it is bad but they will not know what particular
criminal activity the money related to. This is a significant problem.
The Northern Territory Police reported that one strength of unexplained
wealth laws that did not require a predicate offence, was the ability to focus
on particular criminal assets rather than just the individual. Northern
Territory Police noted that the pursuit of third parties and receivers of crime
derived assets had been effective under the Northern Territory laws,
undermining asset dissipation strategies adopted by criminals.
In their submission to the inquiry, the AFP further argued:
If we are serious about providing law enforcement with an
effective tool to target those in the upper echelons of organised crime groups – who profit from crime at an arm’s length – then action needs to be taken to
address the gap in the Commonwealth’s unexplained wealth regime.
In order to improve the operation of unexplained wealth provisions in
light of constitutional requirements, there were several suggestions. These
include the use of money-laundering provisions, international treaties and seeking
a referral of powers from the states.
Use of Section 400.9 of the
Section 400.9 of the Commonwealth Criminal Code creates the offence of
dealing with money or property that is reasonably suspected to be the proceeds
This offence may therefore be of use in cases of unexplained wealth, if it can
be proved that there was reasonable suspicion that the wealth was the proceeds
of crime. The AFP noted that this could be used to target money launderers,
although not without its own difficulties:
Particularly with these issues where they have no knowledge
of the predicate offence, we have to rely on section 400.9 of the Commonwealth
money laundering legislation, when in fact you have to show reasonable grounds
to suspect it could be linked into a criminal offence.
The CDPP agreed that because section 400.9 does not make specific
reference to Commonwealth offences, but has other constitutional foundations,
it may be a provision that could be used in certain circumstances.
Use of external affairs powers
Section 51 of the Constitution grants the Commonwealth legislative
powers in matters relating to external affairs.
The ACC noted that this could possibly provide a head of power by linking
unexplained wealth provisions to international treaty obligations.
For example, the committee heard that the offence created in section 400.9, discussed
above, is supported in its
entirety through the external affairs power, by reference to the Council of
Europe Convention on Laundering, Search, Seizure and Confiscation of the
Proceeds of Crime, to which Australia is a party.
The unique nature of unexplained wealth provisions, however, may not be
supported by any relevant treaties. The Attorney-General’s Department
previously advised the Senate Legal and Constitutional Affairs Legislation
Committee that existing international conventions relating to organised crime, corruption
and money laundering would not support a comprehensive unexplained wealth
AGD informed the committee that it remains unaware of any international
treaties established since that time that could support reliance in the
external affairs power in relation to this issue.
Referral of powers from the states
The committee heard that a far more effective way to establish an
unexplained wealth regime that was not linked to a predicate offence would be
to seek a referral of power in this area from the states, as the states are
subject to different Constitutional requirements. Subsection 51(xxxvii) grants
the Commonwealth legislative power to make laws with respect to:
matters referred to the Parliament of the Commonwealth by the
Parliament or Parliaments of any State or States, but so that the law shall
extend only to States by whose Parliaments the matter is referred, or which
afterwards adopt the law.
In addition to providing a mechanism by which the Commonwealth could
create a comprehensive unexplained wealth regime, a referral of powers may also
assist in achieving national consistency in the approach taken to serious and
organised crime and unexplained wealth.
The potential for a referral of powers in discussed further in Chapter 4
which deals with harmonisation of unexplained wealth laws across Australia.
Enhancing unexplained wealth investigations
Unexplained wealth investigations can be complex and time consuming, not
least due to the intricacies of unravelling an individual's personal finances
which may include accounts, equities, real estate, physical assets and
legitimate business interests. Unexplained wealth investigations, which may
commence as an offshoot of a criminal investigation or as the result of
specific intelligence, generally begin as a covert investigation, which at some
stage becomes an overt investigation potentially necessitating freezing or
restraining orders to prevent liquid and other wealth dissipating prior to the
resolution of the investigation.
The committee was informed by Commonwealth law enforcement agencies
that, in practice, the nature of current unexplained wealth provisions
necessitated an overly burdensome investigation, limiting the use of those
The ACC submitted that existing unexplained wealth provisions impose an
excessive burden of proof on law enforcement agencies while allowing too much
flexibility in the application of the proceedings by courts.
Obtaining any unexplained wealth order, including the
preliminary unexplained wealth order, inevitably requires investigators to
build a comprehensive financial picture of all the property a person owns or
has owned, effectively controls or has controlled and their sources of income.
It is usually necessary to investigate the whole of the person's working life.
This means that in many cases it is simply not practicable to embark on proceedings.
As ACC predicted in 2009, the work required to satisfy the
court and do the complex financial analysis to distinguish legitimate from
co-mingled illegitimate funds has meant that other proceeds of crime recovery
options are generally preferred (including traditional proceeds of crime
action, taxation and debt recovery methods).
The committee was provided with a number of suggestions for improving
the ability of law enforcement agencies to successfully conduct investigations
into unexplained wealth, including:
- revising definitions of total wealth within PoCA;
- using ACC coercive powers in unexplained wealth investigations;
- amending search warrant powers in PoCA;
- improving information sharing with the Australian Taxation
- deeming certain types of unexplained wealth to be unlawfully
obtained or treating large amounts of unexplained cash as a criminal commodity;
further developing international and domestic cooperation in this
area through mutual assistance treaties and arrangements.
Definitions of total wealth
The ACC informed the committee that one of the major drawbacks of the
existing unexplained wealth provisions was the requirement for the
investigating agency to conduct a complete analysis of all of a person's
financial circumstances over a long period. While unexplained wealth provisions
are intended to reverse the onus of proof onto the accused, in practice, this
is a very easy onus to discharge, and may require nothing more than a credible
denial on oath.
As Mrs Karen Harfield, ACC, explained:
It is usually necessary to investigate the whole of a
person's working life, and this results in significant resource impediments for
law enforcement to find and analyse this amount of financial documentation
often where the individual themselves is the only person who has access to it.
The ACC referred the committee to a case study taken from New South
Wales, where NSW Police arrested two people at a train station carrying over
$2.5 million in suitcases. The arrests were made under NSW's unexplained
wealth provisions, based on the 'unexplainability' of why somebody would have
that enormous amount of money, yet not have a reasonable explanation as to
where it came from. The money was later forfeited to the NSW Crime Commission.
The ACC noted that under the Commonwealth provisions:
[I]t is unlikely that unexplained wealth proceedings would
have commenced in relation to these people without extensive investigative
research into their whole life earnings and the ability of prosecutors to
demonstrate a direct linkage of the money to a Commonwealth offence.
The CDPP provided further evidence, drawing the committee's attention to
the definitions of wealth within PoCA:
[I]t goes back to the definitions of total wealth and wealth
in, section 179G of the Proceeds of Crime Act. If I can paraphrase that, the
total wealth of a person is the sum of all the values of the property that
constitutes the person's wealth. Wealth is defined to mean property owned by
the person at any time, property that has been under the effective control of
the person at any time and property that the person has disposed of, whether by
sale, gift or otherwise, or consumed at any time.
The committee notes that it may be possible to alter the provisions so
that unexplained wealth orders could apply to the change in a person's wealth
in a specified period, for example, if a person's wealth increased dramatically
within a period of a few years.
The ACC submission indicated that if the provisions were altered in this
way, cases like the following scenario presented in its submission could be
more effectively dealt with:
In June 2010, ACC met with CDPP to brief them on a matter in
which a significant amount of information was held to indicate that a person
had accumulated large amounts of unexplained wealth over several years, with
asset holdings being disproportionate with declared income. Intelligence
indicated the person had been involved in criminal activity, but there was
insufficient evidence to charge, and the person has never been convicted of an
Between January and June 2011, all relevant financial and
banking records were sourced and a detailed financial analysis prepared to
support the unexplained wealth case. This analysis has shown that the person
has unsourced income of approximately $2.7 million. The complexity of the
matter, and the extent of the information required to satisfy the unexplained
wealth provisions, is such that the case requires very careful consideration,
and no decision has yet been made as to whether action will be taken, and if so
whether unexplained wealth is the appropriate course.
The committee notes that revising the definition of total wealth within
the unexplained wealth provisions may be desirable, but that it remains to be
seen how the courts will choose to interpret the existing definition and other
provisions. In principle, the committee considers that the provisions should be
able to be used to effectively address situations where it can be proven that a
large amount of unexplained wealth has been obtained over a specific timeframe.
The committee will therefore remain seized of the matter.
Using ACC coercive powers in
unexplained wealth investigations
The ACC proposed a significant new measure to contribute to unexplained
wealth investigations through the use of its coercive powers to obtain
information about unexplained wealth. The ACC proposal, as outlined in its
submission, would involve an ACC examiner being empowered, in appropriate
circumstances and with existing safeguards, to use the ACC's coercive powers
for the purpose of an unexplained wealth investigation and to order temporary
freezing of assets.
The ACC proposal would work in conjunction with the PoCA measures
currently in existence, and involves four steps.
Firstly, the ACC Board would approve a special investigation in relation
to unexplained wealth, in order to give the ACC authority to use its coercive
powers. This may require amendment of the ACC Act, as a Board determination
currently requires a link to a relevant offence, which may not be present in an
unexplained wealth investigation.
Secondly, the ACC would need to identify possible unexplained wealth.
During the course of an investigation, the ACC or its partner agencies may
obtain intelligence that a person of interest has unexplained wealth that is
potentially subject to Commonwealth unexplained wealth provisions. The ACC
notes that this could be as the result of suspected criminal activity, or could
involve a person who is suspected of benefiting from a life of crime or from
offences committed by others.
The third step would be to apply to an ACC examiner for the use of coercive
powers and a restraining order. Obtaining a restraining order is considered
critical, as once a person of interest is notified of the requirement to
produce documents or attend an examination, they may seek to dissipate their
assets to prevent seizure. An ACC examiner does not currently have the power to
issue an asset restraining order, necessitating amendment of the ACC Act if
this were to occur.
The final stage of the ACC proposal would be to use the ACC coercive
powers, including demanding the production of documents and undertaking
examinations. The ACC foresees three possible outcomes from this process:
the wealth is satisfactorily explained, with any appropriate costs incurred
by the person of interest to be borne by the ACC;
(b) the wealth cannot be legitimately explained, with the evidence being
used in proceeds of crime or unexplained wealth proceedings, but not in
(c) the individual commits an ACC Act offence/contempt, for example by lying
to an examiner. The act of contempt could potentially be used as evidence in a
A flowchart depicting this process is reproduced at Appendix 3.
The ACC proposed two measures complementary to the proposal: ensuring
that ACC examination material could be used in PoCA proceedings and alibi-style
The ACC informed the committee that despite recent court decisions,
uncertainty remained over the scope of permitted use of ACC examination
material in the context of proceeds of crime proceedings. The ACC proposed
that, regardless of whether the measure discussed above was adopted, the ACC
Act and PoCA be amended to make it clear that examination material could be
used as evidence in PoCA proceedings, and that the ACC could continue conduct
coercive hearings even after PoCA proceedings had commenced.
Secondly, the ACC recommended the introduction of provisions, similar in
nature to existing alibi notice provisions, within PoCA. The intent of these
provisions would be to reduce the scope for a respondent to assert a legitimate
source for restrained property at a late stage in the case, despite having
provided different evidence up until that point. As the ACC explained:
The use of alibi-type notice provisions do not significantly
diminish the rights of the respondent as their right to explain the source of
the wealth still exists. Instead, such provisions would ensure that the
resources of law enforcement are targeted and the investigation can be
appropriately limited. Further, these provisions would not remove the need for
law enforcement to prepare a brief satisfying the court to the necessary
standard and to undertake an initial investigation before commencing
applications under the PoCA, but would simply act to narrow the scope of
additional investigation to those issues defined by the respondent.
The ACC also raised the issue of the ATO receiving telecommunications
intercepts, which is discussed below.
Issues with the ACC proposal
While the committee considers that the ACC proposal could provide great
value in assisting unexplained wealth investigations, it received evidence
suggesting that a number of legal issues would need to be resolved before it
could go ahead.
Firstly, there may be Constitutional issues arising from the proposal to
allow the ACC Board to grant a determination in relation to unexplained wealth
without a link to a relevant offence, for the same reason that the unexplained
wealth orders currently require a link to a federally relevant offence. In both
cases, the link is necessary to obtain a Commonwealth head of power.
In the ACC's case, however, each State and Territory has enacted its own ACC
legislation which enables the Board to authorise operations and investigations
into State criminal activity, and confers coercive powers on the ACC in respect
of those operations and investigations.
Currently, Board determinations can only be made in relation to a
relevant crime, defined as either 'serious and organised crime' or 'indigenous
violence or child abuse'. The ACC noted that limiting the scope of the use of
coercive powers to only those unexplained wealth matters involving serious and
organised crime unduly restricts the breadth of matters that the ACC can be
involved in. As the ACC submitted:
This is not because the ACC wishes to use its coercive powers
in relation to minor indiscretions but because in unexplained wealth matters a
demonstrated link to serious and organised crime may not always be evident at
the initial investigation phase. For example, it is not uncommon for persons of
interest who have accumulated vast wealth from serious crime to be so well
insulated from the commission of those crimes so as to prevent the ACC
investigating the matter, because the connection to serious and organised crime
can not be readily and initially established.
The ACC explained that the proposal would require amendments to the ACC
Act to allow the ACC to use its coercive powers specifically in relation to
unexplained wealth, independent of a link to a 'relevant crime' being established.
Given the need for a link to Commonwealth power if the Commonwealth act was
used, the committee notes that this may also require amendment of the state and
territory enabling legislation.
The committee agrees that, in principle, the use of ACC examination
powers in support of unexplained wealth proceedings could be very effective,
and recommends that the Commonwealth Government pursue an expansion of the
ACC's remit to include support of unexplained wealth investigations.
3.78 The committee recommends that Commonwealth Government explore the
possibility of amending legislation to allow the Australian Crime Commission
Board to issue a determination on unexplained wealth, so as to enable the
Australian Crime Commission to use its coercive powers to provide evidence in
support of unexplained wealth proceedings.
Furthermore, the committee agrees with Australian Crime Commission's
suggestion that, regardless of whether other recommendations relating to the
proposal to use the ACC's powers to support unexplained wealth proceedings are
adopted by the government, the PoCA and ACC Act should be amended to make clear
that examination material could be used as evidence in PoCA proceedings.
3.80 The committee recommends that the Australian Crime Commission Act
2002 and the Proceeds of Crime Act 2002 be amended as necessary to
make clear that the Australian Crime Commission's examination material can be
used as evidence in proceedings under the Proceeds of Crime Act 2002.
Secondly, and perhaps more importantly, granting an ACC examiner the
authority to restrain a person's assets may be considered a breach of the
separation of powers, in that it may be considered to be giving a judicial
power to an executive agency. As Mr Iain Anderson, AGD, explained:
It is one thing for them to use their coercive powers for the
hearing. But if it was envisaged that they would somehow make orders that would
affect the assets of the person of interest, that may well be a judicial power
that could not be bestowed upon a part of the executive.
The ACC responded to this evidence, noting that, if the exercise of a
power does not result in a binding, permanent decision, or does not purport to
determine rights, it will generally not be considered a judicial function.
Furthermore, the ACC observed that:
In some cases a power may be judicial or non-judicial,
depending on the body exercising the power. Proceeds of crime legislation, for
example, commonly provides for the making of freezing orders or restraining
orders. Although such orders have relevantly identical effects (ie, a person is
prevented from dealing with their property), the powers may be judicial or
non-judicial depending on whether they are conferred on a court or an
Legislation which treats the power to temporarily freeze
assets (typically where the property is suspected of being related to a crime)
as a non-judicial function to be exercised by administrative officers (such as
Ministers or their delegates, authorised justices and justices of the peace) is
relatively common. In NSW, the legislation explicitly provides that the
function is non-judicial.
Typical characteristics of non-judicial freezing orders are
that they are limited in duration (for example 14 or 21 days), and are subject
to a court‘s ultimate supervision (for example, there may be a requirement for
a court to confirm a notice within a specified period).
Administrative officers such as examiners and authorised
justices exercise a wide range of other functions which temporarily affect a
person‘s right to deal with their property. For example, ACC examiners have the
power to order production of documents or things, authorised justices have
powers to issue search warrants, and public servants have powers to freeze bank
accounts in limited circumstances.
Although punitive detention is a judicial function, ordering
detention in certain circumstances is not considered a judicial functions, such
as the power of a Minister to detain a person for non-punitive purposes (eg
immigration detention), or for police to initially detain a person charged with
a criminal offence pending a judicial bail consideration.
A further issue arising is the potential for contempt of a court. In the
event that the ACC was unable to issue restraining orders, and instead had to
rely on the court-based provisions within PoCA, the use of ACC coercive powers
after PoCA proceedings have commenced could be considered a contempt of court.
This may be the case, given that the information gathering powers provided by
PoCA include enabling the court to conduct its own examination process. Mr
Anderson gave a scenario where:
... you have got proceeds of crime proceedings in a court going
on and the ACC examiner is at the same time seeking to coercively examine
someone about the subject of the proceeds of crime proceedings. In that
situation, that might constitute a contempt of court by the examiner. If the
ACC does it prior to matters being commenced in the court, the issue would not
The combination of these issues resulted in a chicken-and-egg type
dilemma. Under the ACC's proposal, it would issue its own restraining order
prior to an examination to prevent asset dissipation by the person of interest
upon notification of the ACC's interest. If this was not Constitutionally
possible, however, and the ACC sought a restraining order through PoCA prior to
an examination, then its examination could constitute a contempt of the court.
The timing of the restraint of assets and the use of the ACC's examination
powers is of critical importance.
The ACC informed the committee that, in the event that a freezing or
restraining order could not be issued by the ACC, provision should be made
within PoCA to ensure that the ACC's examination powers could be used to
complement the PoCA processes. The ACC observed that it may be possible to give
a court the option to authorise the ACC to conduct examinations, submitting:
We note that there have been many instances where information
obtained through the use of coercive examinations has been introduced in
confiscation proceedings without objection in the past. However, to avoid
doubt, the ACC proposes that consideration be given to amending the POC Act to
allow the Court, in its discretion, to authorise or endorse the use of ACC
examinations when it becomes vested of the matter. The issue of contempt would
then not arise.
Such an amendment would need to be carefully drafted to ensure that the
discretion and independence of both the court and the ACC examiners remained.
The ACC informed the committee that the legislation would need to clearly state
that the court could refuse to authorise the use of the ACC's examination
powers. Similarly, the independence of the ACC examiner would have to be
preserved, with a court authorisation not predetermining whether the ACC
examiner would in fact conduct an examination.
In practice, it may be possible for the ACC proposal to be revised along
these lines, so that the AFP or CDPP, upon making an application for a PoCA
restraining order, could also apply for an order giving approval from the Court
to use the ACC examination process instead of, or in addition to the PoCA
The Attorney-General's Department suggested a similar variation of the
ACC's original proposal, noting that an alternative could be to amend the
Proceeds of Crime Regulations 2002 to specify ACC Examiners as approved
examiners for the purposes of PoCA.
In AGD's view, this would enable the expertise of ACC examiners to be
employed in conducting POCA examinations. ACC examiners serving in this
capacity, however, would be exercising powers under the POCA, not the ACC Act,
and would be subject to the provisions of that Act in conducting examinations. AGD
noted that it would nevertheless be possible to use ACC facilities,
capabilities and information in conducting the examinations.
Coopting an ACC examiner into the PoCA examination process in this way
would limit the broader use of the information gained in the examination. Under
the existing POCA provisions, information obtained from these examinations
would only be able to be disclosed to other ACC investigators if the examiner
believed it would assist in the investigation or prosecution of an offence
punishable by over 3 years imprisonment. To allow the information to be used
for broader ACC purposes, the PoCA would need further amendment.
The ACC informed the committee that placing the ACC Examiner within the
PoCA examination framework could cause other problems, including interfering
with the independent function of the ACC Examiner, confusing the governance and
responsibilities of ACC officers, and limiting the scope of what could be asked
in such examinations.
In general, the committee notes that there may be considerable merit in
using the ACC examination process rather than that provided for under PoCA, for
several reasons described by the ACC, including:
- the ACC has far more experience in conducting examinations
involving serious and organised crime, holding over 500 such examinations in
2010–11, compared to four conducted under the auspices of PoCA;
- the ACC examination process is more developed, featuring robust
practices and procedures to ensure legal compliance, access to specialised
professionals such as forensic psychologists, intelligence analysts and
forensic accountants; and
- the ACC is used to conducting secret hearings that protect the
identity of those involved using secure facilities at short notice.
The committee notes that, under the PoCA examination provisions, a court
appointed examiner could also conduct confidential examinations.
In practice, however, the ACC handles a larger volume of such examinations and
therefore is likely to have greater experience in such matters. A more detailed
comparison of the PoCA and ACC examination processes has been included at Appendix
While the proposal to give ACC examiners the power to temporarily
restrain assets could be highly effective from a law enforcement perspective,
the committee remains conscious of the Constitutional arguments raised by AGD.
The committee is not in a position to make a determination on whether the
proposal is appropriate under the circumstances and is therefore hesitant to
recommend amendments along these lines.
The committee is, however, supportive of amending PoCA so as to allow
for ACC examinations to be conducted after a restraining order has been made by
a court, in such a way that the evidence could be used in an unexplained wealth
proceeding. Such a provision would have to be carefully drafted so as to ensure
that both the court and ACC examiners retained appropriate discretion and
3.96 The committee recommends that the Proceeds of Crime Act 2002 be
amended so as to enable an ACC examiner to conduct examinations in support of
unexplained wealth proceedings after a restraining order has been made by a
The committee's preference would be for the establishment of a
court-approval mechanism whereby the AFP or CDPP could apply to the court
seeking authorisation for the ACC to conduct examinations after a restraining
order had been made by the court. Examinations would be conducted under the
terms of the ACC Act rather than the PoCA, as discussed above. An alternative
would be for the PoCA to be amended to allow the court to appoint an ACC examiner
to conduct a PoCA examination with the consent of the ACC examiner. In all
cases, the court would maintain the ability to conduct examinations under
existing PoCA provisions if it so chose.
Amending search warrant powers
Part 3-5 of PoCA establishes a mechanism by which an authorised officer
of a law enforcement agency can apply to a magistrate for a warrant to search a
premises, or persons in the vicinity of the premises, for ‘tainted property’ or
‘evidential material’. These search warrants are one of a number of information
gathering measures provided for under PoCA.
Tainted property is defined as proceeds of certain indictable offences
or an instrument of an indictable offence (such as vessels used to import
narcotics or computers used to transmit child exploitation material).
Evidential material means evidence relating to: property in respect of which
PoCA action has or could be taken; benefits derived from the commission of
certain offences; or literary proceeds.
The AFP informed the committee that while these search powers are a
valuable investigative tool, they may not be able to be used for unexplained
wealth proceedings. Specifically, the AFP notes that the definition of
evidential material does not appear to extend to evidence of unlawful
activities from which a person has derived wealth. The AFP therefore argued in
favour of amending Part 3-5 to ensure that evidence relevant to unexplained
wealth proceedings can be obtained.
AGD provided further clarification of the issue, agreeing that while the
current search and seizure provisions would allow collection of some evidence
in relation to property relating to unexplained wealth proceedings, significant
limitations remained. For example, AGD was of the view that it was not clear
whether existing provisions would cover property relevant to ascertaining the
total wealth of the person (e.g. evidence of a person’s income or legitimately
acquired property) or evidence of unlawful activities from which a person has
derived wealth. Furthermore, officers would not be able to collect evidence
relating to summary offences, despite the fact that restraint action in
unexplained wealth matters can be based on the commission of either a summary
or indictable Commonwealth offence.
AGD raised two possible remedies by which the search warrant provisions
could be amended. One method would be to expand the definition of 'evidential
material' to include evidence relevant to unexplained wealth proceedings.
However, AGD warned that doing so may result in powers of very broad application:
For example, amending this definition to include evidence
relevant to ascertaining the total wealth of a person would allow for a warrant
to be issued in relation to any premises where a person keeps evidence of their
financial affairs (i.e. most homes and businesses).
A second option would be to amend subsection 228(1) of the POCA to
enable material that is relevant to an unexplained wealth proceeding to be
seized during the execution of a search warrant. Subparagraph 228(1)(d)(iii)
could also be amended to remove the requirement that the evidential material
relate to an indictable offence. This would allow for the collection of
evidence in relation to summary offences and for that material to be used in an
application for an unexplained wealth restraining order under section 20A.
The committee considers that the investigation framework within PoCA in
relation to unexplained wealth would be greatly enhanced through improvement of
the search warrant regime to allow necessary evidence to be collected. Of the
two proposals put forward by AGD, the committee considers the second to be the
superior of the two.
3.105 The committee recommends that search warrant provisions of the Proceeds
of Crime Act 2002 be amended so as to allow for the collection of evidence
that is relevant to unexplained wealth provisions. The committee's preferred
means of amending the provisions would be to amend:
- subsection 228(1) to enable material that is relevant to an unexplained
wealth proceeding to be seized during the execution of a search warrant; and
- subparagraph 228(1)(d)(iii) to remove the requirement that the
evidential material relate to an indictable offence.
Improving information sharing with
the Australian Taxation Office
Given the key role that financial data plays in unexplained wealth
proceedings, information held by the ATO is likely to be of great importance in
unexplained wealth investigations. The mission, powers and abilities of the ATO
are closely aligned with the aim of unexplained wealth provisions. Indeed, so
much so that the Crime and Misconduct Commission (CMC) of Queensland preferred
the use of taxation laws to unexplained wealth laws, submitting:
In the CMC’s view, the taxation laws provide a more appropriate
and effective mechanism to address the accumulation of unexplained wealth
notwithstanding potential criticism of ‘taxing’ organised crime rather than
removing the criminally derived benefits through confiscation.
The committee considered means by which the ATO could better coordinate
its efforts with those of law enforcement agencies, thereby contributing to
both serious and organised crime investigations and to the integrity of the
national taxation system.
Prescription of taskforces under
the Taxation Administration Regulations 1976
In December 2010, the Tax Laws Amendment (Confidentiality of Taxpayer
Information) Act 2010 amended the provisions in the Taxation
Administration Act 1953 (Tax Administration Act) governing disclosure of
taxpayer information to law enforcement agencies. The amendments in conjunction
with other Commonwealth organised crime related legislative reforms:
- removed limitations on the use of taxpayer information enabling
use of this information for the prosecution of serious offences; and
- allow for the disclosure of taxpayer information to law
enforcement agencies and courts for the investigation of unexplained wealth
The committee supports such initiatives as information sharing and
increased coordination significantly enhance the Commonwealth's approach to
tackling serious and organised crime.
The AFP informed the committee of a further reform for consideration. Under
the Tax Administration Act, the ATO can disclose taxpayer information to an
officer of a prescribed taskforce for or in connection with a purpose of the
prescribed taskforce. A taskforce can be prescribed if a major purpose of the
relevant taskforce must be the protection of public finances.
For this reason, the AFP suggested that the Criminal Assets Confiscation
Taskforce be prescribed, enabling the ATO to disclose taxpayer information for
the broader purposes of the Taskforce. Specifically, the AFP identified as
benefits the ability to better identify assets for seizure and pursue wealth
collected by criminals at the expense of the community.
The ATO also supported taskforce prescription, stating that:
Success in tackling organised crime depends largely on
sufficient information sharing powers for law enforcement agencies. It is
expected that further taskforces will be established both at the Commonwealth
and State levels to address serious and organised crime. Prescription of a
taskforce allows the ATO to disclose information to an officer of an agency in
any prescribed taskforce for a purpose of that taskforce. The ATO considers the
prescription of taskforces as imperative for effective information sharing with
law enforcement agencies.
The committee supports the prescription of the CACT as information held
by the ATO is likely to be essential to its activities.
3.114 The committee recommends that the Criminal Assets Confiscation Taskforce
be prescribed as a taskforce under the Taxation Administration Act 1953
and associated regulations.
Enabling the ATO to receive
The committee heard that the ATO is currently only able to make limited
use of information collected by law enforcement agencies through
telecommunication intercepts. Commander Ian McCartney, head of the Criminal
Assets Confiscation Taskforce, highlighted the benefit that could arise if
intercept information could be used more widely by the ATO:
[W]here we have identified a matter, a key operational
strategy for us, particularly in terms of organised crime, is the use of telephone
intercepts on special projects. If we identify through our investigation a tax
mischief that we believe would be relevant to the tax office, we cannot refer
telephone intercept material to the tax office; we are precluded under the
legislation. So there are some barriers there.
Section 67 of the Telecommunications (Interception and Access) Act
1979 (TIA Act) currently enables an interception agency (such as AFP or
ACC) to communicate information to the ATO to assist in the interception
agency’s investigations, for example, in joint operations into serious tax
The receiving agency is only able to use the information for the purposes for
which it received that information, meaning that the ATO would be prevented
from using the information for their own investigations or tax assessments.
The TIA Act does not currently allow for the communication of
intercepted information to the Australian Taxation Office (ATO) for the ATO’s
In practice, this means the ATO cannot receive such information for the purpose
of raising tax assessments, which would be useful both in disrupting organised
crime and collecting unpaid tax.
The ATO submitted that it could play a greater role in assisting law
enforcement agencies to combat serious and organised crime if it more freely
access telephone intercept information, stating:
Enabling the ATO to receive and use intercept information
that law enforcement agencies have obtained under telecommunication laws for
the purposes of raising taxation assessment would enhance the Commonwealth's
ability to address unexplained wealth associated with organised crime. It would
also enable the ATO to better support law enforcement agencies in their
activities through being able to analyse intercept material relating to
financial transactions and structures so as to provide insights back to the
The committee is of the view that the ATO and the enforcement of
Australian tax law should form a key part of the response to serious and
organised crime. The committee has previously recommended, in the course of its
review of the Australian Crime Commission Act 2002, the inclusion of the
Tax Commissioner on the Board of the Australian Crime Commission; a
recommendation since accepted and implemented by the Government.
The committee observes that this is part of the rationale for the inclusion of
officers from the ATO in the Criminal Assets Confiscation Taskforce, and
involvement in serious tax fraud investigations such as Project Wickenby.
The committee notes that obtaining an interception warrant is currently
subject to significant control, and given the highly intrusive nature of this
measure, does not propose that this be altered. However, the committee
recommends that serious consideration be given to enabling the ATO to use
information obtained by law enforcement agencies through telephone intercepts
in the course of investigations into unexplained wealth and serious and
organised crime for the purpose of raising tax assessments. To limit the use of
the intercept information appropriately, the committee considers that such a
practice could be restricted, for example to taskforces prescribed under the Taxation
Administration Act 1953.
3.121 The committee recommends amending the Telecommunications
(Interception and Access) Act 1979 so as to allow the Australian Taxation
Office to use information gained through telecommunications interception, in
the course of joint investigations by taskforces prescribed under the Taxation
Administration Act 1953, for the purpose of the protection of public
Access to financial information
The committee heard that there can be limitations arising from the
timeframes to access financial information. For example WA Police noted:
One of the major issues we have with our act is that, whilst
we can request information from financial institutions, there are no time
frames for when information comes to us. It is very important in any
investigation, whether criminal or civil based, that there be timeliness with
the information coming to us. Sometimes we can wait up to three months for
financial information to come back from a bank, for example.
They have other agencies and organisations which request
information from them. Some of those organisations have time frames within
their legislation, so our requests just go to the bottom of the pile. That is
just the way it is. I certainly do not begrudge the financial institutions.
They obviously have to prioritise their work. 
At the Commonwealth level, access to financial information did not
appear to be a major issue. The ATO indicated that they generally had
sufficient access to information from banks
and the ACC did not see any serious problems, but noted the amount of
information can be challenging:
The financial institutions are dealing with a huge amount of
requests for law enforcement. I think that as the criminals move more and more
into hiding their assets and using various trusts there will be more and more
requests from law enforcement for information from the financial institutions.
I think it is a struggle sometimes for the banks or financial institutions to
cope with that. My sense is that we have quite good relations with those
financial institutions and, where there is something required to be done
urgently, by and large that is achieved. It would be nice to have a service
level agreement where we could put a request in that there would be a
turnaround in a particular time, but there is an impost on the financial
institutions to do that. But by and large the relationships we have with the
financial institutions are such that, if we need something done urgently, it
will be done.
The committee observes that the concentration of specialised officers in
the CACT should assist in effectively accessing and analysing financial
information. The committee is aware that financial investigation is
increasingly important in modern crime-fighting and will continue to monitor
developments in this field.
Deeming certain types of
unexplained wealth to be unlawfully obtained or treating large amounts of
unexplained cash as a criminal commodity
The ACC proposed the introduction of express provisions to deem amounts
in relation to which an individual has no explanation, or which are
inconsistent with levels of income declared in taxation returns, or obtained in
years for which no taxation return was filed, to be illegally obtained. The ACC
informed the committee that it had historical examples where such provisions
would have been valuable.
Ms Kate Deakin, ACC, elaborated further, stating:
We are suggesting—and it might be a reasonable middle
ground—deeming provisions or presumptions, so that if, for example, you have
assets far in excess of your tax-declared wealth, or significant assets
acquired in years for which no tax returns were filed, or if assets were
purchased with large amounts of cash—that sort of thing—if we can put in place
presumptions that say, 'Unless you can prove otherwise, we are going to assume
that those amounts were illegitimately obtained'.
In a similar vein, the ACC also suggested introducing laws which, in
appropriate circumstances, treat cash as a criminal commodity, by creating a
rebuttable presumption that possession of large amounts of cash without
adequate explanation is connected to criminality.
The Attorney-General's Department advised that this would extend the current
unexplained wealth laws and would place an additional burden on people to prove
their wealth was lawfully obtained citing examples where this may be undesirable:
This is especially true if money is deemed to be illegally
obtained if it does not accord with the level of income declared in a person’s
tax returns. For example, money that has been legitimately obtained (e.g.
through an inheritance, gift, scholarship or certain overseas sources) may not
necessarily appear in a person’s tax returns.
AGD further advised that if these measures were adopted, the inclusion
of safeguards would be desirable, while consideration would also need to be
given to constitutional validity.
The Law Council of Australia and the Queensland Law Society were against
the proposals. The Law Council argued that they increased the risk of capturing
the behaviour of individuals who lack capacity to explain how they acquired
particular amounts of money perhaps due to age, cultural and linguistic
background or physical or mental incapacity. Additionally, they may also
capture the behaviour of people who have simply failed to keep receipts or
records, have made errors in tax returns or have not filed tax returns for
legitimate reasons, such as illness.
Improving the efficiency of unexplained wealth proceedings
The committee received evidence suggesting the need for a number of
reforms associated with unexplained wealth proceedings under PoCA. These
- removing the requirement to meet an evidence threshold twice;
- options for dispute resolution;
- extending the time limit for notices of preliminary unexplained
- setting up special courts or judges;
- preventing legal expenses being met from restrained property; and
granting the ability to create and register a charge over
Removing the requirement to meet an
evidence threshold twice
Unexplained wealth proceedings can commence either with an application
for a restraining order (and then an application for a preliminary unexplained
wealth order), or with an application for a preliminary unexplained wealth
order. Applications for unexplained wealth restraining orders and preliminary
unexplained wealth orders must be accompanied by an affidavit made by an
authorised officer. The court may then make a restraining order or preliminary
unexplained wealth order if it is satisfied of the matters dealt with in the
affidavit. In this way, the affidavit requirements form the basis for the
threshold test which must be met before the court may make an order.
The AFP informed the committee that there is an overlap between the
matters required to be addressed in the affidavit for a restraining order, and
the affidavit required for a preliminary unexplained wealth restraining order.
Specifically, both affidavits must state that the authorised officer suspects
(on reasonable grounds) that the person’s total wealth exceeds the value of the
person’s lawfully acquired wealth.
The practical effect of this requirement appears to be that where a
restraining order is sought before an application for a preliminary unexplained
wealth order is made, the Commonwealth will need to meet the same threshold
test twice. As orders may be sought from different judges, the result may be
that two different judges are required to be satisfied of the same threshold.
In order to eliminate this duplication of effort, the AFP proposed to
the committee that the process could be streamlined by amending the relevant
provisions to provide that where an unexplained wealth restraining order has
been made (and the court is satisfied that the authorised officer has
reasonable grounds to suspect that a person’s total wealth exceeds the value of
the person’s lawfully acquired wealth), the affidavit for a preliminary
unexplained wealth order does not have to address the same matter.
AGD supported the AFP's view, noting that removing this duplication
would have a beneficial impact on efficiency and resourcing for law enforcement
agencies and for the courts.
AGD cautioned that the option to provide or otherwise update an
affidavit at stages subsequent to a restraining order should remain as it is
possible that further evidence would be uncovered and should therefore be
included in a revised affidavit. Furthermore, in cases where a restraining
order was not sought prior to a preliminary unexplained wealth order, an
affidavit should be required in applying of the preliminary unexplained wealth
The committee agrees that any amendments should be mindful of these issues.
The committee agrees that the duplication of the evidence threshold test
is unnecessary and notes that AGD has proposed one method by which this might
[T]he PoCA could be amended to include a presumption that,
where a restraining order has been made under section 20A, there is a
reasonable suspicion that the person’s total wealth exceeds their lawfully
acquired wealth. This would ensure that there is consistency between judicial
decisions made at restraining order stage and preliminary unexplained wealth
order stage, and would enable any additional evidence that is uncovered to be
included in the affidavit.
The committee therefore recommends that the duplication of the evidence
threshold test be eliminated.
3.140 The committee recommends that the Proceeds of Crime Act 2002 be
amended so as to eliminate the requirement for authorised officers to meet an
evidence threshold test for a preliminary unexplained wealth order where the
evidence threshold test for a restraining order has already been met. Any
amendment should recognise the need to be able to update an affidavit to
reflect new evidence as appropriate.
Options for dispute resolution and
In its submission the ACC recommended strengthening options to
alternative dispute resolution and administrative forfeiture.
During the hearing, the ACC elaborated further, stating:
That is not an option that we have explored in any great
detail, but it simply would go to reducing the costs and risks which are
inherently involved in litigation. If there were ways to achieve the objectives
without dragging matters through court unnecessarily, we would see that as a
benefit, but that is not a matter that we can give any further detailed advice
The Attorney-General's Department informed the committee that under section
316 of the PoCA, it is possible for the court to make orders by consent, without
necessarily having to consider the matters that the court would otherwise consider
in the proceeding. It is this provision that is used by prosecuting authorities
to ‘settle’ matters.
The committee understands that settlement is, in this case, subject to court
The Commonwealth Director of Public Prosecutions indicated the benefit
of being able to settle proceeds of crime cases in some circumstances, stating:
To date our experience is that we will settle matters where
we have applied for proceeds orders and, having regard to a number of factors
such as the risk of litigation, the prospect of recovery and evidential
concerns, we might agree with a defendant that certain orders should be made
which would pay certain moneys to the Commonwealth and sometimes that will not
include all the moneys that might have been restrained. There are provisions in
the Proceeds of Crime Act for such orders to be entered into and made by the
court without determination of the merits.
AGD noted that introducing alternative dispute resolution into the PoCA
for unexplained wealth cases could raise the following concerns:
it may imply that there is a middle ground where a ‘deal’ can be
done allowing criminals to avoid forfeiting all of the proceeds of their
- in some cases, there will be a public interest in litigating
matters to ensure that all proceeds and instruments of crime are confiscated;
- alternative dispute resolution may be used as a delaying tactic
by litigants. 
AGD also noted that administrative forfeiture was not common in
Commonwealth legislation and generally limited to narrow classes of items that
are easy to identify, whereas proceeds of crimes cases were relatively complex.
In the committee's view, dispute resolution of unexplained wealth
proceedings risks creating a perception that the government is negotiating
deals with serious and organised criminal networks. It is the committee's
preference, therefore, that unexplained wealth cases are litigated using the
full process outlined in the PoCA.
Extending the time limit for
notices of preliminary unexplained wealth orders
The AFP drew the committee's attention to an issue arising from the
requirement that the Commonwealth give a person notice of a preliminary
unexplained wealth order, including providing a copy of the application and
accompanying affidavit within seven days.
The AFP informed the committee that, in some situations, there may be
difficulty or delays in locating the individual or facilitating the giving of
notice. The AFP therefore proposed that the court be given the ability to
extend the time limit for notice, on application of the Commonwealth, to
accommodate extraordinary circumstances.
AGD provided evidence in support of this proposal, stating that extending
the time limit for giving notice of an application for a preliminary
unexplained wealth order would make the provisions more flexible in
circumstances where it is not feasible for notice to be given within 7 days of
an application being made. AGD further noted that if, as is the case in the
AFP's proposal, extensions are made upon application by the Commonwealth, there
would be court oversight to ensure that extensions are granted appropriately.
The Queensland Law Society suggested that the Commonwealth should be
able to apply to the court for an extension of time for service to accommodate
3.151 The committee recommends that provision be made for extending the time
limit for serving notice of a preliminary unexplained wealth order to
accommodate extraordinary circumstances.
Setting up special courts or judges
Proceeds of crime proceedings are inherently complex and unexplained
wealth proceedings are likely to involve an added layer of complexity. For this
reason, the ACC suggested establishing a specialist proceeds of crime court or
tribunal to deal with proceeds of crime matters, submitting:
Given the specialist and complex nature of both the
legislation and the financial and criminal evidence, and the need for swift
response times in cases where funds can be transferred overseas within hours, a
specialist court would allow for the development of both judicial expertise and
The committee sought evidence on whether there would be value in having
special courts or prescribed judges for proceeds of crime matters, as there are
in some other countries. The AFP referred to the Irish model, explaining:
It is a model that is adopted in Ireland with their
structure. There are a couple of issues at play. One is the size of the
jurisdiction in Ireland—it is a lot smaller. It is something we have considered
but we do not see as an organisation significant impediments in how the current
system works. The ability to bring the system into Australia will require a
policy change, a legislation change and a funding change, but it is something
we would consider in future discussion.
The Queensland Law Society supported the introduction of nominated
judicial officers, noting that specialised judges will be better equipped to
appreciate the complexities involved with proceeds of crime matters.
Representatives from the CDPP provided evidence to the committee on how
proceeds of crime proceedings are currently litigated, stating:
At the moment basically we litigate our matters in the state
courts. So, depending on which state we are in and which court has the
appropriate jurisdiction, we will litigate in those and nor would we attempt to
select who might be the adjudicator of those matters. I suppose it might be
said that any court with experience in these sorts of matters is going to
provide a more consistent type of outcome on that, but it is not really a
matter that we as DPP should be commenting on as to its desirability. The
general approach in Commonwealth criminal matters and proceeds of crime matters
is that we litigate in the state courts with the appropriate jurisdiction. Like
any litigant we accept whatever bench is given to us.
The Attorney-General's Department advised the committee of some of the
disadvantage of special courts and judges:
[C]reating specific courts is a step that can be fraught with
dangers, as well. There are issues in creating a specialist court if you have
judiciary who only sit in that court—whether they have sufficient workload to
keep them fully occupied, particularly if you create judges who then stay there
until they are aged 70. There is an expense involved in creating separate
Just looking at other scenarios, there have been questions
raised as to whether the federal court, for example, should have specialist
divisions, particularly with judges only hearing certain types of matters.
Generally, the Commonwealth has refrained from doing that because the view is
that judges bring a range of experiences to hearing matters and that it is
better that they have a broad experience rather than only practicing in a
single area, where people can become too narrow over time. There are arguments
against creating new courts for that reason.
AGD provided subsequent evidence noting the following:
- new courts are costly, requiring new administration and
- where overlap between proceeds of crime proceedings and other
matters exist, non-specialist courts provide flexibility to hear both matters
at once; and
- State and Territory courts with jurisdiction for indictable
criminal offences have extensive experience with criminal law and bring this
expertise to proceeds of crime matters.
The committee acknowledges the difficulty and cost of setting up a
special court or tribunal, but is also concerned to see that proceeds of crime
matters can be effectively dealt with, particularly with future adjudication of
as-yet unused unexplained wealth provisions.
The committee considers that there would be value in ensuring that
courts and judges have appropriate training and experience and that proceeds of
crime matters can be given attention in a timely way to prevent the dispersal
or disposal of assets overseas and through other means.
Preventing legal expenses being met
from restrained property
In the original iteration of the Proceeds of Crime Act 1987,
restrained assets could be used by the defendant to meet legal expenses
incurred in relation to proceedings under that act. However, in 1999 the
Australian Law Reform Commission reported that this practice was contrary to
the principles of PoCA, which were that property liable to forfeiture should be
preserved for that purpose.
Commander Ian McCartney, AFP elaborated further, explaining:
When the proceeds of crime legislation was brought in in 1987
there was an ability for suspects to access assets that had been restrained,
for legal costs. We believe that that system was abused. It was used by
suspects to frustrate the system and, basically, siphon off the assets that had
Accordingly, in 2002, the legislation was changed to preclude the use of
restrained property to meet legal expenses incurred in connection with PoCA or
However, this prohibition on using restrained assets to meet legal
expenses was not applied to unexplained wealth provisions when they were
The stated purpose was to ensure that persons subject to unexplained
wealth proceedings could fund an appropriate and sufficient defence against
such proceedings as they differed from ordinary PoCA proceedings, with no
specific crime needing to be alleged. This difference therefore justified a
different policy approach to whether legal expenses could be met from
The committee notes that the court can engage a costs assessor to
certify that legal expenses in defending unexplained wealth proceedings have
been properly incurred, as a safeguard against abuse of this provision.
Currently, a court does not consider the amount paid for a person’s
legal expenses in calculating the proportion of a person’s wealth that is
unexplained. For example, if the court determined that a person had $200 000 in
unexplained wealth, they could make an order requiring the person to pay the
Commonwealth $200 000 (as a civil debt owing to the Commonwealth).
If, for example, the person used $20 000 of that restrained amount to
fund legal expenses, the person would still be liable to pay the Commonwealth
the full $200 000 amount, though the order may ultimately be enforced against
the remaining $180 000 of restrained funds. The remainder of the amount due to
the Commonwealth under the unexplained wealth order would still be a civil debt
due by the person to the Commonwealth, but, in practice, could be difficult to
recover if there were no other restrained assets.
Both the AFP and the ACC continue to have concerns about the potential
use of restrained assets to meet legal expenses in unexplained wealth cases. As
the AFP submitted:
The AFP’s experience under PoCA 1987 was that the provisions
allowing legal expenses to be paid for out of restrained property were
exploited to deliberately frustrate the objectives of the scheme and dissipate
property through protracted litigation.
The AFP is concerned that this will happen under the
unexplained wealth provisions. The AFP is not convinced that provisions which
require a costs assessor to certify that legal expenses have been properly
incurred will act as a sufficient safeguard to prevent the inappropriate
dissipation of assets.
For this reason, the AFP proposed that PoCA be amended so that legal
expenses cannot be met from property restrained as part of unexplained wealth
proceeding, in a manner consistent with other elements of that act.
Currently, people who are subject to orders under the POCA, including
unexplained wealth orders, are entitled to legal aid. Legal aid costs are then
met from the Confiscated Assets Account — the account into which the value of
confiscated proceeds and instruments of crime is paid.
In the last two years, a total of $1.1 million has been paid from the
Confiscated Assets Account to legal aid commissions in this manner.
Under paragraph 330(4)(c) of PoCA, if a suspect uses proceeds of crime
to pay a lawyer for reasonable legal expenses incurred in connection with an
application under PoCA or defending a criminal charge, the money paid to the
legal practitioner would cease to be the proceeds of crime. This protects
lawyers from being found to be in possession of proceeds of crime.
The Law Council of Australia was against the AFP proposal, arguing that
respondents should continue to exercise a degree of control over their choice
of legal representative as a fundamental aspect of the right to fair trial.
Furthermore, the Law Council was concerned about the burden on legal aid commissions
arising from complex PoCA proceedings.
Whilst the Law Council would like to see the PoCA amended so that respondents
are able to access restrained assets for the purposes of funding their legal
costs for all proceeds of crime proceedings under the PoCA, the Law Council
submits that it is particularly important that such a provision is retained in
relation to unexplained wealth matters, which involve a reverse onus of proof.
Similar arguments were made by the Queensland Law Society.
The committee was concerned about the potential for further burden to be
placed on the legal aid system and sought supplementary evidence from AGD. The
committee notes that Part 4-2 of PoCA allows a legal aid commission to recover
legal costs for:
- representing a person whose property was, at the time of the
representation, covered by a restraining order, and
- representing a person who was a suspect at the time of the
representation and whose property was at that time covered by a restraining
order, in proceedings for defending any criminal charge against the person.
To recover their legal costs, legal aid commissions must give the
Official Trustee a bill for their costs. The process through which the reimbursement
is provided appears to be relatively swift.
Given that legal aid commissions are recompensed in this way for PoCA work, the
committee is of the view that the budget of legal aid commissions would not be
significantly affected if the same system applied to unexplained wealth
In response to the view that a respondent should be entitled to exercise
a degree of control over their choice of legal representative as a fundamental
aspect of the right to a fair trial, AGD noted that the right to fair trial
only applies in criminal proceedings.
Article 14 of the International Covenant on Civil and Political Rights states,
in part, that in the determination of a criminal charge against a person, he is
entitled to defend himself in person or through legal assistance of his own
The committee agrees with AGD's view that it is nevertheless important
to ensure that people who are subject to proceedings under the PoCA have access
to legal advice and representation, which in this case can be achieved through
the provision of legal aid in PoCA matters.
On balance, the committee is of view that the provisions relating to
legal expenses should be harmonised so that unexplained wealth provisions and
other types of proceedings within PoCA are treated in a similar manner.
3.178 The committee recommends that legal expense and legal aid provisions for
unexplained wealth cases be harmonised with those for other Proceeds of
Crime Act 2002 proceedings so as to prevent restrained assets being used to
meet legal expenses.
Granting the ability to create and
register a charge over restrained property
Under sections 142 and 169 of the PoCA, a charge can be created over
restrained property to secure the payment to the Commonwealth of either a
pecuniary penalty order or a literary proceeds order. However, a charge on the
property is only possible where the restraining order over the property relates
to the offence that led to the pecuniary penalty order or literary proceeds order
being made, or a related offence. This ensures that property is available to
satisfy a pecuniary penalty order or a literary proceeds order if a person does
not pay the amount specified in the order.
The AFP was concerned that provisions within PoCA may complicate the
enforcement of unexplained wealth orders. Specifically, the AFP noted while the
process for enforcing an unexplained wealth order is substantially similar to that
for pecuniary penalty orders, it does not include any equivalent provisions
which deal with the creation and registration of charges over property
restrained to satisfy an unexplained wealth order. As the AFP submitted:
This creates the potential for a situation in which,
following the making of an unexplained wealth order, the Commonwealth cannot
effectively enforce the order because its interests over property cannot be
For this reason, the AFP proposed that provisions similar to sections
142 and 143 be inserted into Division 4 of Part 2-6 of PoCA. This would ensure
that the Commonwealth could create and register a charge over property that has
been restrained by the court to satisfy an unexplained wealth order.
AGD also saw an advantage in this proposal.
3.182 The committee recommends that the enforcement provisions for unexplained
wealth orders include an ability to create and register a charge over property
that has been restrained by the court to secure the payment of an unexplained
In the making of final orders for most proceedings under the PoCA, if
the appropriate conditions and tests are satisfied, then the court must make
that final order. In the case of unexplained wealth orders, however, the court
retains a discretion and may, rather than must, make the order, even though the
CDPP or the agency bringing the application meets all of the requirements. As
the ACC informed the committee, there is no information within the legislation
that guides that discretion or explains why the order might be refused.
When the original bill for an unexplained wealth scheme, the Crimes
Legislation Amendment (Serious and Organised Crime) Bill 2009, was first introduced
to Parliament, the provisions in the bill did not include judicial discretion
of the type now in place. Under the original terms, when appropriate conditions
and tests were satisfied, the courts must make unexplained wealth orders,
relating to: restraint (section 20A); a preliminary order to appear (section
179B); and payment of an amount of unexplained wealth to the Commonwealth
The Senate Legal and Constitutional Affairs Legislation Committee
recommended that the court should have a discretion under proposed section 179E
of the Proceeds of Crime Act 2002 to refuse to make an unexplained
wealth order if it is not in the public interest to do so. The committee cited
concerns about a range of matters including:
- the potential for the provisions to be used where it has proved
too difficult or time consuming to meet the exacting requirements of criminal
prosecution of offences;
that the provisions are not limited to the targeting of major
criminal figures; and
- the potential inability of respondents to proceedings to produce
records that may have been accidentally destroyed. 
Amendments made in the Senate adopted the recommendation to create
judicial discretion for orders to pay an amount of unexplained wealth to the
Commonwealth under section 179E. The amendments made in the Senate also went
further and created a judicial discretion for restraining orders (Section 20A)
and preliminary orders to appear (section 179B).
Civil Liberties Australia was keen for the discretion to remain,
Our No. 2 recommendation is that, whatever legislation or
amendments come out of this process, they must address 'serious and organised
crime'—the Mr Bigs—and not be able to be used to target the Mr and Mrs Littles
of Australia. CLA believes judges must be able to exercise discretion based on
the seriousness of the crime. Any mandatory provisions as to how judges will
act should be removed, we believe.
Similarly, the Law Council highlighted the need for judicial discretion
to remain due to the unique nature of unexplained wealth provisions.
The Queensland Law Society objected to the removal of judicial
discretion in these provisions, as it allows courts to be responsive and
flexible to the individual circumstances of a case. It argued that this is
particularly important in the case of unexplained wealth provisions as they
reverse the onus of proof. It also pointed out that no cases have come before
the courts as yet, and are therefore untested.
The ACC informed the committee that there were three levels of
discretion in place, in the form of 'may versus must', a general public
interest test and an interests of justice test. As the ACC explained:
The interests of justice provision was inserted to meet the
High Court international finance case that arose out of the New South Wales
Crime Commission's legislation. Clearly, there is a sensible constitutional
reason to put that level of discretion in, but it seems to us that we cannot
see a policy reason for the inconsistency between the broad scope of the
discretion under unexplained wealth as opposed to the other provisions...
The ACC noted that there may be an opportunity to guide the judicial
discretion, which has informed other recommendations in this report, including
amending the objects of PoCA to include undermining criminal enterprise.
Representatives from the CDPP noted that particular concerns may emerge
if the case was based on criminal intelligence and judicial discretion was
To basically have a system whereby a court did not have a
discretion not to restrain a person's assets based on material that might be of
an intelligence nature only might be something that would create an issue for
the courts. I would need to consider it a bit more carefully.
The Attorney-General's Department indicated that its preference for the
unexplained wealth provisions would be for consistency between the various
measures of PoCA, including unexplained wealth orders, meaning if the necessary
tests were satisfied, the court would be obliged to make the order. As Mr Iain
Anderson, AGD explained:
I am not suggesting that the judiciary should not have a
discretion as to whether they make orders at all. They will always have the
ability to refuse to make an order [brought] by the party. Obviously, if we
remove that discretion completely, then that would be constitutionally invalid
in itself under chapter 3. So the court will always have to be satisfied by the
Commonwealth that an order should be made and that there is sufficient case for
the onus to be put on to the other person to justify why their assets should
not be forfeited or restrained. So, if the person can provide an explanation of
the sources of their wealth that is credible, then they have nothing to worry
The committee is of the view that there does not seem to be a strong
case for a specific unexplained wealth judicial discretion relating to
restraining orders and preliminary orders to appear, given there is limited
impact on an individual subject to those types of orders and that there are
already significant safeguards in place, such as:
- the requirement for a court to be satisfied that the tests for
the orders have been met;
- the judicial discretions of general public interest and the
interests of justice tests that need to be satisfied;
- the standard powers courts have to order costs; and
- oversight by this committee.
The committee also notes that the Senate Legal and Constitutional
Affairs Legislation Committee did not make any recommendations regarding the
orders under PoCA section 20A and 179B.
For this reason, the committee recommends that the judicial discretion
in relation to unexplained wealth restraining orders and preliminary unexplained
wealth orders be removed in cases where the amount of unexplained wealth is
greater than $100 000. The discretion, and hence extra safeguard, would remain
in place for cases where the amount of unexplained wealth was below this
3.197 The committee recommends that the court's discretion to make a
restraining or preliminary unexplained wealth order under subsections 20A(1)
and 179B(1) of the Proceeds of Crime Act 2002 be removed in cases where
the amount of unexplained wealth is more than $100 000, so that the court must
make the order in cases over $100 000.
The committee is aware that orders to pay an amount of unexplained
wealth under section 179E of the PoCA to the Commonwealth, may have a
significant impact on the individuals concerned. The committee notes however,
that the test to be satisfied is substantial. Paragraph 179E(1)(b) requires
that an unexplained wealth order may be made if:
(a) the court is not satisfied that the whole or any part of the person’s
wealth was not derived from one or more of the following:
(i) an offence against a law of the Commonwealth;
(ii) a foreign indictable offence;
(iii) a State offence that has a federal aspect.
The committee observes that judicial discretion relating to orders to
pay an amount of unexplained wealth to the Commonwealth under section 179E of
the PoCA may limit the effective use of the unexplained wealth laws, and
recommends its removal where the amount of unexplained wealth is above $100
3.200 The committee recommends the court's discretion to make an unexplained
wealth order under subsection 179E(1) of the Proceeds of Crime Act 2002 be
removed where the amount of unexplained wealth is above $100 000, so that the
court must make the order in cases over $100 000, and that the following
additional statutory oversight arrangements be made:
- law enforcement agencies must notify the Integrity Commissioner
of unexplained wealth investigations;
- the Ombudsman must review and report to Parliament the use of
unexplained wealth laws in the same way that Ombudsman does for controlled
- the oversight by the Parliamentary Joint Committee on Law
Enforcement be enhanced so that in addition to appearing when required, that
the ACC, AFP, DPP and any other federal agency or authority must brief the
committee on their use of unexplained wealth provisions as part of the
committee's annual examination of annual reports of the ACC and AFP.
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