Chapter 7 - Anti-Money laundering and terrorism financing
This chapter will outline the key provisions and issues
raised in relation to the following aspects of the Bill:
the proposed amendments to the Financial Transaction Reports Act 1988 (the
FTR Act) and other related legislation (Schedule 9); and
the proposed amendments to expand existing
terrorism financing offences (Schedule 3).
New anti-money laundering provisions
Schedule 9 of the Bill
amends the FTR Act, and makes consequential amendments to the Proceeds of Crime Act 2002, and the Surveillance Devices Act 2004, in order 'to
better implement the requirements of the Financial Transaction Task Force'
The FATF is an international organisation concerned
with strengthening anti-money laundering (AML) provisions in the global
financial system, including recommending legislative and enforcement measures
for individual countries to implement. To this end, it developed a series of 40
AML recommendations in 1990, which have been revised twice since. In the
aftermath of the terrorist attacks on 11
September 2001, FATF also adopted 9 special recommendations on
combating the financing of terrorism (CFT).
The amendments contained in Schedule 9 of the Bill address three of these
FATF CFT special recommendations – Special Recommendation VI (remittance
services), Special Recommendation VII (wire transfer funds services), and Special Recommendation IX (cash couriers).
progress in meeting the various FATF recommendations was reported in a FATF
country evaluation published in October 2005. Of the three special
recommendations in question, Australia
was rated as 'partially compliant' for special recommendations SR VI and SR
IX, and 'non-compliant' with
achieved a rating of 'largely compliant' to most of the other special
principle anti-money laundering legislation - the FTR Act - was last updated in
a significant way through the Proceeds of
Crime Act 2002 and, in relation to terrorism, through the Suppression of the Financing of Terrorism
Act 2002. However, following the revision of the FATF recommendations in
2003/04, the Australia Government committed itself to a further overhaul of the
FTR Act and associated legislation. The Bills Digest reports that the
consultative process has been lengthy, with industry groups raising concerns
over compliance costs and competitive neutrality between different sectors. The Government is likely to release
an exposure draft anti-money laundering Bill later
this year. That Bill is expected to cover a
broad range of FATF recommendations.
Outline of the key provisions
Cash dealers and remittance
Item 11 of Schedule 9 inserts new Part IIIB – Register
of Providers of Remittance Services – into the FTR Act. Proposed section 24E provides that
cash dealers (other than financial institutions and real estate agents) who
provide remittance services must provide certain information to the Director of
the Australian Transaction Reports and Analysis Centre (AUSTRAC). AUSTRAC is
the Commonwealth agency with primary responsibility for day to day
administration of the FTR Act.
A failure to provide the above information carries a
maximum penalty of 2 years imprisonment, or in the case of a corporation, a
fine of approximately $50,000.
The detail of the information the cash dealer must
provide to AUSTRAC will be prescribed by regulations. The Explanatory
Memorandum to the Bill notes this is likely to
include Australian Business Numbers and various contact details. The
information provided will be placed on a Register maintained by the Director.
International funds transfer
Item 10 of Schedule 9 inserts new Division 3A into Part
II of the FTR Act.
In order to strengthen the existing reporting and
recording-keeping obligations contained in Part II of the FTR Act, new Division
3A will require customer information to be included in instructions for international
funds transfers into and out of Australia.
In particular, proposed section 17FA provides that, when a cash dealer is given
an instruction for a transfer of funds out of Australia,
the dealer must ensure the instruction includes information about the ordering customer.
In relation to funds transfers coming into Australia,
clause 17FB in certain situations allows the AUSTRAC Director to direct a cash
dealer to request the ordering customer to include customer information in all
future incoming transfers.
The customer information required includes the
customer's name, residential or business address, account number or
identification code. Additional information such as the customer's date and
place of birth may be required in respect of funds transfers coming into Australia.
A failure to comply with the above requirements carries
a maximum penalty of 2 years imprisonment, or in the case of corporation, a
fine of approximately $50,000.
Cash couriers - bearer negotiable
instruments taken in and out of Australia
Schedule 9 of the Bill
also inserts into the FTR Act new reporting requirements in respect of 'bearer
negotiable instruments'. These amendments address the FATF's comments in its country
evaluation report for Australia
... [while] Australia has a comprehensive system for
reporting cross-border movements of currency above AUD 10,000 to AUSTRAC ...
there is no corresponding system for declaration/disclosure of bearer
For the purposes of the Bill,
'bearer negotiable instruments' are defined to include bills of exchange,
cheques, money orders, postal orders, travellers' cheques, and promissory
notes. That is, the types of instrument whereby the holder, or some other
person, can exchange for cash or a deposit of equivalent value in a bank
Item 18 of Schedule 9 inserts proposed section 33AA
into Part V of the FTR Act. It provides that a person that is leaving or
arriving in Australia
must, if requested by an officer, declare any bearer negotiable
instruments they have with them and the amount payable under each instrument.
They must also produce each instrument to the officer, if requested. If a
person fails to declare or produce a bearer negotiable instrument as required,
they commit an offence with a maximum penalty of imprisonment for one year. If
an officer has asked a person to declare any bearer negotiable instrument, and
they have 'reasonable grounds to suspect that the person has made a false or
misleading declaration' in response, they may search their baggage or person.
Officers may seize any bearer negotiable instruments in respect of which a
false declaration has been made.
If a bearer negotiable instrument is produced in a
voluntary declaration by the person, or found through search, an officer may
ask the person to prepare a report on the instrument. The report must include
the very detailed information listed in proposed Schedule 3AA.
The Explanatory Memorandum notes that there is no
monetary limit on the face value of a bearer negotiable instrument that
triggers the above reporting requirements. It explains that:
In practice a person will only be required to produce a bearer
negotiable instrument when asked by an officer. It is not proposed that the
currency declaration system that applies to all persons travelling into or out
of Australia be extended to bearer negotiable instruments. This ‘disclosure
when asked’ system will enable more targeted use of customs and police
Commencement of the above
The Bill provides that the proposed amendments concerning
international fund transfer instructions and registration of remittance service
providers shall commence on Proclamation, or if any of the relevant provisions
do not commence within the period of 6 months beginning on the day the Act
receives Royal Assent, they shall commence on the expiry of 6 months and one
day from the date of Royal Assent.
According to the Explanatory Memorandum:
The reason for the potential delay of 6 months for the
commencement of these provisions is to allow for industry to develop processes
to meet the inclusion of customer information requirements with international
funds transfer instructions and for AUSTRAC to implement appropriate systems to
raise public awareness of the new register requirements and to manage this
The Bill provides that
the amendments concerning negotiable bearer instruments generally commence on
Proclamation, or if any of the relevant provisions do not commence within the
period of 12 months beginning on the day the Act receives Royal Assent, they
commence on the expiry of 12 months and one day from the date of Royal Assent. According to the Explanatory
The reason for the potential delay of 12 months for the
commencement of these provisions is to allow for a public
education campaign to raise awareness about the implications of the amendments
and to enable the AUSTRAC to put in place appropriate training and system
Key concerns raised in respect of the Schedule 9 of the
Bill include the following:
a lack of consultation with industry on the
detail of the provisions;
the Bill's interaction with the pending AML review
and legislation and the potential cost to industry of having to amend their
processes and systems to comply with the Bill and then the AML legislation;
industry's need for more time in which to make
the necessary changes in order to be compliant with the Bill; and
privacy concerns over the required transfer of
Lack of consultation with industry
The Department argued that the amendments in Schedule 9
of the Bill should not take industry by
surprise. It advised the committee that:
... Industry has been
closely consulted on AML/CTF reform, and the FATF Forty Recommendations and
Special Recommendations on Terrorist Financing since the Government announced
its intention to implement the FATF Recommendations in December 2003.
Consultation has taken a number of forms, including the release of
industry-specific discussion papers, several meetings of a Ministerial Advisory
Group and Systems Working Group, and ongoing discussion between industry
representatives and the Department. More recently a number of round-table
forums were held with
the financial sector, co-chaired by the Minister for Justice and Customs and
the ABA [Australian Banker Association], resulting in
agreement on many specific issues, including funds transfers. The proposed amendments
on funds transfers are consistent with the agreements reached on this issue.
did acknowledge that the banking and finance industry has not been consulted on
the exact provisions of the Bill.
As the Australian Bankers Association stated:
It is certainly the case that we have been involved in extensive
consultation with the government and we continue that in relation to the AML
bill. The point at issue here, however, is the detail of some very specific
provisions. That is quite a different matter to talking about principles in
relation to FATF recommendations.
interaction with the pending AML review and legislation
In this regard, a key concern of the Australian Bankers
Association was possible overlap with the pending AML Bill. As the Department
Similar provisions to those contained in Schedule 9 of the AT
Bill will be in the AML/CTF exposure Bill,
as the FTR Act will eventually be replaced by the new AML/CTF legislation.
The Department confirmed that the exposure Bill
will also impose additional related obligations necessary to ensure greater
compliance with relevant FATF Special Recommendations.
Industry representatives were therefore concerned that
financial institutions were potentially faced with two different pieces of
legislation and compliance obligations, which may involve the same internal
systems and processes, but with different requirements and dates of effect. The
Australian Bankers Association was particularly concerned to avoid:
... an outcome where banks,
and many other financial institutions, would be required, in a relatively short
time frame, to undertake two major sets of changes to the same computer systems
and business processes: one to meet the ATB’s requirements, and the other to
meet the requirements of the new anti money laundering laws, the specific
requirements of which are not yet known.
These concerns were shared by the Association of
Superannuation Funds of Australia.
Cost to industry
At issue here was the potential cost to industry. The
Department's view was that Schedule 9 of the Bill
would have relatively little cost impact on industry and any assessment of cost
could safely be left to the consultation on the AML exposure Bill.
In its view, consultation at that time 'will enable an assessment of the
overall costs to industry of AML/CTF reform to occur'. The Department also advised the
committee that consideration of measures to alleviate or offset industry's
implementation costs could be also be left to consultation on the exposure Bill. The Department also noted that the
amendments in Schedule 9 had been designed to have a minimal impact on business
pending that further consultation, but were going to have been implemented at
some stage as they are FATF requirements. 
Industry representatives had a less sanguine view. They
argued that Schedule 9 of the Bill –
particularly the amendments concerning international funds transfers - would
involve 'very significant change' to industry practice and processes. Mr
Bourke of the Australian Bankers Association
... what is sought of us now by these provisions is not currently
provided and ... to provide this information in the specific form requested will
require changes to core systems and to multiple core systems, because these
payments are processed across a range of applications. It is also the case that
the larger institutions process payments on behalf of smaller institutions and
those smaller institutions will need to provide the same information, with
possibly, relative to the size of their institutions, a greater impact.
These sentiments were echoed by Mr
Bell, also of the Australian Bankers
There must be a cost. If you change computer systems there is a
cost. If you change computer systems twice, because of overlap or underlap of
legislation, there will be more cost involved. What that cost is we do not
know. It is not insignificant.
Additional time required to ensure
Industry representatives argued that there was a need
for more time and further consultation. They had originally argued for an implementation
period of 3 years for the proposed AML/CTF legislation, part of which is now covered
by the Bill. As explained above, the Bill
provides that Schedule 9 will come into force within six months (for international
fund transfer instructions and registration of remittance service providers)
and 12 months (for negotiable bearer instruments) of the Bill
receiving Royal Assent. Industry had expressed concern at having to ensure all
relevant systems and processes are compliant by the earlier date than expected.
In support of the argument for more time, industry
representatives also raised a number of specific concerns with the detail and
drafting of the Bill.
In light of the above, the Australian Bankers Association
put the following recommendation to the committee:
The simplest solution, which would involve minimal changes to
the Bill, would be to increase the implementation time by changing the date of
commencement of proposed new sections 17FA and 17FB to ‘a date to be
proclaimed’. The date to be proclaimed should be the same as the date of
commencement of related provisions in the new anti money laundering laws
currently being drafted. Proposed sections 17FA and 17FB of the bill should
also be repealed in 2006, on the date of royal assent for the new anti-money
laundering laws, and replaced by provisions in the anti money laundering
legislation. The consultation period for the anti money laundering laws would
allow industry to work with governments to overcome the problems in the current
drafting of this bill.
In response, the Department stressed that there was a
need to act now to prevent the Australian financial system being used for
terrorist financing purposes. It pointed out that, in contrast, there is likely
to be a considerable period before the new AML legislation will come into
force. Although this new legislation was likely to be introduced into
Parliament in mid-2006, a considerable transition period would still be
required to allow industry implementation of the new requirements.
The Department also argued that action was required now
to prevent the Australian financial system from being used to finance terrorism
and to ensure that Australian financial institutions are not barred from
sending funds transfers to Europe and the US. The Department noted that:
US AML/CTF legislation already requires the inclusion of
customer information with funds transfers and most EU [European Union] countries
will have similar provisions by January 2007. For Australian financial
institutions to be able to send funds transfer instructions to corresponding
banks in these countries they will soon have to include customer information,
regardless of what Australian law provides.
The Department maintained that the measures proposed by
Schedule 9 were ones that could be effectively implemented by industry and the
Government relatively quickly. It considered a six month period from Royal
Assent for those amendments that, in its view, will affect industry (i.e., those
amendments dealing with international funds transfer instructions and the
register of providers of remittance services) was sufficient time for industry
to prepare for those provisions to come into force.
The Australian Bankers Association, the Office of the
Privacy Commissioner (OPC) and the Australian Privacy Foundation (APF) raised
privacy concerns over the amendments proposed by Schedule 9 of the Bill.
As mentioned above, the amendments will require:
certain cash dealers to provide prescribed
personal information to AUSTRAC;
identifying personal information to be included
in international funds instructions; and
persons carrying 'bearer negotiable instruments'
– such as travellers cheques - to prepare detailed reports to AUSTRAC
containing personal information about the courier or the person on whose behalf
the instruments are being carried.
The Australian Bankers Association also expressed
concern that sending personal information overseas may expose customers to the
risk of identity fraud.
The OPC expressed concern that the amendments in
Schedule 9 will impose reporting obligations on a large number of financial
entities, some of which may be exempt from statutory privacy obligations
governing the private sector or state and territory agencies:
The implications of this uneven coverage of the private sector
and, possibly many public agencies, is that large amounts of often sensitive
financial and other personal data handled by these entities will not be
protected by any privacy legislation – national, state or territory. This
situation is compounded by the current obligations in Part IV of the FTR Act
for financial institutions to retain data, such as customer generated financial
transaction documents, for a minimum of seven years.
The OPC noted that a lack of effective privacy
protection could result in an unintended loss of community and business confidence
in the proposed regime:
The effective implementation of legislative measures to counter
money laundering and the financing of terrorist activities will depend in large
part on the willing cooperation of the business community in providing critical
financial data to law enforcement agencies. This in turn will be underpinned by
the understanding and confidence on the part of the community as to what
happens to their financial data.
In support of this argument, the OPC pointed to
research demonstrating notable community reluctance to deal with business in
situations where concerns existed over the protection of their personal
The OPC therefore recommended that, in view of the
privacy issues involved, the amendments should be delayed pending further
careful consultation and assessment as part of the planned consultation process
for the proposed AML Bill. It also stressed the need to conduct a Privacy
Impact Assessment in respect of the proposed amendments in Schedule 9.
The above concerns and recommendation were echoed by
the Australian Privacy Foundation. It characterised the amendments proposed by
Schedule 9 as:
... another example of ‘a power grab by stealth’ – introduction of
provisions with much wider reach, which deserve much wider debate by the many
interested parties, as part of supposedly purpose specific anti-terrorism
legislation. The appropriate place for these provisions are in the proposed
anti money-laundering legislation, which have quite properly been the subject
of recent consultation at least with industry (albeit with limited opportunity for
wider community input).
The Department advised the committee that detailed
discussion on privacy issues and the means to best address these will take
place during the consultation period following release of the AML exposure
However, it maintained that the amendments should not be delayed and the
current practices and requirements included the disclosure of customer
information (such as account numbers). It reiterated that:
... the inclusion of customer information with wire transfers is a
requirement of FATF under Special Recommendation VII on Terrorist Financing.
Financial institutions from most EU countries are expected to be required to
include this type of information in wire transfers by January 2007, and these
institutions will be expecting institutions with which they have correspondent
banking relationships to also comply. Financial institutions from the US
are already required to include customer information with wire transfers.
The committee's view
The committee acknowledges the concerns raised by
submissions in respect of Schedule 9 of the Bill.
However, the committee also appreciates the need for prompt action to progress
counter-terrorist financing measures. The committee also accepts that, as
stated by the Department, the concerns outlined above may be able to be
accommodated within the implementation time period currently provided for the Bill's
commencement provisions. Yet, it is apparent that some flexibility in this area
may be required. This can be achieved by providing the amendments will commence
on ‘a date to be proclaimed’ as opposed to a fixed date.
The committee recommends that clause 2 of the Bill
be amended to provide that Schedule 9 of the Bill
shall commence on 'a date to be proclaimed'.
Schedule 3 of the Bill
amends the Criminal Code and FTR Act in order to 'strengthen existing terrorism
financing offences'. According to the Explanatory Memorandum:
The amendments strengthen the existing terrorist financing
offences and confirm Australia’s
commitment to the principles behind the Financial Action Task Force on Money
Laundering’s (FATF’s) Special Recommendations on Terrorist Financing, the
International Convention for the Suppression of the Financing of Terrorism and
United Nations Security Council Resolution 1373. In particular, the proposed
amendments better implement FATF’s Special Recommendation II, which was
developed with the objective of ensuring that countries have the legal capacity
to prosecute and apply criminal sanctions to a person who finances terrorism.
FATF, in its country evaluation report on Australia,
recommended that 'Australia
should specifically criminalise the collection or provision of funds for an
individual terrorist, as well as the collection of funds for a terrorist
organisation'. FATF did so as it considered
existing terrorist financing offences did not sufficiently cover the requirements
of Special Recommendation II.
terrorism financing offences
Existing subsections 102.6(1) and (2) of the Criminal
Code makes it an offence to receive funds from, or make funds available to, a
terrorist organisation, whether directly or indirectly. Subsection 102.6(1)
deals with the situation where the offender knows the organisation is a
terrorist organisation. This offence carries the maximum penalty of 25 years
imprisonment. Subsection 102.6(2) deals with the situation where the offender
is reckless as to whether the organisation is a terrorist organisation, and imposes
a maximum penalty of 15 years imprisonment.
Existing subsection 103.1(1) of the Criminal Code makes
it an offence for a person to provide or collect funds, and be reckless as to
whether those funds will be used to facilitate or engage in a terrorist
act. The offence is committed even if
the terrorist act does not occur (subsection 103.1(2)). The maximum penalty for
the offence is life imprisonment.
‘Knowledge’ and ‘recklessness’ are defined in sections
5.3 and 5.4 respectively of the Criminal Code. A person has knowledge of a
circumstance (in this case that an organisation is a terrorist organisation) if
they are aware that the circumstance exists or will exist in the ordinary
course of events. A person is reckless with respect to a circumstance if they
are aware of a substantial risk that the circumstance exists or will exist, and
having regard to the circumstances known to them, it is unjustifiable to take
‘Terrorist organisation’ is defined in section 102.1 of
the Criminal Code. ‘Funds’ are broadly defined in section 100.1 of the Code,
and cover property and assets of every kind.
Outline of the Bill's
Item 1 of Schedule 3 of the Bill
will amend subsections 102.6(1) and (2) to criminalise the collection of funds
for, or on behalf of, a terrorist organisation, whether directly or indirectly.
The new offence is committed where the person knows the organisation to be a
terrorist organisation (102.6(1)(a)) or is reckless as to whether it is a
terrorist organisation (102.6(2)(a)). The maximum penalties for the offences
under subsections 102.6(1) and (2) will not change.
Item 3 of Schedule 3 inserts proposed subsection
103.2(1) to criminalise similar conduct as that covered by existing section
103.1, but where the funds are made available to, or collected for, or on
behalf of, another person. The offence will occur if the person providing, or
collecting, the funds is reckless as to whether that other person will use the
funds to facilitate or engage in a terrorist act.
The Explanatory Memorandum explains in relation to Item
As recklessness [defined
above] is a relatively high standard fault element, the proposed offence
will not apply to a person who provides or collects funds believing those funds
will be used for an innocuous purpose, irrespective of whether the funds are in
fact used for a terrorist act.
Proposed subsection 103.2(2) provides that the offence
is committed under proposed subsection 103.2(1) even if:
- a terrorist act does not occur;
- the funds will not be used to
facilitate or engage in a specific terrorist act; or
- the funds will be used to facilitate or
engage a number of terrorist acts, instead of just the one act.
The offence in proposed subsection 103.2(1) carries a
maximum penalty of life imprisonment.
Proposed subsection 103.3 provides that the offences
under Division 103 (which includes existing subsection 103.1(1) and proposed
subsection 103.2(1)) have extended geographical jurisdiction – Category D. This
means that an offence under one of these provisions is committed whether or not
the conduct constituting the alleged offence, or the result of that conduct,
occurs in Australia.
Item 4 of Schedule 3 amends the definition of
‘financing of terrorism offence’ in subsection 16(6) of the FTR Act to include
the new terrorist financing offence added by Item 3. Subsection 16(1A) of the
FTR Act requires a cash dealer to report to AUSTRAC any transaction the dealer
is involved in and has reasonable grounds to suspect is either:
to the commission of a financing of terrorism offence; or
- relevant to
the investigation or prosecution of a financing of terrorism offence.
Concerns were raised with the committee that the new offence
of financing a terrorist (in new section 103.2) would allow a person to be
imprisoned for life if the person indirectly
makes funds available to another person, or indirectly
collects funds for another, and the person is reckless as to whether the other person will use the funds for terrorism.
That is, the person need not intend that the funds be used for terrorism, nor
must they have knowledge that the funds will be used for the purpose. Also of concern was the fact that the offence
is committed even if a terrorist act does not occur or the funds will not be
used for a specific terrorist act.
The committee received a large number of submissions
from a wide cross section of the community which argued that the above extends
criminal liability too far and would make it impossible for any person to know the
scope of their legal liabilities with any certainty. For example, the Gilbert
and Tobin Centre of Public Law submitted that:
financing from a range of sources, including legitimate institutions (such as
money laundering through banks), and employ a variety of deceptive means to
secure funding. This offence would require every Australian to vigilantly
consider where their money might end up before donating to a charity, investing
in stocks, depositing money with a bank, or even giving money as birthday
The key concern was that innocent, well meaning people will be caught. The Law Council noted,
for example, that the proposed offence would encroach on everyday
activities undertaken by many ordinary Australians:
The proposed measure has the capacity to catch all financial
transactions and everyday activities including purchasing items, paying bills,
banking transactions and charitable and other collections, many of which
typically do not warrant, require or allow an enquiry as to the purpose of the
funds. ... There is [also] no minimum amount required to commit the offence, so
that the purchase of a $5 raffle ticket could be sufficient.
Privacy Foundation advised the committee that:
Individuals and organisations acting in good faith cannot be
expected to know enough about these potential links to make a judgement. Criminal offences should only apply to
financial contributions made in the full knowledge that they will be used to
fund criminal activity. Otherwise, two
things will happen - a vast number of individuals will inadvertently expose
themselves to criminal prosecution, and some people will be deterred from
contributing to legitimate social and political movements which criticise
current government policies or even those that don’t. Both are undesirable.
Submitters pointed to the current controversy surrounding
the Australian Wheat Board to demonstrate the uncertainties over the scope of
the offence provision and its reliance on recklessness. As the Law Council noted:
The recent report on the Australian Wheat Board “knowingly”
providing funds to the Saddam Hussein Government via a Jordanian
trucking company provides an interesting example if the facts were slightly
different. For example, what if the funds had flowed through to a terrorist
organisation, would the Board’s conduct amount to the reckless financing of
Submitters also expressed concern that the
amendments would discourage donations to charitable organisations and create
feelings of ill-will and suspicion within the community. It was put to the committee that:
... the Bill’s provisions are likely to exacerbate community, and
possibly racial, tensions as members of the public who propose to donate funds
to seemingly needy groups or causes decide which recipients should be
questioned, and to what extent, about how they propose to use the donated
Witnesses and submitters also argued that a penalty of
life imprisonment was unreasonable and not proportionate for an offence which
is unknowingly committed by a person.
The Law Council
also opposed the use of a fault element of 'recklessness'. It argued that, where
a person convicted of this offence faces the real possibility of losing their
liberty and serving a lengthy prison term, intention and knowledge should be
the standard of fault required.
In light of the above, it was put to the committee that
the new financing terrorism provisions should be subject to the same review as existing
terrorism laws. The Law Council of Australia noted, for
example, the current financing terrorism provisions in the Criminal Code, and therefore
the proposed provisions in Schedule 3 of the Bill,
are excluded from review required under the Security Legislation Amendment
(Terrorism) Act 2002 (Cth).
The Department's response
The Committee put the above concerns to the
The Department argued that many of the concerns raised
were misconstrued. It stressed that the Criminal Code provides that a person is
reckless with respect to a result if they are aware of a substantial
risk that the result will occur, and having
regard to the circumstances known to them it is unjustifiable to take that
risk. As the Department explained:
This means that a person would have to be aware of a substantial
risk that the funds will be used by the receiver of the funds to facilitate or
engage in a terrorist act, and being aware of that risk continued to provide
funds or collect funds (whether directly or indirectly) for that person. The
fact that the funds may be made available to the person indirectly or are
indirectly collected for that person is irrelevant, unless the person engages
in such conduct with the requisite state of mind. For the ordinary person who,
for example, gives funds to a person believing that person is legitimately
collecting money for charity or who collects funds believing that they are
doing that for a legitimate charity, they will not commit an offence,
irrespective of where those funds are eventually used.
That is, the proposed
offence will not apply to a person who provides or collects funds believing
those funds will be used for an innocuous purpose, or even if they believe
there is a small risk of the funds being used for terrorist purposes.
The Department also advised the committee that:
The maximum penalty of life imprisonment is considered
appropriate to the gravity of the act of financing a terrorist offence. The
maximum penalty is the same as that for the existing offence in section 103.1
of the Criminal Code of financing terrorism, which has been in the Criminal
Code since the original terrorism offences were inserted in 2002. This offence
covers essentially the same conduct and also carries a fault element of
The committee's view
The committee acknowledges the significant level of
concern in respect of Schedule 3 of the Bill. However, after careful consideration and
after having regard to the Department's response, the committee does not
consider that these concerns warrant rejection or amendment of the Schedule.
The committee also notes the onus of proof on the prosecution in criminal
matters is beyond reasonable doubt. The Commonwealth Director of Public
Prosecutions would have to be satisfied that a case was worth pursuing, having
regard to the Prosecution Policy of the Commonwealth and related guidelines
governing the exercise of the prosecutorial discretion.
does, however, accept the point that the new financing terrorism provisions ought
to be subject to the same review requirements as apply to other federal
The committee recommends that the Bill
be amended to provide that Schedule 3 of the Bill
shall be subject to a public and independent five year review.
Subject to the above recommendations, the committee
recommends that the Senate pass the Bill.
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