Chapter 1
Introduction and background
1.1
On 26 November 2015 the Hon Michael Keenan MP, Minister for Justice and
Minister Assisting the Prime Minister on Counter-Terrorism, introduced the
Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2015
(the bill) into the House of Representatives.[1]
The bill was passed by the House of Representatives on 3 December 2015.[2]
1.2
On 3 December 2015, pursuant to a report of the Senate Standing
Committee for Selection of Bills, the Senate referred the provisions of the
bill to the Senate Legal and Constitutional Affairs Legislation Committee (the
committee) for inquiry and report by 3 February 2016.[3]
Conduct of the inquiry
1.3
In accordance with usual practice the committee wrote to a number of
persons and organisations, inviting submissions to the inquiry by 8 January
2016. The inquiry was also made public on the committee's website (www.aph.gov.au/senate_legalcon).
1.4
The committee received 12 submissions to the inquiry. The list of
submissions received by the committee is at Appendix 1.
Purpose of the bill
1.5
According to its Explanatory Memorandum (EM), the bill contains 'a range
of measures to improve and clarify Commonwealth criminal justice arrangements'.[4]
These measures are implemented through proposed amendments to the Proceeds
of Crime Act 2002 (PoC Act), the Criminal Code Act 1995 (Criminal
Code), the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF
Act) and the AusCheck Act 2007 (AusCheck Act).
1.6
The bill proposes five discrete sets of amendments, all relating to
criminal justice and national security matters, but not directly related to
each other. The amendments are intended to:
-
clarify the operation of the non-conviction based civil scheme
for the forfeiture of assets suspected of being the proceeds of crime;
-
create new offences of false dealing with accounting documents;
-
amend provisions relating to serious drug offences in the
Criminal Code to ensure that they capture all relevant substances and
processes;
-
enable a wider range of agencies and officials to access and
share information obtained by AUSTRAC under the AML/CTF Act, and further
clarify the circumstances under which information can be shared; and
-
extend the circumstances under which AusCheck can share
background checking information it gathers with other Commonwealth, state and
territory agencies performing law enforcement and national security functions.
1.7
Commending the bill to the House of Representatives, Minister Keenan said
that:
This bill will enhance the ability of Commonwealth agencies
to investigate and prosecute criminal offences, and seeks to ensure that the
Commonwealth can effectively target and confiscate proceeds of crime. It will
better address law enforcement issues and national security risks through
improved information sharing, and it will improve the efficiency and
effectiveness of various laws relating to the administration of criminal
justice.[5]
Key provisions of the bill
1.8
The key substantive provisions of the bill are contained in its five
schedules.
Schedule 1: proceeds of crime
Disclosure of information
1.9
Under the PoC Act, a person may be compelled by a court or a proceeds of
crime examiner to provide a sworn statement or certain information to specified
persons. Section 266A of the PoC Act provides that such information may then be
disclosed onward to certain other authorities, and sets out the authorities to whom
and the purposes for which such disclosures may be made.
1.10
Subsection 266A(2) presently provides that the listed disclosures may be
made if the person disclosing information for a purpose specified in the
subsection 'believes on reasonable grounds that the disclosure will serve that
purpose'. The proposed amendment to that subsection would add the requirement
that a court has not made an order prohibiting the disclosure of the
information to the authority for that purpose.
Asset forfeiture scheme—interaction
with related criminal proceedings
1.11
The PoC Act establishes a non-conviction based civil scheme for the
restraint and subsequent forfeiture of assets which may be the proceeds of
crime. Under the scheme, the Commissioner of the Australian Federal Police
(AFP) or the Commonwealth Director of Public Prosecutions (CDPP) may apply to a
court to restrain property reasonably suspected of being the proceeds of crime,
without requiring any person to be charged. The restrained property may later
be forfeited, if the court is satisfied on the balance of probabilities that
the property is the proceeds of crime.[6]
1.12
The non-conviction based forfeiture scheme operates alongside provisions
for forfeiture upon criminal conviction. Section 319 of the PoC Act provides
that the fact that related criminal proceedings have been instituted is not
grounds for staying
non-conviction based forfeiture proceedings. Following a 2015 High Court
decision in which the Court held that civil forfeiture proceedings must be
stayed until criminal charges against the respondent had been determined,[7]
the bill seeks to amend section 319 to provide more specific direction on the
relationship between civil proceedings under the Act, and related criminal
proceedings.
1.13
Item 4 of Schedule 1 proposes to replace the existing Section 319 with a
new multi-part section setting out more detailed criteria for the stay of
non-criminal forfeiture proceedings under the PoC Act (PoC Act proceedings).
1.14
Subsection 319(1) provides that a court may stay PoC Act proceedings 'if
the court considers that it is in the interests of justice to do so'.
1.15
Subsection 319(2) states that the court may not stay PoC Act
proceedings on any or all of the grounds that:
- (any)
criminal proceedings have been, are proposed to be or may be instituted or
commenced against the person subject to the PoC Act proceedings;
- (any)
criminal proceedings have been, are proposed to be or may be instituted or
commenced against another person in respect of matters relating to the subject
matter of the PoC Act proceedings;
- a person
may need to give or call evidence in the PoC Act proceedings and that evidence
is or may be relevant to a criminal matter; or
- PoC Act
proceedings in relation to someone else have been, are to be or may be stayed.
1.16
The EM states that the grounds set out in subsection 319(2) are
'designed to prevent a respondent from claiming merely a generalised
"risk" of prejudice to support a stay of proceedings', which would
'have flow-on effects on the availability of evidence, would impede the
operation of the non-conviction based scheme and would frustrate the objects of
the PoC Act'.[8]
1.17
Subsections 319(3) and (4) provide that paragraphs 319(2)(a) and (2)(b)
apply even if the circumstances or subject matter of the civil and criminal
proceedings in question are the same or very similar; and subsection 319(5)
provides that paragraph 319(2)(d) applies even if the result is a multiplicity
of PoC Act proceedings.
1.18
Subsection 319(6) provides that in considering whether a stay of PoC Act
proceedings is in the interests of justice, the court must have regard to the
following matters:
-
that both the criminal and civil proceedings in question should proceed
as expeditiously as possible;
-
the cost and inconvenience to the Commonwealth of retaining property to
which the PoC Act proceedings relate, and being unable to expeditiously realise
the proceeds;
-
the risk of any prejudice to the PoC Act proceedings if they were
stayed;
-
whether any prejudice that might occur if the civil proceedings were not
stayed may be addressed by the court by means other than a stay of the
proceedings; and
-
any other order the court could make to address any potential prejudice
to a person which may arise from continuing with the PoC Act proceedings.
1.19
The EM states that the list of matters in subsection 319(6) 'is not a
closed list, and does not prevent the court from considering other issues in
its determination of the interests of justice'.[9]
1.20
A note is inserted after new subsection 319(6) to give examples of
orders the court could make to address any potential prejudice resulting from
not staying PoC Act proceedings. These include appropriate orders for the
non-disclosure of evidence, or hearing the proceedings in closed court under
new section 319A proposed in the bill, which provides that a court may order
PoC Act proceedings to be heard in whole or part in closed court, if the court
considers that necessary to prevent interference with the administration of
criminal justice.
Restraint and forfeiture: order of
proceedings
1.21
An amendment is also proposed in relation to the order of proceedings
where the restraint and subsequent forfeiture of assets is in question. Section
315A presently provides that a court may hear and determine two or more
applications under the PoC Act at the same time. New subsection 315A(2)
qualifies this, by providing that if a proceeds of crime authority applies for
a forfeiture order in relation to particular property (which will have been
'restrained' by authorities under the Act pending the forfeiture application),
and a person has applied to exclude an interest in that property from the
restraining order, the court may only hear the application for the forfeiture
order after the application for exclusion from restraint has been determined.
Schedule 2: false accounting
1.22
Schedule 2 of the bill seeks to amend the Criminal Code to create two
new offences of false dealing with accounting documents. The EM states that
these are intended to implement Article 8 of the OECD Anti-Bribery Convention,[10]
which requires parties to create offences of false accounting for the purposes
of concealing or enabling bribes to a foreign public official. While there are
existing provisions at Commonwealth, state and territory level which relate to
false accounting, a 2012 OECD review of Australia's implementation of the
Convention found that Australia had not fully implemented the accounting
obligations required under Article 8 of the Convention.[11]
1.23
Schedule 2 would insert a new Part 10.9 at the end of Chapter 10 of the Criminal
Code, containing a new Division 490: 'False dealing with accounting documents'.
Within that Division, two new offences would be created.
1.24
Section 490.1 would make it an offence to make, alter, destroy or
conceal an accounting document,[12]
or to fail to make or alter an accounting document a person is required by law
to make or alter, with the intention that such conduct would facilitate,
conceal or disguise the giving or receiving (by any person) of a benefit that
is not legitimately due, or a loss not legitimately incurred.
1.25
The penalty for an individual committing the offence would be
imprisonment for up to ten years, a fine of up to 10,000 penalty units ($1.8
million), or both. For a corporation, the offence is punishable by a fine of up
to 100,000 penalty units
($18 million), an amount three times the value of the illegitimate benefit
obtained by the company from the offence, or ten per cent of the company's
turnover for the
12 months before the offence was committed, whichever is greater.
1.26
Section 490.2 would make the same conduct an offence where the person is
reckless (rather than intentional) about whether the conduct would facilitate,
conceal or disguise an illegitimate benefit or loss. The penalties for
commission of a section 490.2 offence would be half the value of the penalties
under section 490.1.
1.27
With regard to both offences, section 490.5 provides that it is not
necessary to prove that a benefit was actually given or received, or a loss
incurred; or that the defendant intended that a particular person receive a
benefit or incur a loss. The (general) intention or recklessness itself is
sufficient to prove the offence.
1.28
Subsection 490.1(2) sets out the circumstances in which the offences would
apply, as determined by the constitutional powers of the Commonwealth, such as
in relation to constitutional corporations, territories, the Commonwealth
public service, Australian currency or matters occurring outside Australia. Under
section 490.7, the new provisions would not exclude or limit the operation of
any other Commonwealth, state or territory laws.
1.29
In cases where the conduct occurs wholly overseas and the alleged
offender is not an Australian citizen, resident or corporation, section 490.6
requires that proceedings can only commence with the written consent of the
Attorney-General. Subsection 490.6(2) provides that an alleged offender may be
arrested, charged and detained pending such consent from the Attorney-General,
to ensure that a person can not evade justice by fleeing Australia while the
determination is made.
Schedule 3: serious drugs
Drug analogues
1.30
Part 9.1 of the Criminal Code establishes serious drug offences,
applying to substances determined by regulation to be 'controlled' and 'border
controlled' drugs, plants or precursors. Controlled and border controlled drugs
are described by their chemical structure.
1.31
The offences relating to such drugs also apply to substances that are
structurally similar to a controlled or border controlled drug, called 'drug
analogues'.[13]
The bill seeks to amend the chemical descriptors of drug analogues in section 301.9,
to clarify the provisions and account for some of the most common methods of
synthesising drug analogues.[14]
1.32
New subsection 301.9(3), further seeks to remedy an unintended ambiguity
in existing subsection 301.9(2), which states that a drug analogue 'does not
include a substance that is itself a listed controlled drug or a listed border
controlled drug'. The new subsection 301.9(3) would clarify that while a
substance cannot be a drug analogue of a controlled drug if it is already
listed as a controlled drug, and similarly cannot be a drug analogue of a
border controlled drug if it is already listed as a border controlled drug, a
substance can be a drug analogue of a controlled drug if it is listed as a
border controlled drug, and vice versa.
1.33
Finally, new subsection 301.9(4) provides that the words 'addition' and
'replacement' used in section 301.9 have their ordinary meanings. The EM
advises that this is necessary because both terms have a scientific meaning
which is different to their ordinary meaning, and which is not intended here.[15]
Manufacture
1.34
Part 9.1 of the Criminal Code includes offences relating to the
manufacture of controlled drugs. The bill proposes to amend the definition of
'manufacture' in section 305.1 to specify that it includes any process (other
than the cultivation of a plant) by which a substance is produced, extracted,
refined, transformed into a different substance, or converted from one form to
another. This amendment responds to a 2013 case in which the Victorian Court of
Appeal interpreted the definition of 'manufacture' to require that the process
produce a new substance, not merely convert a substance from one form into
another.[16]
Schedule 4: anti-money laundering
and countering the financing of terrorism (secrecy and access of AUSTRAC
information)
1.35
The AML/CTF Act establishes the Australian Transaction Reports and
Analysis Centre (AUSTRAC), a Commonwealth entity which retains, compiles,
analyses and disseminates information to specified government persons and
agencies in support of counter-terrorism and anti-money laundering activities.[17]
Part 11 of the AML/CTF Act governs the secrecy and disclosure of AUSTRAC
information, providing for access to it by 'designated agencies'.
1.36
Item 1 of Schedule 4 seeks to amend the definition of 'designated
agency' in section 5 of the Act to add the Independent Commissioner Against
Corruption of South Australia (ICAC SA), enabling it to access AUSTRAC
information. A consequential amendment to subsection 22(1) designates relevant
staff of ICAC SA as 'officials' of the agency for the purposes of the Act.
1.37
Section 132 of the AML/CTF Act provides for the AFP or Australian Crime
Commission (ACC) to disclose AUSTRAC information to foreign law enforcement
agencies in certain circumstances. A proposed amendment to the definition of
'foreign law enforcement agency' in Section 5, presently defined as 'a
government body that has responsibility for law enforcement in a foreign
country or a part of a foreign country', would expand it to add multi-country
organisations the European Police Office (Europol) and the International
Criminal Police Organization (Interpol), and to allow other international
bodies to be added in future by regulation.
1.38
Section 49 of the AML/CTF Act enables certain designated persons to
compel further written information and documents from agencies who report to
AUSTRAC (such as banks and other financial service providers[18]),
to assist with relevant investigations arising from their reporting. Section 122
governs the secrecy of information obtained under section 49, providing that it
must not be disclosed to anyone else, other than in accordance with exceptions
set out in subsection 122(3).[19]
Item 4 of Schedule 4 proposes to add to these exceptions, by way of a new
subparagraph 122(3)(c), allowing disclosure 'for the purposes of, or in
connection with, the performance of the duties of' the AFP Commissioner, the
Chief Executive Officer of the ACC, the Comptroller-General of Customs, the
Integrity Commissioner or an investigating officer. The EM provides the example
that such further disclosure may be required in an application for a warrant.[20]
1.39
Item 5 of Schedule 4 provides that the new disclosure provisions, once
commenced, would apply to information obtained both before and after the
commencement of the bill.
Schedule 5: disclosure and use of
AusCheck scheme personal information
1.40
AusCheck is a branch within the Attorney-General's Department (AGD) that
provides national security background checking services for persons who require
an Aviation Security Identification Card or a Maritime Security Identification
Card, and for the National Health Security check regime. These accreditations
enable persons to have access to secure areas of Australia's airports or
seaports, or to security-sensitive biological agents. To conduct the background
checks, AusCheck obtains personal information on applicants' identity, criminal
history, security assessment and citizenship or residency status, from agencies
such as the Australian Security Intelligence Organisation (ASIO), CrimTrac and
the Department of Immigration and Border Protection (DIBP).[21]
1.41
Schedule 5 of the bill seeks to amend the AusCheck Act to extend
AusCheck's ability to share the personal information it obtains with other
agencies.
1.42
Subsection 4(1) of the Act presently defines 'Commonwealth authority'
as 'a body corporate established for a public purpose by or under a law of the
Commonwealth'. The bill proposes to replace this definition with 'a body
(whether incorporated or not) established for a public purpose by or under a
law of the Commonwealth'. The EM states that expanding the definition in this
way aims to allow AusCheck to share information with non-corporate Commonwealth
agencies and entities, such as specific areas within government departments.[22]
1.43
Section 14 of the AusCheck Act governs the retention and subsequent use
of information gathered by AusCheck. Subparagraph 14(2)(b) sets out the
purposes for which the information may be used or disclosed. These include for
carrying out a subsequent background check on the same individual, responding
to an incident that poses a threat to national security, and, at 14(2)(b)(iii),
for:
the collection, correlation, analysis or dissemination of
criminal intelligence or security intelligence by the Commonwealth, or by a
Commonwealth authority that has functions relating to law enforcement or
national security, for purposes relating to law enforcement or national
security.
1.44
The bill proposes to repeal subparagraph 14(2)(b)(iii) and replace it
with two new provisions, allowing disclosure for the following purposes:
(iii) the
performance of functions relating to law enforcement or national
security by the Commonwealth or a Commonwealth authority;
(iiia) the
performance of functions relating to law enforcement or national
security by a State or Territory or a State or Territory authority.
1.45
The bill would insert into subsection 4(1) a new definition of 'State or
Territory authority' as 'a body (whether incorporated or not) established for a
public purpose by or under a law of a State or Territory'.
1.46
The EM states that these amendments would enable AusCheck to disclose
personal information to 'a Commonwealth authority which is not traditionally
considered to be a law enforcement agency but may require access to the
information to respond to national security or crime threats', as well as to
state and territory agencies, which were not previously included in the Act.[23]
The EM advises that 'appropriate safeguards' exist within the Act in relation
to the use and disclosure of information, which would apply to the broader
range of agencies with whom information may be shared under the amended provisions.[24]
1.47
Item 5 of Schedule 5 provides that the amendments would apply to the use
or disclosure of information collected both before and after the commencement
of the bill.
Consideration by Scrutiny of Bills Committee
1.48
On 2 December 2015 the Senate Standing Committee for the Scrutiny of
Bills (Scrutiny of Bills Committee) tabled its comments on the bill.[25]
1.49
The Scrutiny of Bills Committee raised two issues upon which it sought
further advice from the minister:
-
the provision in Schedule 4 which would allow for additional
international bodies to be prescribed by regulation in future for the purposes
of sharing information. The committee stated that 'the implications for
individual privacy of sharing AUSTRAC information are significant', and therefore
such provision 'should be included in primary legislation unless a
comprehensive and compelling justification is provided'.[26]
The committee requested that the minister provide more detailed justification
for the use of regulation rather than future primary legislation in this
instance; and
-
with regard to Schedule 5, the strength of safeguards to protect
the disclosure of AusCheck personal information, given the expansion of such
disclosures which would be allowed by the bill and the implications for
persons' privacy. While recognising that AusCheck policies established
practical safeguards, the committee regarded it as 'a matter of concern that
the existence of safeguards...is not required by law', and sought the minister's
advice as to whether consideration had been given to enshrining practices and
policy in law to provide assurance that the safeguards were 'robust and
permanent', or to at least impose a legislative requirement that safeguards be
in place.[27]
1.50
Addressing one additional matter, the Scrutiny of Bills Committee noted
that the ratio between imprisonment and penalty units for the new false
accounting offences in Schedule 2 was inconsistent with other provisions in the
Criminal Code, but that that approach had been justified in detail in the EM.
The committee therefore did not seek further advice from the minister, inviting
the Senate to consider the appropriateness of the provisions.[28]
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