BILLS DIGEST NO. 27, 2018–19              17 September 2018

Unexplained Wealth Legislation Amendment Bill 2018

Jonathan Mills
Law and Bills Digest Section

Cat Barker
Foreign Affairs, Defence and Security Section

Date introduced:  20 June 2018

House:  House of Representatives

Portfolio:  Home Affairs

Commencement: Schedules 1 to 8 commence on proclamation or six months from Royal Assent, whichever comes first. The remaining sections of the Act commence on Royal Assent.

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

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

All hyperlinks in this Bills Digest are correct as at September 2018.

Purpose of the Bill

The purpose of the Unexplained Wealth Legislation Amendment Bill 2018 (the Bill) is to amend the Proceeds of Crime Act 2002 (the POC Act), the Telecommunications (Interception and Access) Act 1979 (the TIA Act) and the Proceeds of Crime Regulations 2002 to establish a national cooperative scheme on unexplained wealth (NCSUW).

The NCSUW will not replace existing unexplained wealth regimes operating at Commonwealth level and in the states and territories, but is intended to operate concurrently with them and enhance them by providing a more coordinated scheme with information sharing, access to information gathering powers and sharing arrangements for seized assets available to participating jurisdictions.

Structure of the Bill

This Bill is divided into eight schedules.

•       Schedule 1 amends the POC Act to establish how states may join or leave the NCSUW by reference to the Commonwealth or adoption of the amended Act

•       Schedule 2 amends the POC Act to extend the main unexplained wealth provisions of that Act to relevant offences against the laws of a participating state

•       Schedule 3 amends the POC Act to extend the main unexplained wealth provisions of that Act to offences against the laws of the Northern Territory or the Australian Capital Territory

•       Schedule 4 amends the POC Act to create a scheme for information gathering by participating states and the territories

•       Schedule 5 amends the POC Act to enable and set out arrangements for the sharing of proceeds between jurisdictions under the NCSUW

•       Schedule 6 amends the TIA Act to enable the recording, use and sharing of information under that Act between the agencies of and for proceedings under the unexplained wealth legislation of the Commonwealth, a participating state, the Northern Territory or the Australian Capital Territory

•       Schedule 7 amends the POC Act to require a review, after four years, of the national unexplained wealth provisions and any other matter specified for review in the NCSUW agreement

•       Schedule 8 contains an amendment to the Proceeds of Crime Regulations 2002 to appropriately define the unexplained wealth legislation of New South Wales and the Northern Territory so that those jurisdictions can access the information gathering and sharing measures of Schedules 4 and 6.

Background

What is ‘unexplained wealth’?

As outlined in an earlier Bills Digest:

‘Unexplained wealth’ laws enable a court to issue an order unless the subject of proceedings can establish, on the balance of probabilities, that his or her wealth was lawfully acquired. An assessment is made of the quantum of unexplained wealth (the difference between the person’s total wealth and that shown to be derived lawfully), and the subject of the order must pay the amount to the relevant jurisdiction.

Unexplained wealth laws are designed to target the wealth of senior organised crime figures, who profit from crime while tending not to be directly linked to the commission of specific offences.[1]

Commonwealth unexplained wealth laws

The POC Act, which already provided for conviction-based and civil confiscation, was amended in 2010 to include unexplained wealth laws.[2] The POC Act provides for three types of orders relating to unexplained wealth:

•       unexplained wealth restraining orders, which restrict a person’s ability to dispose of or otherwise deal with property

•       preliminary unexplained wealth orders, which require a person to attend court for the purpose of enabling the court to decide whether to make an unexplained wealth order and

•       unexplained wealth orders, which require a person to pay the amount determined by the court to be the difference between the person’s total wealth and that which has been legitimately acquired.[3]

Limitations of Commonwealth scheme and proposal for a national scheme

As noted above, unexplained wealth laws can be particularly valuable in the context of organised crime, where those who derive the greatest profits are not directly involved in the commission of offences. They provide an alternative avenue where senior figures cannot be pursued effectively through prosecution or traditional confiscation action:

Unlike existing confiscation orders, unexplained wealth orders will not require proof of a link to the commission of a specific offence and in that sense they represent a quantum leap in terms of law enforcement strategy.[4]

However, due to the need for a connection with a constitutional head of power, the application of the Commonwealth unexplained wealth regime is currently limited to instances where a court is satisfied that there are reasonable grounds to suspect that:

•       the person has committed an offence against a law of the Commonwealth, a foreign indictable offence or a state offence that has a federal aspect or

•       part of the person’s wealth was derived from an offence against a law of the Commonwealth, a foreign indictable offence or a state offence that has a federal aspect.[5]

This undermines the key advantage of unexplained wealth laws over prosecution or traditional confiscation as, in practice, a connection must be made to a specific offence or fairly specific type of offence in order to satisfy the jurisdictional requirement. For this reason, and to provide national consistency, the Parliamentary Joint Committee on Law Enforcement recommended in March 2012 that the Australian Government:

… seek a referral of powers from the states and territories for the purpose of legislating for a national unexplained wealth scheme, where unexplained wealth provisions are not limited to having to prove a predicate offence.[6]

Negotiations with state and territory governments

The Australian Government first raised the proposal with state and territory governments in April 2012.[7] Despite assurances that they would still retain proceeds seized under their own laws, the states and territories initially rejected the proposal and in June 2013, former police commissioners Mick Palmer and Ken Moroney were appointed to negotiate with jurisdictions on a national scheme to ‘break the deadlock’.[8] Palmer and Moroney reported to the Government in 2014 and negotiations continued with the states and territories, with New South Wales (NSW) the first state to agree to participate in a national unexplained wealth scheme in November 2015.[9] Victoria, South Australia (SA), Western Australia (WA), the Northern Territory (NT) and the Australian Capital Territory (ACT) were also involved in the negotiations at various points, but Queensland and Tasmania were not.[10] However, the Victorian, South Australian and Western Australian Governments were all reported to have ruled out participating in the national scheme at different points.[11]

If the Bill is passed, the NT and ACT will be included in the scheme without the need for separate legislation in those jurisdictions.[12] NSW is the only state to have introduced legislation to refer its powers at the time of publication of this Digest.[13] The Bill will provide a framework for a national scheme, but will not actually establish a national scheme—that will rely on other states referring their powers. The utility of the scheme will depend on how many states choose to do so.

Committee consideration

Senate Legal and Constitutional Affairs Legislation Committee

The Bill was referred to the Legal and Constitutional Affairs Legislation Committee for inquiry and the Committee published its report on 6 August 2018. The Committee recommended that the Bill be passed.[14] Details of the inquiry are at the inquiry webpage.

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills considered the Bill in its Digest 7 of 2018,[15] and flagged several issues on which the Committee requested responses from the Minister.

The Minister responded on 12 July 2018[16] and the Committee considered the response in its Digest 8 of 2018.[17] In light of the response, the Committee chose to make no further comment on some concerns and left to the Senate as a whole consideration of the appropriateness of abrogating legal professional privilege and the privilege against self-incrimination.

Policy position of non-government parties/independents

The Bill enjoys the support of the Australian Labor Party.[18] At the time of writing this Digest, it appears that no other parties or independents had commented on the Bill.

Position of major interest groups

Some concerns have been raised by interest groups regarding the proposed extension of the unexplained wealth regime.[19] These centre around the powers that the schemes grant to law enforcement and the past application of the regime to seizing assets of criminals involved in less serious crimes, rather than only senior crime figures. These concerns however, relate to the nature of existing unexplained wealth laws and the manner in which they have been used, rather than relating to the subject matter of the current Bill. The Shadow Minister for Justice, Clare O’Neil, addressed this issue in her second reading speech:

I would like to speak about a number of concerns that were expressed by stakeholders through the parliamentary process that this bill has gone through. An unexplained wealth regime does have some issues where well-established principles of law that protect us have to be amended for us to be able to put unexplained wealth laws into our parliamentary context. They are valid concerns—they really are—and that's why I want to draw them out in this discussion. They are things like the abrogation of legal professional privilege, the privilege against self-incrimination, issues around use and derivative use immunity, and immunity from liability. These are all core principles in law that essentially allow individuals to protect themselves from admitting to liability for crimes. In some senses, the unexplained wealth regime probably doesn't technically sit well with those principles.

What I want the stakeholders who have made a contribution to this discussion to understand is that the bill before us is not changing any powers that the federal government has over individuals. It's not changing the powers of police in any way. It's just extending existing powers over new offences. There is a debate to be had, perhaps, about unexplained wealth regimes, but this bill is really not the place to do that. I believe we have a good structure in place and we have some really good protections, too, that are enshrined in law.[20]

Financial implications

The Explanatory Memorandum states that that the Bill will have no financial impact.[21]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[22]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights considered the Bill in its Scrutiny Report 7 of 2018, and flagged several human rights issues on which the Committee requested responses from the Minister. [23] Specifically these related to various aspects which may engage the right to privacy, the privilege against self-incrimination and the rights to a fair trial and hearing.[24] Most of these concerns were related to the operation of the POC Act and TIA Act as they stand, as those Acts were introduced before the Committee was established and hence have not been subject to its consideration. For that reason the Committee recommended that the Minister undertake or consider undertaking assessments of those Acts to determine their compatibility with relevant human rights.[25]

Key issues and provisions

States joining the national scheme

Schedule 1 amends the POC Act to establish how states may join or leave the NCSUW and how their laws interact with those of the Commonwealth.

Proposed section 14A ensures that the laws of states or territories are able to operate concurrently with the POC Act, except for the proposed national unexplained wealth provisions.[26]

Proposed section 14L sets out how the proposed national unexplained wealth provisions of the POC Act interact with the laws of states or territories. The national unexplained wealth provisions do not exclude or limit state or territory laws where they can operate concurrently,[27] and, for laws of participating jurisdictions, even where the state or territory law deals with the same matter.[28]

Proposed section 14C provides for states to become participating states by legislatively referring powers to the Commonwealth before the enactment of the Unexplained Wealth Legislation Amendment Act 2018 or by legislatively adopting that Act after its enactment.

Proposed sections 14G to 14K provide mechanisms for participating states and territories to rollback any subsequent amendments to the POC Act to ensure that they do not apply in their jurisdiction should they not wish them to.

Item 6 of Schedule 1 introduces transitional arrangements to deal with orders, proceedings, information, assets and the like in the event that a participating state withdraws from the national scheme by terminating a reference or adoption.

Extension to relevant state offences

Schedule 2 amends the POC Act to extend the main unexplained wealth provisions of that Act to also apply to relevant offences under the laws of a participating state.

Item 8 inserts a definition into section 338 to provide that a relevant offence is one that is specified by the participating state in its referral or adoption Act.

Extension to territory offences

Schedule 3 amends the POC Act to extend the main unexplained wealth provisions of that Act to all offences against a law of a ‘self-governing Territory’. A ‘self-governing Territory’ is defined by section 338 of the POC Act to mean the Northern Territory and the Australian Capital Territory.

Information gathering

Schedule 4 amends the POC Act to create a scheme for information gathering by participating states and the territories.

Item 6 inserts proposed Schedule 1 into the POC Act to permit authorities of participating states and territories to gather information for the purposes of their unexplained wealth legislation through a scheme of production orders and notices to financial institutions. Proposed clause 18 also lists people to whom any information gathered under that Schedule may be disclosed and the purposes it may be disclosed for. This permits disclosures including to an authority of another Australian jurisdiction for purposes of performing functions under the POC Act or a corresponding law, or dealing with an offence punishable by imprisonment for at least three years.

Sharing proceeds

Schedule 5 amends the POC Act to set out arrangements for the sharing of proceeds between jurisdictions under the NCSUW.

The amendments in this Schedule provide a legislative mechanism for the Commonwealth to receive and share the proceeds of confiscated assets with states, territories and foreign countries (if that country has made a contribution to the recovery of the proceeds).[29] Decisions on sharing proceeds between jurisdictions are to be made according to a process set out under proposed section 297C by a subcommittee established under that section and under the NCSUW agreement.[30] The subcommittee is to consist of members of the Cooperating Jurisdiction Committee from the Commonwealth and contributing states or territories. Once certain deductions are made,[31] the remaining part of the proceeds is to be shared equally between relevant jurisdictions.[32]

Sharing information

Schedule 6 amends the TIA Act to enable the recording, use and sharing of information under that Act between the agencies of the Commonwealth, a participating state, the Northern Territory or the Australian Capital Territory, and for proceedings under the unexplained wealth legislation of those jurisdictions.

Item 1 of Schedule 6 imports the definitions of main unexplained wealth provisions, participating State and unexplained wealth legislation from the POC Act.

Item 2 inserts proceedings under the main unexplained wealth provisions or unexplained wealth proceedings of a participating state or territory into the list of exempt proceedings in section 5B of the TIA Act. This permits the use of lawfully intercepted information as evidence in such proceedings.

Similarly item 3 adds those proceedings to the permitted purposes for which police forces of the relevant jurisdictions may deal with intercepted information.

Item 4 inserts into the section 6L list of relevant proceedings, for the NSW Crime Commission, proceedings for prescribed NSW offences or for confiscation or forfeiture of property, or penalties connected with such offences. This will allow the NSW Crime Commission to have the same powers as other similar agencies, such as the Australian Commission for Law Enforcement Integrity and the ACIC, already have under section 6L.

Items 7 and 8 introduce amendments to section 68 to allow the chief officer of an agency to communicate lawfully intercepted information relating to the unexplained wealth provisions to the AFP Commissioner or to the Commissioner of a state police force.

Item 9 provides that the amendments to the TIA Act apply only to proceedings begun on or after the commencement of Schedule 6.

Other provisions

Schedule 7 amends the POC Act by inserting proposed section 327A to require the Minister to cause an independent review to be undertaken, after four years, of the national unexplained wealth provisions and any other matter specified for review in the NCSUW agreement.

Schedule 8 contains an amendment to the Proceeds of Crime Regulations 2002 to appropriately include the relevant unexplained wealth legislation of New South Wales and the Northern Territory so that those jurisdictions can access the information gathering and sharing measures of Schedules 4 and 6.

© Commonwealth of Australia

Creative Commons

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

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

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

Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.

Disclaimer: Bills Digests are prepared to support the work of the Australian Parliament. They are produced under time and resource constraints and aim to be available in time for debate in the Chambers. The views expressed in Bills Digests do not reflect an official position of the Australian Parliamentary Library, nor do they constitute professional legal opinion. Bills Digests reflect the relevant legislation as introduced and do not canvass subsequent amendments or developments. Other sources should be consulted to determine the official status of the Bill.

Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library’s Central Enquiry Point for referral.

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.

[1].              Footnote references have been omitted from this quotation and can be viewed in the source document: C Barker, Crimes Legislation Amendment (Unexplained Wealth and Other Measures) Bill 2014, Bills digest, 57, 2013–14, Parliamentary Library, Canberra, 2014, p. 2.

[2].              Crimes Legislation Amendment (Serious and Organised Crime) Act 2010, Schedule 1. For details of the originating Bill, see M Biddington, Crimes Legislation Amendment (Serious and Organised Crime) Bill 2009, Bills digest, 31, 2009–10, Parliamentary Library, Canberra, 2009.

[3].              Proceeds of Crime Act 2002, sections 20A, 179B and 179E. For further background to the Commonwealth’s unexplained wealth laws, see M Biddington and C Barker, Crimes Legislation Amendment (Organised Crime and Other Measures) Bill 2012, Bills digest, 64, 2012–13, Parliamentary Library, Canberra, 2013. For general background on unexplained wealth laws, see Parliamentary Joint Committee on Law Enforcement (PJCLE), Inquiry into Commonwealth unexplained wealth legislation and arrangements, Commonwealth of Australia, Canberra, March 2012 and Parliamentary Joint Committee on the Australian Crime Commission (now the PJCLE), Inquiry into the legislative arrangements to outlaw serious and organised crime groups, Commonwealth of Australia, Canberra, August 2009.

[4].              R McClelland, ‘Second reading speech: Crimes Legislation Amendment (Serious and Organised Crime) Bill 2009’, House of Representatives, Debates, 24 June 2009, pp. 6964–7.

[5].              Proceeds of Crime Act 2002, sections 20A, 179B and 179E. Foreign indictable offence and state offence that has a federal aspect are defined in sections 337A and 338 of the POC Act respectively, with the latter taking the same meaning as in the Crimes Act 1914 (section 3AA).

[6].              PJCLE, Inquiry into Commonwealth unexplained wealth legislation and arrangements, op. cit., p. 79 (Recommendation 15). See further pages 30–33, 55–79 (including Recommendation 14).

[7].              Australian Government, Australian Government Response to the Parliamentary Joint Committee on Law Enforcement Inquiry into Commonwealth Unexplained Wealth Legislation and Arrangements, February 2013, p. 8.

[8].              J Clare (Minister for Home Affairs and Justice), Mick Palmer and Ken Moroney appointed to break deadlock on national unexplained wealth laws, media release, 24 June 2013.

[9].              Australian Government, National organised crime response plan 2015–18, Commonwealth of Australia, Canberra, 2015, p. 14; M Keenan (Minister for Justice) and T Grant (NSW Minister for Justice and Police), One step closer to taking the profit motive away from organised crime, media release, 5 November 2015. The 2014 report does not appear to have been made public.

[10].              Law, Crime and Community Safety Council (LCCSC), Draft Communique, LCCSC Meeting, Canberra, 5 November 2015 (mentions NSW, Victoria, WA, ACT and NT); LCCSC, Communique, LCCSC Meeting, Melbourne, 21 October 2016 (mentions NSW, SA, Victoria, WA, ACT and NT); LCCSC, Communique, LCCSC Meeting, Melbourne, 19 May 2017 (mentions NSW, SA, WA, ACT and NT).

[11].              F Anderson, ‘Feds plan to seize crime money by year's end’, The Australian Financial Review, 16 June 2016, p. 8 (stated that Victoria and SA would not participate); A Smethurst, ‘States in fight for profits of crime’, Sunday Mail Brisbane, 18 June 2017, p. 9 (reported that WA would not participate; there was a change of government in WA in March 2017). The status of the Intergovernmental Agreement on the National Cooperative Scheme on Unexplained Wealth referred to in the Bill (proposed subsection 297A(2)) and the Explanatory Memorandum (pp. 1, 22, 53) is unclear. If the Agreement already exists, it does not appear to be publicly available.

[12].              Proposed subsection 14B(11), to be inserted by item 2 of the Schedule 1, and Schedule 3.

[13].              Unexplained Wealth (Commonwealth Powers) Act 2018(NSW).

[14].              Senate Legal and Constitutional Affairs Legislation Committee, Unexplained Wealth Legislation Amendment Bill 2018 , Report, The Senate, Canberra, 6 August 2018, p. vii.

[15].              Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 7 of 2018, The Senate, Canberra, 27 June 2018, pp.5-14.

[16].              Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 8 of 2018 – Ministerial Responses, The Senate, Canberra, 27 June 2018, pp.17-24.

[17].              Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 8 of 2018, The Senate, Canberra, 27 June 2018, pp.61-73.

[18].              C O’Neil, ‘Second reading speech: Unexplained Wealth Legislation Amendment Bill 2018’, House of Representatives, Debates, 21 August 2018, p. 2.

[19].              See for example: Submissions from Civil Liberties Australia (submission no. 2), the Law Council of Australia (submission no. 5) and Barrister Mr Edward Greaves (submission no. 7) of the Senate Legal and Constitutional Affairs Legislation Committee, Unexplained Wealth Legislation Amendment Bill 2018 , Submissions, The Senate, Canberra, 2018 ; P Gregoire, Government to Give Itself Greater Power to Seize the Assets of Citizens, Sydney Criminal Lawyers, blog, 16 August 2018.

[20].              C O’Neil, op cit.

[21].              Explanatory Memorandum, Unexplained Wealth Amendment Bill 2018, p. 5.

[22].              The Statement of Compatibility with Human Rights can be found at pages 6-14 of the Explanatory Memorandum to the Bill.

[23].              Parliamentary Joint Committee on Human Rights, Scrutiny Report 7 of 2018, Parliament, Canberra, 2018, pp. 65-81.

[24].              Ibid.

[25].              Ibid, pp.71, 80, 81.

[26].              The national unexplained wealth provisions are essentially those that deal directly with the NCSUW, and are defined by proposed sections 338 and 14B as those under or relating to proposed sections 20A, 14A-14N, Schedule 1 and various relevant definitions.

[27].              Proposed subsection 14L(1).

[28].              Proposed subsections 14L(3) and (4).

[29].              Proposed section 297B.

[30].              Proposed subsections 297C(3) and (4). Proposed subsection 297A(2) provides that the NCSUW agreement is an Intergovernmental Agreement as in force from time to time.

[31].              Proposed subsections 297C(2) and (5).

[32].              Proposed subsection 297C(6).