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CHAPTER 2
Overview of Commonwealth unexplained wealth laws
What are unexplained wealth laws?
2.1
Unexplained wealth laws represent a relatively new form of criminal
assets confiscation, whereby, in essence, individuals who cannot account for
the wealth they hold may be liable for forfeiture of those assets to the state.
In this sense, unexplained wealth laws go further than most established proceeds
of crime laws.
Proceeds of crime
2.2
Modern proceeds of crime provisions generally take two forms: conviction
based laws and civil confiscation laws.[1]
The former requires a criminal conviction before assets may be confiscated,
while the latter uses the courts' civil jurisdiction to confiscate criminal
assets. Civil forfeiture laws are generally based on a civil, rather than
criminal standard of proof, as is the situation under the Commonwealth's Proceeds
of Crime Act 2002 (PoCA), which provides that a court may make an order
restraining assets, if 'there are reasonable grounds to suspect that' the
assets are the proceeds of crime.[2]
2.3
The reason for this extension of confiscation laws from conviction-based
to civil, is due to the effectiveness of the laws in preventing organised crime
from occurring. Confiscating illegally obtained assets undermines the profit
motive of crime and prevents the re-investment of those assets into further
criminal ventures.
Unexplained
wealth provisions
2.4
Unexplained wealth legislation goes a step beyond civil forfeiture by
reversing the onus of proof in criminal assets confiscation proceedings.
2.5
A number of jurisdictions have already adopted legislation which
reverses the onus of proof, enabling authorities to restrain assets that appear
to be additional to an individual's legitimate income and requiring that
individual to demonstrate that those assets were obtained legally.
2.6
For example, the legislation in Western Australia (WA) and the Northern
Territory (NT) allows the respective Directors of Public Prosecutions to apply
to the courts for a confiscation order if a person has 'unexplained wealth'.
2.7
In practice, this means that, on the basis of covert financial
investigation of an individual, it is determined that they have wealth exceeding
what would reasonably be expected given an individual's lifestyle. Using this
financial information, a court may order that an individual prove the
legitimacy of the unexplained amount of wealth. At this point, the onus of
proof has been reversed.
2.8
This means that in those jurisdictions, in principle, it is not
necessary to demonstrate on the balance of probabilities that the wealth has
been obtained by criminal activity, but instead places the onus on an
individual to prove their wealth was acquired legally.
Undermining serious and organised
crime networks
2.9
The value of unexplained wealth provisions lays in their potential
ability to significantly undermine the business model of serious and organised
crime. The incentive behind organised crime is to make money. By removing
unexplained wealth from serious and organised criminal networks and associated
individuals, this incentive is removed.
2.10
In the course of its previous inquiry into legislative arrangements to
outlaw serious and organised crime groups, the committee collected evidence
from a wide range of law enforcement agencies around Australia and overseas. The
committee repeatedly heard that one of the most effective ways of preventing
organised crime is by 'following the money trail'. As the Australian Crime
Commission (ACC) informed the committee:
...organised crime is for the most part about profit. They are
not generally about a better quality of firearm or a better quality of drug.
Perhaps there is something of that in there but by and large it is about the
balance sheet for them. Our focus then is not necessarily about the predicate
activities or even some of the individuals involved in it, but recognising
that, wherever the criminal activity takes place and whatever crimes are
involved in it, if we can take away the profit benefit then we are having more
impact than we would through any number of—and I hesitate to use this
term—minor charges. If we drive at what is the profit motive here, I think we
will be more successful in unpicking and deterring—and perhaps even in the
crime prevention area.[3]
As the ACC noted, while serious and organised criminal
groups continue to prove resilient and adaptable to legislative amendment and
law enforcement intelligence and investigative methodologies, the reduction or
removal of their proceeds of crime is likely to represent a significant
deterrent and disruption to their activities.[4]
2.11
The committee has heard that while organised crime figures may be
prepared to spend time in prison, taking their assets was what really
constituted harm to them. For this reason, Mr Raffaele Grassi, from the Italian
National Police, highlighted the importance of 'going after the money' and
depriving criminal groups of their assets.[5]
2.12
This same point was reiterated by the Australian Federal Police (AFP)
during the current inquiry. As Commander Ian McCartney informed the committee,
targeting the business model of criminal enterprise represented a new way of
attacking organised crime:
In terms of mindset, I think that what is also important—and
we have to put our hand up—is that the work that we are doing now has to be
seen as traditional policing. We have to change the culture within our policing
agencies on the importance of following the money to target organised crime
activity, and it is still a work in progress in policing agencies around
Australia, which are focused on the drug or on the predicate offence. With the
importance and benefit of utilising proceeds of crime and money laundering
legislation to target organised crime, I think that is traditional policing in
the new environment.[6]
2.13
The AFP informed the committee that unexplained wealth provisions are
particularly valuable as they can be used to target criminals who derive an
income from criminal activity, but because of where they sit in a criminal
enterprise and their lack of proximity to the offences committed, cannot be
pursued through criminal prosecution or traditional proceeds of crime action. In
this way, unexplained wealth provisions are a particularly effective tool for law
enforcement agencies to use to target the profits of serious and organised
crime.[7]
As Commander McCartney pointed out, unexplained wealth provisions worked
alongside other measures, filling a specific gap in existing legislation:
We have said right from the start that we never viewed
unexplained wealth as the panacea for targeting organised crime. But we view
the concept as a very important tool in the toolbox. Where in dealing with
serious and organised criminals we have the situation where we have sufficient
evidence to prosecute and sufficient evidence to utilise the existing proceeds
of crime legislation in relation to restraint and forfeiture, our focus is on
utilising that. But where we have a situation where there is a significant
serious and organised crime target who has disassociated himself from the
criminal activity, that is where the vulnerability is. If we know he is
involved in criminal activity and we know the assets he has obtained are from
criminal activity, without the opportunity for robust unexplained wealth
legislation that is a real vulnerability for us.[8]
2.14
The Committee heard from Western Australia Police that unexplained
wealth provisions can be a significant deterrent to serious and organised
criminals, who would otherwise feel protected from the activities of law
enforcement agencies. In addition, Assistant Commissioner Nick Anticich
informed the committee:
I...think that, if we are able to remove assets that have been
acquired through illicit activities well after the event, that sends a really
powerful message. It has been my experience that incarceration, imprisonment
and other forms of more legitimate punishment for offences often do not have as
great an effect as the removal of assets and wealth from these particular
individuals.
There is also an economic benefit from this. Looking at some
of the figures quoted regarding organised crime and its value, if we are able
to return that money to the funds that are available for the community and for
other uses, it is going to be extremely beneficial and a real, tangible measure
for the community in terms of the effect. [9]
2.15
Furthermore, unexplained wealth provisions that do not require proof of
a predicate offence enable law enforcement agencies to take an assets-based
rather than individual-based approach to confiscation. For example, the
Northern Territory Police noted the capacity under some unexplained wealth laws
to pursue assets to third parties:
In respect to the specifics of an Unexplained Wealth
Declaration, Northern Territory legislation does not have a predicate offence
provision and therefore it is not necessary to convict a person prior to
commencing proceedings. This simplifies the pursuit of third parties and
receivers of crime derived assets. Further, it has been used successfully to
target [asset] rich spouses, family members and close associates of targets
where there is no apparent lawful income evident to support their wealth
position.[10]
2.16
The committee considers that unexplained wealth provisions of this type
can therefore play a significant role in countering the techniques organised
crime figures use to insulate themselves from more traditional law enforcement
techniques, which are generally aimed at securing a prosecution. Mr Tony Negus,
Commissioner of the AFP, commented on the growing importance of the prevention
work undertaken by law enforcement agencies, stating:
Across law enforcement over the last decade or more we have
realised that the arrest of offenders is one very strong deterrent, but it is
only one and there needs to be a range of other treatments put in place.
Prevention is very much at the forefront of the thinking of most law
enforcement agencies around the world these days. If we can devise processes
and systems that help to destabilise or undermine the creation of wealth across
those criminal syndicates then prevention will be one of the outcomes that we
will be looking for. There have to be different ways of attacking the root of
serious and organised crime. These are very resourceful and sometimes very
clever people who will devise methods to avoid detection and apprehension. We
need to be very creative in the way that we look at dealing with the wider
syndicates.[11]
2.17
It is the committee's opinion that unexplained wealth provisions represent
an important new way to protect the community from the malevolent effects of
serious and organised crime, through disruption of its underlying business
model. In cases where it is not possible to catch the ringleaders of organised
crime through traditional techniques, unexplained wealth provisions offer a way
to bring these figures down, to the benefit of the wider community.
Intrusive nature of unexplained
wealth laws
2.18
Unexplained wealth laws are controversial because they reverse the
longstanding legal tradition of the presumption of innocence. Under most
unexplained wealth regimes, once certain tests or thresholds have been
satisfied, it is the respondent who must prove that wealth has been
legitimately acquired.
2.19
Unexplained wealth laws are more intrusive than proceeds of crime
laws because, in their purest form, they do not rely on prosecutors being able
to link the wealth to a criminal offence, even at the lower civil standard. As
such there is a greater likelihood that the assets of crime will be confiscated.
Though the reversal of the onus of proof is a key element of effective
unexplained wealth legislation, it is this very element that raises concern.
2.20
The Law Council of Australia, using the example of the Western Australia
legislation, was concerned about unexplained wealth provisions undermining
principles of common law, submitting:
The Law Council continues to be concerned that by reversing
the onus of proof and enacting a presumption against the respondent, the
unexplained wealth provisions remove the safeguards that have evolved at common
law to protect innocent parties from the wrongful forfeiture of their property.
As a result a person may be liable to have their lawfully acquired property confiscated
as unexplained wealth in WA, even though there is no evidence that the property
in question has been associated with, used for or derived from criminal
activity.[12]
2.21
Furthermore, the Law Council submitted that unexplained wealth models of
the type used in WA and the NT infringe the right to silence, have the potential
for arbitrary application, create prosecutorial difficulties, and are
unnecessary in light of other confiscation mechanisms.[13]
2.22
Western Australia Police had a rather different view of the same
legislation, reporting difficulty in succeeding in unexplained wealth cases,
despite the reverse onus of proof, stating:
The reversal of onus of proof is often talked about. In
reality...the standard of proof can be discharged at what we consider to be a
very low level. For example, a person could come before a court and say, 'The
unexplained funds in my bank account I received as a result of doing my job.'
Then the onus is back on the prosecution to prove that that is not the case,
and that is at a very high standard. So, whilst the reversal of onus within the
act is talked about, in reality it is a lot harder.[14]
2.23
The committee also notes that, in practice, it is difficult to conceive
of scenarios by which an individual had significant amounts of unexplained
wealth with no way of accounting for their legitimate accumulation, if that was
in fact what had occurred. The committee sought evidence on whether there was
any way that an individual could legitimately accumulate wealth without being
able to explain or document how they accumulated that wealth. Several witnesses
indicated that they could not think of any ways.[15]
The ACC noted one possible, but rare, scenario where a legitimate reason could
be offered:
A couple examples that have been brought to our notice would
be if someone were fleeing persecution, liquidated their assets and arrived in
Australia claiming refugee status with those assets. That might be a
possibility. There might want to be some exploration of where those assets came
from.[16]
2.24
The committee is therefore of the view that, with appropriate
safeguards, unexplained wealth laws represent a reasonable, and proportionate
response to the threat of serious and organised crime in Australia.
The growth of unexplained wealth laws here and abroad
Domestic laws
2.25
Western Australia was the first Australian jurisdiction to introduce
unexplained wealth laws in 2000. The Northern Territory enacted a similar
scheme in 2003. Since the introduction of Commonwealth unexplained wealth
legislation in 2010, similar laws have been enacted in Queensland, South
Australia and New South Wales.[17]
2.26
State and territory models are discussed further in Chapter 4, including
details of each scheme.
International approaches
2.27
In September 2011, the Chair of the committee, Mr Chris Hayes MP, visited a range of law
enforcement, policy and legislative organizations in the United Kingdom,
Ireland, Italy and France to gain a better understanding of how relevant
agencies in these countries deal with unexplained wealth and proceeds of crime
matters.
2.28
This supplemented
earlier research done by the committee during a study tour undertaken as part
of the committee's inquiry into legislative arrangements to outlaw
serious and organised crime groups.
2.29
The following section examines three models considered by the committee.
The Irish approach
2.30
Ireland's approach to the seizure of criminal assets is governed by the Proceeds
of Crime Act 1996 (Ireland) (since amended by the Proceeds of Crime
(Amendment) Act 2005) and the Criminal Assets Bureau Act 1996.
2.31
The agency responsible for the carriage of investigations into suspected
proceeds of criminal conduct is the Criminal Assets Bureau (CAB). While CAB is
nominally part of Ireland's national police service, An Garda Síochána, it uses a
multi-agency multi-disciplinary approach in its investigations, using officers
from a number of agencies including An Garda Síochána, the Office of the
Revenue Commissioners, the Department of Social Protection, the Department of
Justice and Law Reform and the Bureau Legal Officer.[18]
2.32
CAB identifies assets of persons which derive (or are suspected to
derive) directly or indirectly from criminal conduct. It then takes appropriate
action to deprive or deny those persons of the assets and the proceeds of their
criminal conduct.[19]
2.33
Powers of the CAB include the ability to make an application to the High
Court seeking an interim order, which prohibits dealing with property if the
court is satisfied, on the civil standard of proof, that such property is the
proceeds of criminal conduct and has a value of more than €13 000.[20]
2.34
To maintain the freeze on the assets, the interim order must be followed
by a successful application for an Interlocutory Order. Such an order
effectively freezes the property until further notice, unless the court is
satisfied that all or part of the property is not the proceeds of criminal
conduct.[21]
An interim order is not necessary, but acts to restrain the property until the
Interlocutory Order is made.
2.35
Once an order is in place, it is open to any person to seek to vary or
set aside the order if that person can satisfy the court that they have a
legitimate right to the property and/or the property is not the proceeds of
crime.[22]
2.36
The property must remain frozen for seven years, during which time the
affected individual can seek to prove the legitimacy of the property. However,
after seven years the High Court may make an order transferring the assets to
the Minister of Finance for the benefit of the Central Fund.[23]
The 2005 amendment allowed for, under certain circumstances, the disposal of
assets within the seven year period.[24]
2.37
The CAB 2009 Annual Report notes that, in that year, almost €1.5 million was paid over to the
Minister of Finance.[25]
2.38
In addition, CAB
makes use of tax powers to target the profits or gains derived from criminal
conduct and suspected criminal conduct. As the CAB notes:
The application of these powers enables the Bureau to carry
out its statutory remit and is an effective means of depriving those engaged in
criminal conduct, of such profits and gains.[26]
2.39
In 2009, CAB raised assessments on 21 individuals and three corporate
entities. In total, over €5
million in tax and interest was collected in 2009.[27]
In addition, CAB was also able to terminate a number of social welfare payments
that had been claimed inappropriately.[28]
The UK approach
2.40
Detective Inspector John Folan, head of the Dedicated Cheque and Plastic
Crime Unit in the UK, previously told the committee that the historical
approach to policing involving 'identifying suspects and getting prosecutions'
had failed with regard to organised crime. Detective Inspector Folan argued,
like his counterparts around the world, that UK law enforcement needs to focus
on the motivations of criminals, and target the profits of organised crime in
order to successfully dismantle criminal groups.[29]
2.41
The Proceeds of Crime Act 2002 (UK) (UK-POCA) provides for the
confiscation and restraint of proceeds of crime. In order for a person's assets
to be confiscated under the Act, the person must have been convicted. However,
in order for assets to be restrained, it is only necessary that the person is
being investigated and that there is reasonable cause to believe that they have
committed an offence.
2.42
The UK also has a set of offences under the UK-POCA which enable
the confiscation of assets obtained from a 'criminal lifestyle'. Under section
75 of the Act, a person has a 'criminal lifestyle' if they:
- have been convicted of one of the offences listed in Schedule 2
(drug trafficking offences);
- have been convicted of any offence over a period of at least 6
months, from which they obtained at least £5000, or
- have been convicted of a combination of offences which amount to
'a course of criminal activity' which is either:
(a) conviction in the current proceedings of at least four offences from
which they have benefited; or
(b) conviction in the current proceedings of one offence from which they
have benefited in addition to at least two other convictions on at least two
separate occasions in the past 6 years.
2.43
Where a court has decided that a defendant has a criminal lifestyle, section
10 of the UK-POCA contains provisions which enable an assessment to be made as
to the financial benefit they have derived from their criminal lifestyle. The
court may make certain assumptions in relation to property and expenditure,
which the defendant is then required to disprove, thus reversing the onus of
proof in relation to the assets held by those proven to have a criminal
lifestyle.
2.44
The amount recoverable by the Crown is an amount equal to the
defendant's total benefit from criminal conduct, unless the defendant is able
to prove that the available amount is less than the recoverable amount.
2.45
In 2009, the committee was informed by Mr Ian Cruxton, from the Proceeds
of Crime Office within the Serious and Organised Crime Agency (SOCA), that the
'criminal lifestyle' provisions have been an effective tool for recovering
criminal assets. However, it was also acknowledged by SOCA officers and other
UK police officers that the civil recovery process in the UK is extremely
lengthy, and can take up to three years to go to trial.[30]
The Italian
approach
2.46
The committee was told in 2009 that Italy has also developed laws based
on a reverse onus of proof which allow law enforcement to prevent the mafia
from using illegally obtained assets to reinvest in further criminal
enterprises.
2.47
Officers from the Italian Central Directorate for Antidrug Services
informed the Committee in 2009 that Chief Police Officers and Public
Prosecutors can undertake investigations into suspected illegally obtained
assets without having prima facie evidence of a predicate offence. At
the conclusion of such an administrative investigation, the matter can be
referred to a judge who can investigate the matter further to establish the
source of the assets. During the trial process, the burden of proof falls on
the defendant to explain the source of their assets.[31]
2.48
The committee was told in 2009 that this process had been very effective
in confiscating criminal assets and preventing organised crime in Italy.
2.49
Italy is a civil law jurisdiction with an inquisitorial judicial system
and in this context a judge can investigate the source of the individual's
assets and require evidence from the individual. The same system could not be
applied in the same form in the Australia. However, the committee was
interested to learn about the successful use of reverse onus of proof
investigations in a civil law jurisdiction.
The Commonwealth Scheme
2.50
The Commonwealth's unexplained wealth provisions were enacted through
the Crimes Legislation Amendment (Serious and Organised Crime) Bill 2010, in
February 2010. The bill amended the Proceeds of Crime Act 2002 (PoCA) to
include provisions relating to the confiscation of unexplained wealth. Part 2-6
of the PoCA sets out how unexplained wealth orders work.
Parliamentary debate and amendment
2.51
During the passage of the Crimes Legislation Amendment (Serious and
Organised Crime) Bill 2010, the proposed unexplained wealth provisions
underwent significant amendment.
2.52
The bill was referred to the Senate Legal and Constitutional Affairs
Legislation Committee, which wholeheartedly endorsed the purpose of the
unexplained wealth provisions: namely, targeting the people at the head of
criminal networks who receive the lion's share of the proceeds of crime, whilst
keeping themselves safely insulated from liability for particular offences. It
also made a number of recommendations including:
(a) that the court should have a discretion under proposed section 179C of
the Proceeds of Crime Act 2002 to revoke a preliminary unexplained
wealth order if it is in the public interest to do so.
(b) 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.
(c) that proposed subsection 179B(2) of the Proceeds of Crime Act 2002 specify
that an officer must state in the affidavit supporting an application for a
preliminary unexplained wealth order the grounds on which he or she holds a
reasonable suspicion that a person’s total wealth exceeds his or her lawfully
acquired wealth.
(d) that the disclosure of information acquired under the Proceeds of
Crime Act 2002 to law enforcement and prosecuting agencies should be
limited to disclosure for the purpose of investigation, prosecution or
prevention of an indictable offence punishable by imprisonment for three or
more years; and
(e) that disclosure of information acquired under the Proceeds of Crime
Act 2002 to foreign law enforcement agencies should not be made unless the
offence under investigation would be an indictable offence punishable by
imprisonment for three or more years if it had occurred in Australia.[32]
2.53
Some of these recommendations were the basis of amendments made in the
Senate, alongside other amendments[33]
which addressed issues including disposal of property to cover legal expenses,
awarding of damages, costs or indemnities, parliamentary supervision,
requirements for making and revoking freezing orders, and revocation of
restraining orders.
2.54
The committee notes that the effect of these amendments was to change
the nature of the unexplained wealth provisions from that recommended by this
committee in its previous reports. Chapter 3 contains analysis of some of the
issues raised as a result of these amendments, with proposals for reform.
Current Commonwealth unexplained
wealth legislative provisions
2.55
Unexplained wealth provisions form one of five types of asset
confiscation proceedings provided for in PoCA. The Commonwealth Director of
Public Prosecutions (CDPP) may apply to a State or Territory court for:
- restraining orders prohibiting a person from disposing or dealing
with the subject property;
- forfeiture orders which require a person to forfeit property to
the Commonwealth;
- pecuniary penalty orders which require a person to pay money to
the Commonwealth based on the proceeds they have received from crime;
-
literary proceeds orders which require a person to pay money to
the Commonwealth based on literary proceeds of crime; and
- unexplained wealth orders requiring payment of unexplained wealth
amounts.[34]
2.56
Unexplained wealth orders are made under Part 2-6 of the PoCA. Using
these provisions, if a court is satisfied that there are reasonable grounds to
suspect that a person’s total wealth exceeds the value of the person’s wealth
that was lawfully acquired, the court can compel the person to attend court and
prove, on the balance of probabilities, that their wealth was not derived from
offences with a connection to Commonwealth power. If a person cannot
demonstrate this, the court may order them to pay to the Commonwealth the
difference between their total wealth and their legitimate wealth.[35]
2.57
There are three types of order which can be sought in relation to
unexplained wealth:
- unexplained wealth restraining orders;
- preliminary unexplained wealth orders; and
- unexplained wealth orders.[36]
Unexplained wealth restraining
orders
2.58
Unexplained wealth restraining orders are interim orders that restrict a
person’s ability to dispose of or otherwise deal with property. These
provisions ensure that property is preserved and cannot be dealt with to defeat
an ultimate unexplained wealth order.[37]
2.59
Restraining orders in relation to unexplained wealth are governed by
section 20A of PoCA. They are made upon application by the Commonwealth
Director of Public Prosecutions, can be made ex parte, and are subject
to two main requirements:
(a) a court must be satisfied that there are reasonable grounds to suspect
that a person’s total wealth exceeds the value of wealth that they have
lawfully acquired, and
(b) a court must be 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, and/or
- the whole or any 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.[38]
Preliminary unexplained wealth
orders
2.60
A preliminary unexplained wealth order requires a person to attend court
to determine whether or not an unexplained wealth order should be made. Under
section 179B of PoCA, a court may make a preliminary unexplained wealth order
if it is satisfied that an authorised officer has reasonable grounds to suspect
that a person’s total wealth exceeds the value of the person’s wealth that was
lawfully acquired.[39]
2.61
Whether reasonable grounds exist is informed by assessment of the
person’s wealth in accordance with section 179G, which defines what property
constitutes a person’s wealth and the time at which the property’s value is to
be calculated.[40]
Unexplained wealth orders
2.62
If a preliminary unexplained wealth order has been made and the court is
not satisfied that the person’s wealth was not derived from an offence against
a law of the Commonwealth, a foreign indictable offence or a State offence that
has a federal aspect, it may make an unexplained wealth order.
2.63
The burden of showing that wealth was not derived from offences with a
link to Commonwealth power falls on the person in relation to whom the
preliminary order was issued. The person is required to satisfy the court on
the balance of probabilities, which is a civil standard of proof.
2.64
An unexplained wealth order makes payable to the Commonwealth an amount
which, in the court’s opinion, constitutes the difference between the person’s
total wealth and the value of the person’s property which the court is
satisfied did not derive from the commission of a relevant offence. That is,
the difference between their total wealth and the wealth that has been
legitimately acquired.
2.65
A court making an unexplained wealth order must direct the Commonwealth
to pay a specified amount to a dependant of the person, if it is satisfied that
the amount is necessary to offset hardship. If the dependant is over 18 years
old, they must not have been aware of the conduct that was the subject of the
order.[41]
Current oversight arrangements
2.66
The oversight arrangements applying to unexplained wealth provisions
include a monitoring role by this committee. The operation of Part 2-6 (on
unexplained wealth orders) and section 20A of the PoCA is subject the oversight
of the committee and the committee may require the ACC, AFP, CDPP or any other
federal agency of authority that is the recipient of any material disclosed
under
Part 2-6 to appear before it to give evidence.[42]
The Criminal Assets Confiscation
Taskforce and other administrative arrangements
2.67
In order to provide administrative support for the investigation and
litigation of proceeds of crime matters, including unexplained wealth, the
Commonwealth formed the Criminal Assets Confiscation Taskforce (CACT) in March
2011.
2.68
The CACT arrangements were put in place to boost the identification of
assets that should be seized, and strengthen the pursuit of wealth collected by
criminals at the expense of the community.[43]
2.69
On establishment, the CACT comprised 68 AFP members, including its
Financial Investigations Teams, five tax officers from the Australian Taxation
Office (ATO) and six officers of the ACC.[44]
2.70
The AFP noted that it had considered arrangements in other countries,
when putting together the Criminal Assets Confiscation Taskforce:
In particular, the AFP examined the Serious and Organised
Crime Agency in the United Kingdom, and the Irish Criminal Assets Bureau.
While the approach of SOCA, CAB and the Taskforce differ, they all recognise
the merit in pursuing non-conviction based action to target the profits of
crime.[45]
2.71
The AFP informed the committee that the taskforce, in addition to its
in-house investigative capabilities, was able to select from a range of
confiscation methods under PoCA, including unexplained wealth provisions:
In assessing potential proceeds of crime action the Taskforce
considers all available options, including possible unexplained wealth
proceedings. Where multiple criminal asset confiscation pathways are available,
the operational decision to undertake an investigation to support particular
type of proceeds action, or refer the matter for other types of non PoCA
treatment (such as taxation remedies), is made on a case-by-case basis. To
ensure, as far as possible, consistent decision making, the Taskforce takes a
range of factors into account including: the strength of the available
evidence; the resources required to obtain further evidence to support a
particular type of action; the total value of assets involved; and the
likelihood of a successful outcome.[46]
2.72
The AFP indicated that prior to the establishment of the CACT, it had restrained
$41.1 million in assets, while $3.7 million in assets were forfeited. Pecuniary
penalty orders to the value of $17.1 million were also made. The AFP informed
the committee that this experience provided a foundation to develop
capabilities to undertake conviction and non-conviction based asset confiscation
action under the new taskforce arrangements.[47]
2.73
The CACT is yet to bring any proceedings under PoCA seeking an
unexplained wealth order, however, although the AFP is currently investigating potential
two cases. Indeed, as discussed below, no unexplained wealth proceedings have
been brought before the courts as yet.[48]
Responsibility for litigation
2.74
Under the original CACT arrangements, the CDPP remained responsible for
litigating PoCA cases on behalf of the taskforce. With the passage of the Crime
Legislation Amendment Bill (No. 2) 2011 in late 2011, however, this
responsibility has passed to the taskforce itself. It may now litigate all PoCA
actions relevant to investigations undertaken by the Taskforce, and all
non-conviction based PoCA matters (including unexplained wealth matters)
referred by other agencies.[49]
2.75
Despite unexplained wealth provisions having existed for two years, they
are yet to be used. As the AFP observed:
The unexplained wealth provisions...commenced on 19 February
2010. To date, no unexplained wealth matters have been tested in the courts. It
remains to be seen how the legislation will be interpreted by the judiciary. It
will take some time and case law to determine whether or not the unexplained
wealth provisions operate as intended. The application of the unexplained
wealth provisions has been under active consideration by the AFP.[50]
2.76
While the Law Council suggested that the lack of proceedings indicated
it was too early to review the unexplained wealth provisions,[51]
the Attorney-General's Department (AGD) also noted:
Certainly the fact that there have been no cases suggests
that there is something wrong, but whether there is something wrong with the
act or whether there is something wrong with the way in which it is being
approached, at this stage we cannot say. It is disappointing that there have
not been the cases yet.[52]
2.77
By way of comparison, the unexplained wealth provisions in WA have also had
limited use, with only six declarations leading to confiscation made between July 2004 and June 2011.[53]
2.78
The committee is concerned that the Commonwealth unexplained provisions
have not been used since their introduction. In the next chapter, the committee
examines issues with the existing provisions that were raised during the course
of this inquiry.
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