CHAPTER 2


CHAPTER 2

OVERVIEW OF THE BILL

Background to the Bill

2.1        In his second reading speech, the Minister noted that the Bill forms part of the Australian Government's response to recommendations of the Parliamentary Joint Committee on the Australian Commission for Law Enforcement Integrity (PJC-ACLEI) in its 2010 interim report on the inquiry into the LEIC Act.[1] These recommendations relate to the inclusion of Customs in the jurisdiction of ACLEI.

2.2        The Minister also noted that the Bill would implement one of the Australian Government's 2010 election commitments in relation to combating serious and organised crime, namely support of the newly established Criminal Assets Confiscation Taskforce (Taskforce), which came into effect in January 2011:

The task force commenced operations in January of this year, bringing together expertise in intelligence, operations, forensic accounting, litigation and specialist law enforcement to ensure a highly integrated approach to criminal asset confiscation. Its main objective is to enhance the identification of potential criminal asset confiscation matters and strengthen their pursuit. To support this work, schedule 2 of the bill will amend the Proceeds of Crime Act 2002 to enable the Commissioner of the Australian Federal Police (AFP) to commence proceeds of crime litigation on behalf of the government’s Criminal Assets Confiscation Taskforce.[2]

2.3        Mr O'Connor stated that the amendments in the Bill relating to proceeds of crime are 'fundamental to achieving the [Australian Government's] proactive and dynamic approach to asset confiscation'.[3]

Extension of ACLEI's jurisdiction to Customs

2.4        The statutory office of Integrity Commissioner was established by the LEIC Act, and is supported by ACLEI. ACLEI is an independent body which consists of investigative, legal, policy, and corporate staff.[4]

2.5        The role of the Integrity Commissioner is to:

  • detect, investigate and prevent corruption in law enforcement agencies;
  • maintain and improve the integrity of staff members of law enforcement agencies; and
  • collect and process intelligence on corruption in law enforcement.[5]

2.6        The LEIC Act extends oversight of Commonwealth law enforcement agencies to ACLEI by regulation. Law enforcement agencies currently under the jurisdiction of ACLEI include the AFP and the Australian Crime Commission (ACC), and also the former National Crime Authority (NCA). The extent of ACLEI's jurisdiction is set out in section 5 of the LEIC Act. Section 5 lists the agencies currently within ACLEI's oversight, and also includes:

(d) any other Commonwealth government agency that:

(i) has a law enforcement function; and

(ii) is prescribed by the regulations for the purposes of this paragraph.[6]

Previous parliamentary inquiries

2.7        The issue of expanding ACLEI's jurisdiction to other law enforcement agencies has been discussed in two previous parliamentary inquiries. In 2006, this committee held an inquiry into the Law Enforcement Integrity Commissioner Bill 2006 (LEIC Bill). Subsequently, the PJC-ACLEI conducted an inquiry into the operations of the LEIC Act.

2.8        During the course of this committee's inquiry into the LEIC Bill, the extension of ACLEI's jurisdiction to other law enforcement agencies was canvassed.[7]

2.9        The committee acknowledged that the LEIC Bill envisaged a broader anti-corruption role for ACLEI in the future:

...[I]t may be one of the Bill's strengths in that it allows for other Commonwealth agencies with law enforcement functions to be added to ACLEI's jurisdiction. While unstated in evidence, this may have operational advantages for the Commission, allowing a more gradual widening of its jurisdiction in line with its developing expertise, experience, capabilities and resources.[8]

2.10      The committee continued:

...[T]he committee considers that there is a strong rationale for ensuring that a wider group of law enforcement agencies are brought within its jurisdiction, including Customs, the ATO and DIMA [Department of Immigration and Multicultural Affairs]. In the committee's view, it would be useful for the government to give a public indication of the proposed timetable for this process.[9]

2.11      The committee also recommended that the process of expanding ACLEI's jurisdiction through the use of regulations be amended, and instead be dealt with by legislation.[10]

2.12      On 14 May 2009, the PJC-ACLEI initiated an inquiry into the operation of the LEIC Act and its regulations. The PJC-ACLEI tabled an interim report on 22 February 2010, and tabled its final report on 7 July 2011. The interim report made 11 recommendations. Two of these recommendations were as follows:[11]

  • as an immediate measure, Customs should be brought under ACLEI's jurisdiction on a whole-of-agency basis by regulation (Recommendation 2); and
  • in the longer term, Customs should be prescribed as a law enforcement agency within the LEIC Act through the amendment of section 5 of that Act (Recommendation 3).

2.13      The Australian Government agreed to these recommendations when it tabled a Government Response to recommendations 2 and 3 of the PCJ-ACLEI's interim report in September 2010.

2.14      The Government Response stated that, subject to resources consultations, the Australian Government would:

...extend the jurisdiction of ACLEI to include the Australian Customs and Border Protection Service (ACBPS) in recognition of ACBPS's critical law enforcement and related functions.[12]

2.15   The Government Response advised that this jurisdiction would commence in 2011. The Explanatory Memorandum to the Bill notes that, while ACLEI has had oversight of the law enforcement functions of Customs from 1 January 2011,  following Customs' prescription in regulations made under the LEIC Act:

The inclusion of [Customs] within ACLEI's jurisdiction under the LEIC Act will enable ACLEI to investigate corrupt conduct relating to all [Customs'] functions.[13]

2.16      In its submission to the recent PJC-ACLEI inquiry into the operations of the LEIC Act, ACLEI stated that there are factors to be considered when jurisdiction is to be extended, including issues of agency direction, safeguarding current arrangements, and inclusion of all staff.[14] The submission also stated that ACLEI 'would be prepared to extend corruption prevention assistance to other agencies under special arrangements'.[15]

2.17      During that inquiry, the Integrity Commissioner asserted that Customs was at a high risk of corruption by the nature of its role in an area of law enforcement and that, although not all Customs staff have a law enforcement role, the agency as a whole possesses the characteristics of a law enforcement agency.[16]

Inclusion of all Customs' functions in ACLEI's jurisdiction

2.18      The Explanatory Memorandum notes that, currently, ACLEI's jurisdiction provides that it is able to investigate corrupt conduct relating to the law enforcement functions of Customs. The amendments in Schedule 1 of the Bill will enable ACLEI to investigate corrupt conduct relating to all Customs functions.

2.19      The Explanatory Memorandum outlines the reasons for providing the Integrity Commissioner with the jurisdiction to investigate all Customs staff members, even if the functions performed by the relevant staff member fall outside the boundaries of a traditional law enforcement role:

...Customs officers may have access to information that is likely to be of interest to those engaged in serious and organised crime, regardless of whether the officer performs a specific law enforcement function within Customs. In addition, Customs also rotates officers between roles of a law enforcement and non-law enforcement nature, such that a Customs officer could use information obtained while in a law enforcement role while performing a non-law enforcement role. Including all Customs' functions within ACLEI's jurisdiction on a whole of agency basis is also consistent with the current application of the LEIC Act to all AFP and ACC staff, regardless of their role.[17]

2.20      The Integrity Commissioner has previously outlined the reasons why Customs officers would be at a high risk of corruption:

...it is a decentralised agency with officers having a high degree of discretion and autonomy in those decentralised locations. Customs protects the border in many ways, and of course the increase of corruption risk goes right up in that context. Customs and Border Protection would be attractive to organised crime—and, in saying 'organised crime', I also say to you 'transnational organised crime'—who have an interest in breaching the border.[18]

2.21      Further, the Integrity Commissioner noted the 'other phenomenon' which would lead to a high risk of corruption:

Customs is pushing protection of the border offshore into countries where corruption is sometimes an accepted business practice. So, for those reasons and possibly others as well, I think that Customs and Border Protection would be well suited to inclusion in ACLEI's jurisdiction.[19]

Criminal Assets Confiscation Taskforce

2.22      At the time of the introduction of the Bill into Parliament, a joint press release issued by the Attorney-General and the Minister for Home Affairs and Justice stated that the Bill would support the Taskforce, which came into effect in January 2011.[20]

2.23      The Taskforce was announced by the Australian Government during the 2010 election campaign and was officially launched on 10 March 2011 by the Attorney-General, the Minister for Home Affairs and Justice, and the Commissioner of the AFP. The Taskforce's main function is to 'provide a more coordinated and integrated approach to identifying and removing the profits derived from organised criminal activity'.[21]

2.24      The Attorney-General's Department (Department) outlined the purpose of the Taskforce in its submission:

The Taskforce commenced operation in January 2011 and is designed to take a more proactive, intelligence-led approach to the identification of potential criminal asset confiscation matters by bringing together intelligence, operations, legal and other specialist resources. The AFP, Australian Taxation Office and the Australian Crime Commission are participating agencies in the Taskforce.[22]

2.25      During the election campaign it was announced that the AFP would lead and house the Taskforce, and, subject to the passage of the proposed amendments to the Bill, would assume responsibility for the litigation of 'all proceeds of crime matters relevant to the proceeds investigations undertaken by the Taskforce, and all non-conviction based proceeds of crime matters'.[23]

2.26      While the CDPP is not intended to be a permanent member of the Taskforce, it is part of the interim Taskforce which was launched in March 2011. The members of the interim Taskforce are the AFP, the CDPP, the ACC and the ATO.[24] The CDPP has indicated that it will not be a permanent member of the Taskforce because the AFP would be able to take control of litigation action.[25]

2.27      The Department has advised that a working group had been established to plan for the transition from interim to permanent Taskforce. These arrangements will be included in a Memorandum of Understanding, which will set out the division of responsibilities between the AFP and the CDPP.[26]

2.28      The Taskforce is reported to have withheld more than $43 million in profits from organised criminal activity since its implementation and official launch.[27]

Key provisions of the Bill

Schedule 1 – Australian Commission for Law Enforcement Integrity amendments

2.29      Schedule 1 of the Bill amends the LEIC Act to include Customs in the ACLEI's jurisdiction.

2.30      Item 3 of Schedule 1 amends the definition of 'law enforcement agency' in section 5 of the LEIC Act to include 'Customs'. 'Customs' is defined in the Customs Administration Act 1985 (Customs Administration Act) and covers Customs and its predecessor, the Australian Customs Service. The inclusion of Customs in the definition of a law enforcement agency in the LEIC Act has the effect of providing the Integrity Commissioner with the jurisdiction to investigate corrupt conduct engaged in by all past and present Customs staff members, even if the particular functions performed by the staff member fall outside the boundaries of a traditional law enforcement role.[28]

2.31      Section 10 of the LEIC Act defines staff members of law enforcement agencies for the purposes of the Act. Item 4 inserts in section 10 a definition of 'Customs staff members' (proposed new subsection 10(2A)). The purpose of the amendment is to provide the Integrity Commissioner with the jurisdiction to investigate allegations of corruption made against, or relating to, the CEO of Customs, a Customs employee, or a person authorised in writing by the CEO of Customs to perform a function of a person employed in Customs.[29]

2.32      Item 5 amends subsection 10(5) of the LEIC Act to insert proposed new paragraph 10(5)(ba), which specifies that all persons authorised by the CEO of Customs to perform a function of a person employed in Customs are 'secondees' for the purposes of the Act. Under the LEIC Act, the Integrity Commissioner has an obligation to inform the head of a government agency where a corruption issue involves one of their employees who has been authorised by the CEO of Customs to perform a Customs function.

2.33      Item 6 is an application provision. Item 6 provides that ACLEI's jurisdiction to investigate corrupt conduct by Customs staff extends to all conduct regardless of whether it was engaged in before or after the commencement of the LEIC Act on 30 June 2006, and covers conduct of staff of the predecessor to Customs, the Australian Customs Service.[30]

2.34      Schedule 1 of the Bill also amends the Customs Administration Act. Item 1 inserts proposed new paragraph 16(2)(ca) to the Customs Administration Act, which exempts disclosures made for the purposes of the LEIC Act, or regulations under the LEIC Act, from the prohibition against disclosure of protected information. This will bring the Customs secrecy provision in line with the ACC and AFP provisions relating to disclosures to the Integrity Commissioner or ACLEI.[31]

Schedule 2 – proceeds of crime amendments

Part 1 of Schedule 2 – commencement of litigation by AFP

2.35      In his second reading speech, the Minister outlined the reasons why the transfer of power from the CDPP to the AFP are considered to be necessary:

Currently, the Commonwealth Director of Public Prosecutions is the only authority that is able to conduct proceedings under the Proceeds of Crime Act. The amendments contained in this bill will ensure that the AFP has that same power.

Extending the act to include the AFP will enable the task force to become a specialised unit focused on proactively investigating and litigating proceeds of crime matters, which will lead to the more effective pursuit of criminal assets. And ultimately, the objective is to ensure that more proceeds of crime money is returned to the community for crime prevention and diversion initiatives.[32]

2.36      Part 1 of Schedule 2 of the Bill amends the Proceeds of Crime Act and other Acts to enable the Commissioner of the AFP to commence proceeds of crime litigation.

2.37      Item 1 of Schedule 2 inserts proposed new subsection 69C(3) into the AFP Act. Currently, subsection 69C(1) enables the Commissioner of the AFP to delegate any or all of the Commissioner's powers, functions and duties under that Act. Proposed new subsection 69C(3) will enable the Commissioner to delegate powers, functions or duties as a 'proceeds of crime authority' to the Deputy Commissioner or a senior executive AFP employee.

2.38      Item 5 inserts the definition of 'proceeds of crime authority' into section 338 of the Proceeds of Crime Act. A proceeds of crime authority is the Commissioner of the AFP or the CDPP.

2.39      Item 4 inserts a definition of 'principal order' into section 338 of the Proceeds of Crime Act, to mean: a restraining order; a forfeiture order; a pecuniary penalty order; a literary proceeds order; or an unexplained wealth order.

2.40      Item 6 inserts the definition of 'responsible authority' into section 338 of the Proceeds of Crime Act. Responsible authority means the proceeds of crime authority which made the application for the principal order or, in the case where the proceedings have been transferred to another proceeds of crime authority, the authority to which responsibility has been transferred.

2.41      Item 3 inserts proposed new section 315B into the Proceeds of Crime Act. Proposed new section 315B provides for the transfer of responsibility for 'principal orders' and 'applications for principal orders' between the CDPP and the AFP Commissioner where both agencies consent to that transfer.

2.42      The Explanatory Memorandum expands on the transfer of responsibility provisions:

The provisions are designed to allow a smooth and efficient transfer without causing undue delay or inconvenience, in particular avoiding the need to recommence proceedings.[33]

2.43      Proposed new subsection 315B(2) provides that the authority taking responsibility for the proceedings (the transferee authority) must give written notice of the transfer of responsibility to the court hearing the matter and other relevant parties to the proceedings.

2.44      Proposed new subsection 315B(6) sets out the effect of the transfer of responsibility with regards to the conduct of proceedings, including that the transferee authority:

  • replaces the transferor authority as a party to any applications or proceedings (proposed new paragraph 315B(6)(a));
  • may initiate, conduct or respond to any related applications or proceedings (proposed new paragraph 315B(6)(b)); and
  • is responsible for any functions, powers and duties under the Proceeds of Crime Act to be performed by a responsible authority in relation to the application or the order, any related proceedings, and any order arising out of related applications or proceedings (proposed new paragraph 315B(6)(c)).

2.45      Proposed new subsections 315B(7) and (8) set out the effects of the transfer as between the transferee and transferor authorities. These provisions include that, following the transfer:

  • the functions, powers and duties of the transferor authority are extinguished, except with regards to any damages or costs awarded against the transferor authority while it was responsible for the proceedings; and
  • the transferee authority is bound by the actions of the transferor authority when it was responsible for the proceedings.

2.46      Items 7-138 provide for the replacement of various references to ensure consistency throughout the Proceeds of Crime Act.

Part 1 of Schedule 2 – retrospective application of amendments

2.47      Item 139 is the application provision in relation to the amendments set out in Part 1 of Schedule 2 of the Bill. The amendments will apply in relation to applications for orders, actual orders, and proceedings, regardless of when they were made or started, or when the conduct giving rise to those orders or proceedings occurred.[34]

2.48      The Explanatory Memorandum notes that while the provision is retrospective in application, it does not create any retrospective criminal liability. The Explanatory Memorandum states that the amendments need to apply retrospectively because proposed new section 315B of the Proceeds of Crime Act will enable the transfer of applications for orders and orders which may have been made prior to the commencement of the amendments. The conduct to which the applications, orders and proceedings relate will also have occurred prior to the commencement of the amendments.[35]

2.49      Further, the Explanatory Memorandum notes that retrospective application of the amendments will ensure that the Commissioner of the AFP is able to apply for proceeds of crime orders, regardless of when the conduct leading to the orders occurred.[36]

2.50      Similar items in the Bill retrospectively apply amendments to other Acts (see, for example, item 194 which sets out the application of amendments to the Family Law Act).

Part 1 of Schedule 2 – consequential amendments to other Acts

2.51      The remaining items in Part 1 of Schedule 2 make consequential amendments to a number of other Acts. A number of these amendments substitute references to the DPP in the context of proceeds of crimes applications, orders and proceedings, with appropriate references which will also cover the Commissioner of the AFP when undertaking proceeds of crime litigation.

2.52      For example, item 140 replaces a reference to the DPP with a reference to a proceeds of crime authority in the Administrative Decisions (Judicial Review) Act 1977 (ADJR Act). Currently, decisions of the DPP, or an approved examiner under Part 3-1 of the Proceeds of Crime Act, and decisions of the DPP to apply for an order under the Proceeds of Crime Act, are not decisions to which the ADJR Act would apply. The amendment in item 140 extends this exclusion to the same decisions by the Commissioner of the AFP under the Proceeds of Crime Act.[37]

2.53      The Acts amended by these consequential amendments are:

  • Administrative Decisions (Judicial Review) Act 1977 (items 140-141);
  • Bankruptcy Act 1966 (items 142-150);
  • Crimes Act 1914 (items 151-153);
  • Crimes Legislation Amendment (Serious and Organised Crime) Act 2010 (item 154);
  • Foreign Evidence Act 1994 (items 195-197);
  • International Criminal Court Act 2002 (items 198-209);
  • International War Crimes Tribunals Act 1995 (items 210-217);
  • Mutual Assistance in Criminal Matters Act 1987 (items 218-239); and
  • Trade Marks Act 1995 (items 240-242).
Part 1 of Schedule 2 – amendments to Family Law Act

2.54      Items 155-194 make amendments to the Family Law Act. The Bill amends the Family Law Act so that state and territory proceeds of crime orders and forfeiture applications can be taken into account in property settlement and spouse maintenance proceedings, in the same way as Commonwealth proceeds of crime orders and forfeiture applications. For example, item 157 amends the definition of 'forfeiture order' to refer to:

  • a forfeiture order under the Proceeds of Crime Act; or
  • an order made under a state or territory proceeds of crime law and that is of a kind declared by the regulations to be a forfeiture order.

2.55      Similar amendments are made for the definitions of 'freezing order' (item 159) and 'restraining order' (item 161).

2.56      Item 163 inserts proposed new section 4C into the Family Law Act. Proposed new section 4C sets out the meaning of 'proceeds of crime authority' in relation to various orders and applications under the Proceeds of Crime Act, or state or territory proceeds of crime law.

2.57      The proceeds of crime authority for restraining orders or forfeiture orders, or applications for forfeiture orders under the Proceeds of Crime Act, is the responsible authority (that is, the Commissioner of the AFP or the DPP) for the relevant restraining order, forfeiture order, or application for forfeiture order (proposed new subsection 4C(2)). For a freezing order under the Proceeds of Crime Act, the proceeds of crime authority is the Commissioner of the AFP or the DPP (proposed new subsection 4C(3)).

2.58      The proceeds of crime authority for proceeds of crime orders, or an application for a forfeiture order, under a state or territory proceeds of crime law is the person or body prescribed in regulations (proposed new subsection 4C(4)).

2.59      Item 165 amends subsection 79B(3) of the Family Law Act. Section 79B of the Family Law Act sets out the notification provisions in relation to proceeds of crime orders.

2.60      Currently, subsection 79B(3) provides that, if a person is a party to property settlement or spousal maintenance proceedings, and the person is notified by the DPP[38] that the property of the parties to the marriage of either of them is covered by a proceeds of crime order or a forfeiture application, the person must notify the Registry Manager in writing of the proceeds of crime order or forfeiture application.

2.61      Proposed new paragraph 79B(3)(c) retains the requirement that the person must notify the Registry Manager in writing of the proceeds of crime order or forfeiture application. Proposed new paragraph 79B(3)(d) provides that the person must also provide the Registry Manager with a copy of:

  • the notification from the proceeds of crime authority; and
  • the proceeds of crime order, or forfeiture application.

2.62      Items 175 and 185 make similar amendments to the notification provisions in Part VIIIA (Financial Agreements) and Part VIIIAB (Financial matters relating to de facto relationships) where a person is notified of a proceeds of crime order or forfeiture application.

Part 2 of Schedule 2 – other proceeds of crime amendments

2.63      Part 2 of Schedule 2 amends the Proceeds of Crime Act in two respects.

2.64      Items 243-245 will amend subsections 131(1) and (2) of the Proceeds of Crime Act to give courts a discretion, when calculating the amount of a pecuniary penalty order, to take into account tax paid after proceedings were commenced under the Proceeds of Crime Act, based on whether the court is satisfied that it is in the interests of justice to do so.[39]

2.65      Items 247 and 248 will amend paragraph 202(5)(ea) to extend the definition of 'property-tracking document'. Currently paragraph 202(5)(ea) provides that a property-tracking document includes a document relevant to identifying, locating or quantifying the property of a person, if it is reasonable to suspect that the total value of the person's wealth exceeds the value of the person's wealth that was lawfully acquired.

2.66      The amendments in items 247 and 248 will align paragraph 202(5)(ea) with the definition of wealth in subsection 179G(1) of the Proceeds of Crime Act.

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