1.1
On 3 September 2020, the Senate referred the provisions of the Crimes Legislation Amendment (Economic Disruption) Bill 2020 (the bill) to the Legal and Constitutional Affairs Legislation Committee (the committee) for inquiry and report by 10 November 2020.
1.2
The Senate referred the bill to the committee following a recommendation of the Selection of Bills Committee. The report of the Selection of Bills Committee presented multiple reasons for referral, including the complexity of the legislation.
Conduct of this inquiry
1.3
Details of the inquiry were advertised on the committee's webpage. The committee called for submissions to be received by 25 September 2020 and wrote to a range of organisations inviting them to submit. The committee received 8 submissions, which are listed at Appendix 1. The committee did not hold any public hearings.
Acknowledgements
1.4
The committee thanks submitters for the evidence they provided to this inquiry.
Structure of the report
1.5
This report consists of two chapters:
This chapter outlines the key provisions of the bill and provides administrative details relating to the inquiry.
Chapter 2 examines the key issues raised in evidence and provides the committee's view.
Background to and purpose of the bill
1.6
The bill was introduced into the House of Representatives on 2 September 2020 by the Minister for Education, the Hon Dan Tehan MP on behalf of the Minister for Home Affairs, the Hon Peter Dutton MP. The minister described the harm to Australia caused by transnational organised and serious crime (TSOC) actors:
TSOC groups pursue criminal profit at the expense of the health, prosperity and safety of ordinary Australians. Whether this is done through the importation of illicit substances, or through tax evasion, market distortion or money laundering, the direct cost to Australia is estimated to be $47.4 billion per year. When the indirect social and economic impacts are factored in, the full cost is immeasurable.
TSOC groups operate as sophisticated and compartmentalised businesses generating huge profits from their criminal pursuits. In order to 'clean' their proceeds of crime and realise these profits, the TSOC business model relies on money laundering. This allows profits to be concealed and reinvested in further criminal activity, or used to fund lavish lifestyles.
1.7
The minister described the intention of key provisions in the bill to ultimately disrupt the business model of TSOC actors:
…Key features of the bill include an overhaul of the Commonwealth's money-laundering offences in the Criminal Code to address the increasingly complex methods employed by TSOC (transnational, serious and organised crime) actors. In addition, the bill includes crucial amendments to the Proceeds of Crime Act to strengthen and clarify provisions to ensure that law enforcement agencies can restrain and forfeit the profits gained by TSOC actors.
Key provisions of the bill
1.8
The bill comprises 7 schedules and seeks to amend the Crimes Act 1914 (Crimes Act), Criminal Code Act 1995 (Criminal Code), the COAG Reform Fund Act 2008 and the Proceeds of Crime Act 2002 (POC Act).
Schedule 1—Money laundering
1.9
Key amendments contained in Schedule 1 would amend the Criminal Code with the intention of addressing the ways in which money laundering networks avoid liability under the more serious offences, namely by:
…obscuring the criminal origins of the money or other property that they launder…ensuring that their trusted operatives remain wilfully blind as to the criminal origins of the money or other property, and; dealing with the money or other property at an arms-length…
New 'proceeds of general crime' offences
1.10
Schedule 1 would create new offences of 'engaging in conduct in relation to' 'proceeds of general crime'. The new offences are intended to address circumstances in which members of money laundering networks remain 'wilfully blind' to the criminal origins of money or other property.
1.11
The more serious proceeds of crime offences at existing sections 400.3 to 400.8 of the Criminal Code:
…require the identification of the 'class of indictable offences' from which the money or other property has actually been derived or realised. The defendant must also have believed, been reckless or been negligent as to the money or other property being derived or realised from the same or a different 'class of indictable offence' (see Lin v R [2015] NSWCCA 204).
1.12
The Department of Home Affairs (the department) submitted that these elements are often impossible to prove:
Proving that money or other property was actually derived or realised from 'a class of indictable offence' is often impossible as these networks distance property and money from predicate offending…It is also often impossible to prove that the defence believed, was reckless or was negligent as to whether money or other property was derived or realised from a 'class of indictable offence', as these networks…keep their members wilfully blind as to the criminal origins of money or other property.
1.13
The bill would amend the offences at sections 400.3 to 400.8 to be 'proceeds of indictable crime' and introduce 'proceeds of general crime' offences in new section 400.2B and existing sections 400.3 and 400.4. For 'proceeds of general crime' offences, the prosecution would only be required to prove that the defendant believed, or was reckless or negligent as to whether money or other property was proceeds of crime generally, as opposed to proceeds of a specific class of indictable offence.
1.14
Under the proposed new offences, money or other property would be 'proceeds of general crime' if the prosecution can establish one or more of the following beyond reasonable doubt:
that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a particular offence against a law of the Commonwealth, a State, a Territory or a foreign country
that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a kind of offence against a law of the Commonwealth, a State, a Territory or a foreign country
evidence of the circumstances in which the money or other property was handled are such as to give rise to the irresistible inference that it is wholly or partly derived or realised, directly or indirectly, by any person from crime generally (without the need to specify a particular offence or kind of offence).
1.15
Given that the proposed amendments would require a lower threshold for prosecution (that is, that the defendant believed, or was reckless or negligent as to whether money or other property was proceeds of crime generally, as opposed to proceeds of a specific class of indictable offence), the amendments would also require that the prosecution must prove:
the defendant intentionally engaged in one or more instances of conduct in relation to money or other property; and
one instance of the defendant's conduct, or two or more instances taken together relate to the money or other property collectively valued at $100,000 or more; and
the person believed, was reckless or was negligent as to whether the money or other property was proceeds of general crime in each instance; and
each instance of the defendant's conduct concealed or disguised one or more particular aspects of the money or other property; and
the defendant was reckless as to this result occurring in each instance.
Dealing with money or other property
1.16
Existing money laundering offences apply to individuals who 'deal with' money or other property. The definition of 'deals with money or other property' under section 400.2 of the Criminal Code includes receiving, possessing, concealing, disposing, importing, exporting or engaging in banking transactions. Schedule 1 would expand the concept of 'dealing with money or other property' in the context of 'proceeds of indictable crime' offences.
1.17
Item 6 of the schedule would expand the concept of 'dealing with money or other property' to include circumstances in which a person:
…intentionally engages in conduct that causes another person to deal with money or other property where the first person is reckless as to whether their conduct would cause this result.
1.18
These amendments are intended to address circumstances in which controllers of money laundering networks deal with money or other property at an arms-length by directing other members of money laundering networks to deal with property on their behalf.
New tiers of offending
1.19
Schedule 1 proposes to introduce a new tier of offences relating to money or other property valued at $10 million or more, and:
…a new offence of dealing with money or other property valued at $1 million or more where it is reasonable to suspect that the money or other property was 'proceeds of indictable crime'.
1.20
Existing sections 400.3 to 400.8 of the Criminal Code relate to offences of dealing with money or property that is, and is believed by the defendant to be proceeds of crime. Schedule 1 proposes to insert a new tier of offence for dealing with money or property that is, and is believed by the defendant to be, proceeds of crime, that will apply where the money or property is valued at $10 million or more, punishable by a maximum penalty of life imprisonment.
1.21
Existing section 400.9 of the Criminal Code relates to offences of dealing with property reasonably suspected of being proceeds of crime. Schedule 1 would introduce two new tiers of offences for dealing with money or property that is reasonably suspected to be 'proceeds of indictable crime' which apply to money and property valued at $10 million or more and money and property valued at $1 million or more. The former offence would be punishable by a maximum penalty of five years imprisonment or 300 penalty units or both, and the latter would be punishable by a maximum penalty of four years imprisonment or 240 penalty units or both.
1.22
These amendments are intended to address the most serious cases of money laundering:
Where prosecutions have been possible, the available evidence is often only sufficient to support a lesser offence of dealing with money or other property reasonably suspected of being proceeds of crime under existing section 400.9, which only attracts a maximum penalty of up to 3 years imprisonment or a fine of 180 penalty units, or both. This has led to serious cases of money laundering attracting inadequate sentence, including cases where individuals have laundered over $10,000,000.
1.23
For the proposed new offences introduced at section 400.9, absolute liability would apply, removing the requirement for the prosecution to prove the defendant's fault in relation to the following elements of the proposed new offences:
it is reasonable to suspect that the money or property is proceeds of indictable crime; and
at the time of dealing, the value of the money and other property is $10 million or more or $1 million or more.
Fault element for attempting to commit criminal offences
1.24
The department stated that where authorities cannot prove that property is actually proceeds of crime, they may pursue a prosecution for attempting to commit a money laundering offence.
1.25
In such circumstances, proposed amendments in Schedule 1 would provide that in relation to attempts to commit certain 'proceeds of general crime' and 'proceeds of indictable crime' offences, recklessness will be the relevant fault element. Under subsection 11.1(3) of the Criminal Code, intention and knowledge would otherwise apply as the relevant fault elements for attempts to commit an offence.
1.26
The department articulated the rationale for the amendments as follows:
Under subsection 11.1(3) of the Criminal Code, however, the prosecution must also prove that the defendant knew or believed the property was the proceeds of crime, even though it would only need to be established that they were reckless of negligent about that fact if they were prosecuted for the completed offence. This is often impossible for law enforcement to prove, as money laundering networks ensure participants remain wilfully blind to predicate offending, preventing them from knowing or believing that property came from crime.
Partial defence of mistake of fact as to the value of money or property
1.27
Currently under the Criminal Code, a partial defence for certain offences applies where a defendant was under a mistaken but reasonable belief about the value of the money or property at or before the time of dealing with it.
1.28
In Singh v the Queen [2016] VSCA 163, the Court found that a person could rely on this partial exemption where they had a mistaken but reasonable belief as to the value of money or other property at or before the time they dealt with this property, even if they discovered its true value while dealing with it.
1.29
Schedule 1 proposes to amend the Criminal Code so that whether a person has a mistaken but reasonable belief as to the value of money or other property at or before the time of dealing with the money or other property, or at the time of engaging in the conduct, they must maintain this belief for the duration of the period of the dealing or conduct to rely on the partial exemption.
Schedule 2—Investigation of Commonwealth offences
1.30
Schedule 2 proposes to amend the Crimes Act:
…to clarify that the obligations imposed on investigating officials under Part IC, including the requirement under section 23F, to caution a person who is under arrest or who is a protected suspect before starting to question the person, do not apply to undercover operatives. This also includes those obligations listed in Division 2, in their capacity as undercover operatives.
1.31
The bill seeks to amend the Crimes Act to exempt undercover operatives from obligations imposed on investigating officials under Part IC of the Crimes Act. Obligations include informing a subject of their right to communicate with a friend, relative and legal practitioner, and the questioning of children.
1.32
The intent of these amendments is to ensure that any evidence gained by undercover operatives is not considered to have been obtained unlawfully, by virtue of the fact that the undercover operative did not comply with the obligations set out under Part IC of the Crimes Act.
Schedule 3—Buy-backs
Applications to buy-back interest in forfeited property
1.33
The POC Act provides that in certain circumstances, individuals may apply to buy-back their interest in property which was forfeited to the Commonwealth under court order or upon conviction of a serious offence.
1.34
Schedule 3 of the bill seeks to amend the POC Act to 'address a number of recent issues that have arisen under buy-back applications', including where suspects attempt to buy-back forfeited property with funds of unknown provenance. Proposed amendments provide that the court must be satisfied that the person applying for a buy-back order:
…was not involved in, and did not have knowledge of, the offending conduct underpinning any relevant restraining or forfeiture order over the property in question.
1.35
The proposed amendments would provide that the court must be satisfied that the funds being used to buy-back the property are not proceeds or an instrument of unlawful activity, or that any loans being used to purchase the property can be paid back.
1.36
Further, the department advised that suspects have previously sought to make 'buy-back applications after forfeiture, unnecessarily delaying proceedings and frustrating law enforcement efforts'. Schedule 3 outlines when an application for a buy-back order should be made, and incentivises applicants to apply for a buy-back order before a forfeiture order has been made. According to the department, the bill would address unnecessary delays to proceedings by making buy-back applications after the courts have resolved relevant forfeiture orders and applications for exclusion and compensation.
1.37
Schedule 3 proposes to provide that a responsible authority may apply for an examination order or a production order to obtain information and documents related to a buy-back application, and committing an offence of failing to abide by examination notice requirements will constitute a 'serious offence'.
1.38
Combined, these amendments are intended to allow law enforcement to collect evidence relevant to considering whether an application is seeking to buy-back property with illicit funds, and circumstances in which:
…law enforcement's efforts to restrain and confiscate criminal assets are being delayed and frustrated by persons who refuse to comply with coercive information-gathering powers under Chapter 3 of the POC Act.
Schedule 4—Definition of 'benefit'
1.39
Under section 338 of the POC Act, the term 'benefit' is defined as including 'service or advantage'. Schedule 4 of the bill would amend the POC Act to clarify that 'the term benefit…includes the avoidance, deferral or reduction of a debt, loss or liability'.
1.40
This is intended to ensure that criminals are not able to benefit in any way from their offending, including by avoiding debt or loss. For example, the new definition would ensure that the criminal evasion of import duties, excises or taxation would be considered a benefit under the POC Act.
1.41
According to the explanatory memorandum, this amendment seeks to reflect the existing operation of the POC Act:
…which allows pecuniary penalty orders and literary proceeds orders to be made in relation to both a benefit gained and loss avoided through criminal conduct.
Schedule 5—Jurisdiction of courts
1.42
As currently drafted, section 53 of the POC Act, relating to jurisdictional issues concerning forfeiture, has resulted in 'unnecessary confusion as to whether the Act can be used to take action against property located overseas'.
1.43
Schedule 5 would amend sections of the POC Act to expressly provide that 'all courts with proceeds jurisdiction are able to make orders under the POC Act in respect of property located overseas'.
1.44
The proposed amendments align with, and are intended to reinforce, the existing procedures by which restraint and confiscation action are taken overseas.
Schedule 6—Information
Compliance with coercive information-gathering powers
1.45
Existing provisions under the POC Act provide for information gathering powers to be exercised by Commonwealth law enforcement agencies to obtain information relevant to confiscating proceeds of crime. Schedule 6 proposes to raise the maximum penalty for non-compliance offences under certain sections of the POC Act, for persons who do not to comply with coercive information-gathering powers. The schedule would also provide that information or documents gained by using POC Act powers can be disclosed to authorities responsible for investigating and prosecuting non-compliance offences, and may be used in criminal proceedings for failing to comply with these powers.
1.46
These amendments are intended to incentivise compliance with information gathering powers, and in some circumstances provide that authorities may take 'enhanced restraint and confiscation action where non-compliance occurs'. Amendments contained in Schedule 6 also aim to expand the ability of information collected under information-gathering powers to be shared.
1.47
Schedule 6 proposes to allow the Official Trustee to disclose information to a wider range of authorities for a wider range of purposes. This includes for the disclosure of information to particular authorities for purposes relating to mutual assistance, extradition and enabling or assisting the International Criminal Court and the International War Crimes Tribunal or a professional disciplinary body.
1.48
According to the department, these amendments seek to address current limitations and ambiguities in legislation that result in the reduced utility of information gathered under the POC Act and limit the ability of agencies to collaborate on cross-agency matters.
Schedule 7—Official Trustee
1.49
Under the POC Act, the Official Trustee has certain powers, including the power to obtain information and evidence and destroying or disposing of property. Schedule 7 amends the COAG Reform Fund Act 2008 and the POC Act to enhance the powers of the Official Trustee, as the entity responsible for managing the Confiscated Assets Account (CAA) and property seized under the POC Act.
1.50
Schedule 7 proposes to expand the powers of the Official Trustee, in particular, so that it:
…can use its powers to gather information and deal with property in relation to property that is forfeited or subject to a confiscation direction, lifting existing prohibitions that prevent the Official Trustee disposing of property by consent or under court order during appeal periods.
1.51
The schedule would also amend the administration of the Confiscated Assets Account and expand the categories of money to be credited into the account by providing:
the Minister with alternative avenues to fund State and Territory law enforcement, crime prevention and drug treatment and diversion measures from the Account, and
that payments under proposed Commonwealth deferred prosecution agreements or foreign deferred prosecution agreements that represent proceeds or instruments of alleged unlawful activity must be credited to the Account.
Consideration by other parliamentary committees
Standing Committee for the Scrutiny of Bills
1.52
The Standing Committee for the Scrutiny of Bills (the scrutiny committee) considered the bill in Scrutiny Digest 13 of 2020, which was tabled on 7 October 2020. The scrutiny committee raised a number of concerns regarding the bill.
1.53
Concerns raised by the scrutiny committee included the following:
The explanatory materials do not contain detailed advice regarding the imposition of significant penalties for new offences introduced by Schedule 1 addressing relevant principles as set out in the Guide to Framing Commonwealth Offences.
The appropriateness of undermining fundamental criminal law principles by applying absolute liability to two proposed new offences is a matter for the Senate as a whole.
The explanatory materials do not address why it is not sufficient to reverse the evidential, rather than the legal burden of proof in relation to new offences introduced by Schedule 1.
The the appropriateness of abrogating the common law privilege against self-incrimination by removing the derivative use immunity in paragraph 271(2)(c) of the POC Act, is a matter for the Senate as a whole.
The scrutiny committee suggested amending the bill to provide some level of parliamentary scrutiny for agreements made under proposed Division 4 of Part 4-3, which seeks to establish a regime by which the minister can make grants to the states and territories for certain measures.
1.54
Except where determining that the appropriateness of issues raised were a matter for the Senate as a whole, the scrutiny committee has sought the minister's advice in relation to the issues raised. At the time of presentation of this report, no response from the minister had been published.
Parliamentary Joint Committee on Human Rights
1.55
The Parliamentary Joint Committee on Human Rights (the human rights committee) considered the bill in Report 11 of 2020, which was tabled on 24 September 2020. The human rights committee raised a number of concerns regarding the bill.
1.56
Concerns raised by the human rights committee included the following:
Two new offences that reverse the legal burden of proof, requiring the defendant prove, on that balance of probabilities, that he or she had no reasonable grounds to suspect the money or property is proceeds of indictable crime, engage and limit the right to a fair trial, in particular, the right to be innocent until proven guilty.
Amendments to the provisions in the Crimes Act relating to the investigation of Commonwealth offences to provide that undercover operatives are exempt from the obligations imposed on investigating officials under Part IC of the Crimes Act, including obligations in relation to child suspects, engage and may limit the rights of the child.
The expansion of the POC Act to cover additional conduct and offences, including expansion of a 'serious offence' to include offences relating to failures to comply with coercive information gathering power and the retrospective application of amendments to the definition of what constitutes a 'benefit', may engage and limit the right to a fair trial and fair hearing.
Provisions amending the coercive information gathering regime under the POC Act remove the derivative use immunity, so that anything obtained as a consequence of the information or documents compulsorily provided by a person could be used against them in a criminal proceeding, engage and limit the right to a fair trial.
Provisions authorising the disclosure of identifying and personal information overseas to foreign governments in circumstances relating to the investigation and prosecution of offences, where the information might be shared with a country that has not abolished the death penalty, may engage the right to life.
1.57
In respect of these concerns, the human rights committee sought the minister's advice to determine whether these possible limitations on human rights are reasonable, necessary and proportionate. At the time of presentation of this report, no response from the minister had been published.