Explanatory Memorandum
(Circulated by authority of the Attorney-General, the Honourable Daryl Williams AM QC MP)Schedule 3 - Amendment of the Charter of the United Nations Act 1945
This Schedule introduces amendments to the UN Charter Act to prohibit dealings in the assets of persons and entities involved in terrorist activities and to prevent others from making assets available to those persons or entities.
The provisions in proposed Part 4 implement paragraph 1(c) of the United Nations Security Council Resolution 1373. Paragraph 1(c) requires States to:
freeze without delay funds and other financial assets or economic resources of persons who commit, or attempt to commit, terrorist acts or participate in or facilitate the commission of terrorist acts; of entities owned or controlled directly or indirectly by such persons; and of persons acting on behalf of, or at the direction of such persons and entities, including funds derived or generated from property owned or controlled directly or indirectly by such persons and associated persons or entities.
The amendments to the UN Charter Act will supersede the existing provisions in the Charter of the United Nations (Anti-terrorism Measures) Regulations 2000 . New simplified regulations giving effect to these amendments will be made to commence at the same time as the amendments. Moving the provisions relating to the freezing of assets from the regulations to the Act will enable the penalty for the offences to be increased.
Item 1
This Item inserts proposed new Part 4 (Offences to give effect to Security Council decisions) into the UN Charter Act. Part 4 creates new offences directed at those who provide assets to, or deal in the assets of, persons and entities involved in terrorist activities. The Part also contains associated provisions that, amongst other things, provide for the Minister for Foreign Affairs to list persons and entities for the purpose of the offences, to revoke a listing and to permit a specified dealing in a freezable asset.
Proposed section 14 - Definitions
Proposed section 14 contains definitions of terms used in proposed Part 4 of the Charter.
asset is defined as property and assets of every kind and legal documents or instruments in any form. The definition is broad in scope and is derived from Article 1 of the International Convention for the Suppression of the Financing of Terrorism. The breadth of the definition will ensure that the requirement to freeze an asset applies regardless of whether that asset is money, equipment or a weapon.
freezable asset means an asset that is listed by the Minister for Foreign Affairs or owned or controlled by a person or entity listed by the Minister or proscribed by regulations, or is derived or generated from such an asset.
listed asset means an asset listed by the Minister under proposed section 15. Proposed section 15 provides for the Minister to list assets if satisfied of the matters prescribed by the Governor-General in regulations. The prescribed matters must give effect to a United Nations Security Council decision related to terrorism and dealing in assets (eg, Resolution 1373).
proscribed person or entity means a person or entity listed under proposed section 15 or proscribed by regulation under proposed section 18. Proposed sections 20 and 21 make it an offence to provide assets to, or deal in the assets of, proscribed persons and entities.
superior court means the Federal Court of Australia or the Supreme Court of a State or Territory. These courts are able to grant an injunction under proposed section 26 to restrain a person from engaging in conduct which would constitute an offence against proposed section 20 or 21.
Proposed section 15 - Listing persons, entities and assets
Proposed section 15 provides that the Minister must list a person or entity, and may list an asset or class of assets, if satisfied of certain prescribed matters. The Governor-General may make regulations prescribing the matters of which the Minister must be satisfied. A matter may only be prescribed if it would give effect to a United Nations Security Council decision that Article 25 of the Charter of the United Nations requires Australia to carry out and that relates to terrorism and dealings with assets. A person, entity or asset is listed by notice in the Gazette .
The listing of a person, entity or asset by the Minister will attract the application of the offences in proposed section 20 and 21. The offences will apply to a person who makes an asset available to a listed person or entity or who deals in a listed asset or an asset owned by a listed person entity.
Proposed section 16 - Minister may revoke the listing
Proposed section 16 provides for the Minister for Foreign Affairs to revoke a listing of a person, entity or asset by notice in the Gazette if he or she is satisfied that the listing is no longer necessary to give effect to a United Nations Security Council decision that Article 25 of the Charter of the United Nations requires Australia to carry out and that relates to terrorism and dealings with assets. The revocation may be made at the Ministers own instigation or on application by a listed person or entity (see proposed section 17).
The proposed section will ensure that the legislation provides an express mechanism for listed persons and entities to have their listing reviewed and, if appropriate, revoked.
Proposed section 17 - Listed person or entity may apply to have the listing revoked
Proposed section 17 enables listed persons and entities to apply in writing to the Minister for Foreign Affairs to have the listing revoked. However, the Minister is not required to consider an application if the person or entity has already made an application within the previous 12 months.
The application must set out the circumstances justifying a revocation of the listing, For example, evidence that the person is not associated with a terrorist organisation or involved in terrorist activities.
Proposed section 18 - Proscription by regulation
Proposed section 18 provides a means of proscribing persons and entities by reference to a decision of the United Nations Security Council that identifies persons and entities to which the decision relates. Security Council decisions often list the persons or entities against whom sanctions should be applied. Enabling those lists to be directly incorporated by the regulations as they exist from time to time is more expedient than requiring the Minister to list each person and entity by notice in the Gazette . However, the ability for the Minister to list persons and entities by notice in the Gazette is necessary to cover Security Council decisions, like Resolution 1373, which do not specifically identify persons or entities to which sanctions should be applied.
Proposed section 19 - Effect of resolution ceasing to bind Australia
Proposed section 19 provides for the listing of a person or entity under proposed section 15 to be automatically revoked when the Security Council decision to which the listing gives effect no longer binds Australia. The section also provides that regulations proscribing a person or entity under proposed section 18 cease to have effect when the Security Council decision to which the regulations give effect no longer binds Australia.
The section makes it clear that the offences cease to apply in relation to persons, entities or assets listed by the Minister or proscribed by regulation from the time the Security Council decision to which the listing or proscription gives effect ceases to bind Australia, without the need for the Minister to revoke the listing or for the regulations to be repealed.
Proposed section 20 - Offence-dealing with freezable assets
Proposed section 20 provides that a person who holds a freezable asset is guilty of an offence if the person uses or deals with the asset, or allows or facilitates a use or dealing, and is reckless as to whether the asset is a freezable asset, and the use or dealing is not in accordance with a notice under section 22. The maximum penalty for dealing with a freezable asset is 5 years imprisonment. The maximum fine will be $33,000 for a natural person and $165,000 for a body corporate under the existing $110 value for a penalty unit in section 4AA of the Crimes Act, and the provisions for calculating maximum fines in section 4B of that Act.
The penalty for the existing offence against the regulations is only $5,500, which is clearly inadequate. Under section 12 of the UN Charter Act, this is the maximum penalty that may be applied to offences against the regulations. Moving the offence to the Act will enable the penalty to be significantly increased.
Strict liability applies to the fact that the use or dealing with the asset is not in accordance with a notice under section 22. The application of strict liability means that the prosecution does not have to prove any fault element, such as knowledge or recklessness, in respect of this element of the offence. However, the defence of mistake of fact is still available.
The application of strict liability is necessary to ensure that a defendant who uses or deals with an asset which he or she knows to be a freezable asset cannot escape liability by demonstrating that they were not aware that the use or dealing was not in accordance with a notice under section 22. A person wishing to deal in a freezable asset will have to ensure that the dealing has been permitted by a notice given under section 22. However, it is a defence to a prosecution for an offence against section 20, if a person shows that he or she dealt with a freezable asset in the mistaken but reasonable belief that the dealing was in accordance with a notice. It is also a defence if the person can show that the use or dealing was solely for the purpose of preserving the value of the asset.
Category A geographical jurisdiction, as set out in section 15.1 of the Criminal Code, will apply to an offence against subsection 20(1). Category A geographical jurisdiction is satisfied if (i) the conduct constituting the offence occurs wholly or partly in Australia, or wholly or partly on board an Australian aircraft or an Australian ship; (ii) a result of the conduct occurs wholly or partly in Australia or wholly or partly on board an Australian aircraft or an Australian ship; or (iii) at time of the alleged offence the person charged with the offence was an Australian citizen or body corporate. Where the conduct constituting an offence occurs wholly in a foreign country and only a result occurs in Australia, there is a defence available if there is no corresponding offence in that foreign country. However, that defence is not available if jurisdiction is to be exercised on the basis of the person's nationality.
The application of Category A jurisdiction to the offence will mean that a person (including a body corporate) who uses or deals with a freezable asset in Australia or an Australian citizen or corporation who uses or deals with a freezable asset in a foreign country will commit an offence against section 20. The offence would not apply to foreign citizens or corporations that engage in a use or dealing with a freezable asset in a foreign country as those persons and corporations could not be expected to act with regard to a listing made under Australian law.
Proposed section 21 - Offence-giving an asset to a proscribed person or entity
Proposed section 21 makes it an offence for a person to directly or indirectly make an asset available to a proscribed person or entity, if the person is reckless as to whether the person or entity is a proscribed person or entity and the making available of the asset is not in accordance with a notice under section 22. The offence carries a maximum penalty of 5 years imprisonment. The maximum fine will be $33,000 for a natural person and $165,000 for a body corporate under the existing $110 value for a penalty unit in section 4AA of the Crimes Act, and the provisions for calculating maximum fines in section 4B of that Act.
The penalty for the existing offence against the regulations is only $5,500, which is clearly inadequate. Under section 12 of the UN Charter Act, this is the maximum penalty that may be applied to offences against the regulations. Moving the offence to the Act will enable the penalty to be significantly increased.
Strict liability applies to the fact that the making available of the asset is not in accordance with a notice under section 22. The application of strict liability means that the prosecution does not have to prove any fault element, such as knowledge or recklessness, in respect of this element of the offence. However, the defence of mistake of fact is still available.
The application of strict liability is necessary to ensure that a defendant who makes an asset available to a person whom he or she knows to be a proscribed person cannot escape liability by demonstrating that they were not aware that the making available of the asset was not in accordance with a notice under section 22. A person wishing to make an asset available to a proscribed person or entity will have to ensure that the making available has been permitted by a notice given under section 22. However, it is a defence to a prosecution for an offence against section 20, if a person shows that he or she made an asset available to a proscribed person or entity in the mistaken but reasonable belief that the making available was in accordance with a notice.
Category A geographical jurisdiction, as set out in section 15.1 of the Criminal Code, will apply to an offence against subsection 21(1). Category A geographical jurisdiction is satisfied if (i) the conduct constituting the offence occurs wholly or partly in Australia, or wholly or partly on board an Australian aircraft or an Australian ship; (ii) a result of the conduct occurs wholly or partly in Australia or wholly or partly on board an Australian aircraft or an Australian ship; or (iii) at time of the alleged offence the person charged with the offence was an Australian citizen or body corporate. Where the conduct constituting an offence occurs wholly in a foreign country and only a result occurs in Australia, there is a defence available if there is no corresponding offence in that foreign country. However, that defence is not available if jurisdiction is to be exercised on the basis of the person's nationality.
The application of Category A jurisdiction to the offence will mean that a person (including a body corporate) who makes an asset available to a proscribed person or entity in Australia or an Australian citizen or corporation who makes an asset available to a proscribed person or entity in a foreign country will commit an offence against section 21. The offence would not apply to foreign citizens or corporations that make an asset available to a proscribed person or entity in a foreign country as those persons and corporations could not be expected to act with regard to a listing made under Australian law.
Proposed section 22 - Authorised dealings
Proposed section 22 provides that the owner of an asset may apply in writing to the Minister for Foreign Affairs for permission to make the asset available to a proscribed person or entity or, if the asset is a freezable asset, to use or deal with the asset in a specified way. The Minister, or a delegate, may grant permission by written notice. The notice may be subject to conditions and must be given to the owner of the asset as soon as practicable after it is made.
The provision will allow the Minister to exempt a particular dealing in an asset from the application of the offences in proposed section 20 and 21. This power would only be exercised in exceptional circumstances, for example, to protect the rights of third parties.
Proposed section 23 - Part prevails over conflicting legal obligations
Proposed section 23 provides that the provisions of Part 4 prevail over Commonwealth, State or Territory laws that would otherwise require a person to act in contravention of this part. The section makes it clear that Commonwealth, State and Territory employees are covered by the offences in Part 4 and should not comply with any statutory obligation or exercise any statutory power to make a payment to a person or entity (eg, a social security payment) where the making of the payment is prohibited by Part 4. This underscores the general point that Commonwealth officers, servants and agents of the Crown have no immunity from the ordinary criminal law: see, eg,
Jacobsen v Rogers
(1995)
182 CLR 572
at 587.
Proposed section 24 - Indemnity for holder of assets
Proposed section 24 provides that a person is not liable to an action, suit or proceeding for anything done or omitted to be done in good faith and without negligence in compliance or purported compliance with this Part.
Proposed section 25 - Compensation for persons wrongly affected
Proposed section 25 provides for the Commonwealth to compensate the owner of an asset where the holder of the asset refuses, in good faith and without negligence, to deal with the asset in accordance with the owners instructions, on the basis that the asset is a freezable asset, when it is not in fact a freezable asset. For example, if a bank freezes the funds in a persons account in the mistaken but honest belief that the person is a listed person or entity, that person will be entitled to compensation from the Commonwealth for any loss he or she suffers as a result.
Proposed section 26 - Injunctions
Proposed section 26 provides for a superior court to grant an injunction restraining a person from engaging in conduct where the person has engaged, is engaging, or proposes to engage conduct involving a contravention of Part 4 (ie, dealing in a freezable asset or making an asset available to a proscribed person or entity). An injunction may only be granted on application by the Attorney-General.
A superior court may grant an injunction by consent of all parties to the proceedings even if it is not satisfied that the person has engaged, is engaging, or proposes to engage in conduct involving a contravention of Part 4. A court may grant an interim injunction pending its determination of an application and may discharge or vary an injunction it has granted. Injunctions are currently available under section 13 of the UN Charter Act for conduct involving a contravention of the regulations. Proposed section 26 will enable an injunction to be granted in relation to conduct that would constitute an offence against section 20 or 21.