House of Representatives

Explanatory Memorandum

Circulated by authority of the Attorney-General, the Honourable Robert McClelland MP

Schedule 1 - Proceeds of Crime

GENERAL OUTLINE

Schedule 1 will amend the Proceeds of Crime Act 2002 (the Act) to implement the recommendations of law enforcement agencies and arising out of the Sherman Report.

Part 1 addresses the provisions in Chapter 2 of the Act, which enable a person whose property has been restrained or forfeited to apply to recover their property, have their property excluded from restraint or forfeiture, or be compensated for their legitimately obtained interest in the property. Part 1 amends the tests for exclusion and recovery of property in order to achieve greater consistency and to ensure that tests are not harder for third parties to satisfy than for respondants. Part 1 also introduces a new provision enabling a person to apply to be compensated for their legitimately obtained interest in the property if it was forfeited 'automatically' (that is, upon conviction of a serious offence).

Part 1 introduces a new provision which requires the CDPP to provide notification of the date on which 'automatic' forfeiture will occur. The provision will require the CDPP to notify all persons reasonably suspected to be affected by the forfeiture, so that these persons are aware of the date of forfeiture and have an opportunity to consider their rights in relation to the property.

Part 1 also clarifies the definition of 'conviction day', as the current definition has proven to be ambiguous. This clarification is essential as the date on which property is forfeited to the Commonwealth is determined by reference to the date of conviction.

Part 2 addresses the provisions in Part 2-4 of the Act, which relate to pecuniary penalty orders. Part 2 ensures that provisions governing the calculation of pecuniary penalty orders are clear. It introduces the ability for the court to reconsider a pecuniary penalty order in certain circumstances (for example, where property that was excluded from forfeiture is subsequently excluded, recovered or in respect of which compensation is paid) and clarifies the way pecuniary penalty orders are calculated. Part 2 also clarifies provisions relating to the jurisdiction of magistrates.

Part 3 expands the circumstances in which examination orders can be made. This will enhance the ability to identify property for enforcement action and assist determination of whether applications for compensation and/or recovery and exclusion of property are legitimate. Part 3 also clarifies that applications for examination orders can be made ex parte , strengthens existing penalties for offences relating to examinations and introduces a new offence of providing false or misleading answers or documents in connection with an examination.

Part 4 amends provisions relating to information gathering, to increase efficiency. Electronic production of documents is now provided for, as is the ability to reduce the time in which documents and information must be produced in accordance with an order or notice. This power is intended to apply only in urgent situations. The definition of 'account' has been expanded to include credit card accounts, loan accounts and closed accounts, and a power to obtain information about stored value cards has also been included.

Part 5 clarifies the way in which orders ancillary to restraining orders are to be made and operate. Part 5 removes the privilege against self-incrimination in relation to providing a sworn statement about particulars of, or dealings with, property. The removal of the privilege is in response to a court decision which held that the privilege was impliedly removed. The provision is designed to clarify the existing position, but provides a use immunity.

Part 6 implements technical recommendations of the Sherman Report about the use of transcripts of evidence from examination hearings in other proceedings under the Act. Part 7 clarifies definitions used in the Act, including the definitions of 'effective control' and 'serious offence'. Part 8 also implements technical recommendations of the Sherman Report that relate to the circumstances in which the court can make certain orders.

Part 9 amends provisions relating to the Confiscated Assets Account. These provisions are designed to increase the effective administration of the Account, and to make clear on the face of the legislation, the source of funds coming into, and out of, the account.

Part 10 amends the Administrative Decisions (Judicial Review) Act 1977 to state that decisions of the CDPP to apply for an order under the Act are not subject to judicial review. As with criminal proceedings, questions about the validity of proceedings under the Act can be examined during the course of proceedings under the Act and a separate stage of review is not necessary.

Part 1 - Exclusion, recovery and compensation

Proceeds of Crime Act 2002

Item 1 - Subsection 29(1)

This item omits 'may' and inserts 'must' into subsection 29(1) of the Act.

The effect of this amendment will be that a court is required to exclude property from a restraining order where certain criteria are satisfied. This amendment aligns the requirement for a court to exclude property from a restraining order, with the court's existing requirement for a court to exclude property from a forfeiture order under sections 73 and 94 (as amended by Item 50 ).

Item 2 - Subsection 29(1)

This item omits the term 'specified' and substitutes 'a specified *interest in'.

The Act currently uses the terms '*property' and '*interests' interchangeably and with little uniformity. This amendment is part of a broader set of amendments to the Act which will make the use of these terms more consistent.

Item 3 - Paragraph 29(1)(b)

This item omits the term 'property' from paragraph 29(1)(b) and substitutes that term with 'interest'.

The Act currently uses the terms '*property' and '*interests' interchangeably and with little uniformity. This amendment is part of a broader set of amendments to the Act which will make the use of these terms more consistent.

Item 4 - Subsection 29(2)

This item omits the term 'specified' and substitutes 'a specified *interest in'.

The Act currently uses the terms '*property' and '*interests' interchangeably and with little uniformity. This amendment is part of a broader set of amendments to the Act which will make the use of these terms more consistent.

Item 5 - Paragraphs 29(2)(a), (b), (c) and (d)

Item 5 will omit the term 'property' from paragraphs 29(2)(a), (b), (c) and (d) and substitutes that term with 'interest'.

The Act currently uses the terms '*property' and '*interests' interchangeably and with little uniformity. This amendment is part of a broader set of amendments to the Act which will make the use of these terms more consistent.

Item 6 - Subsection 29(3)

Item 6 inserts 'a specified *interest in' before 'property' in subsection 29(3) of the Act.

The Act currently uses the terms '*property' and '*interests' interchangeably and with little uniformity. This amendment is part of a broader set of amendments to the Act which will make the use of these terms more consistent.

Item 7 - Paragraphs 29(3)(a) and (d)

Item 7 will omit the term 'property' from paragraphs 29(3)(a) and (d) and substitutes that term with 'interest'.

The Act currently uses the terms '*property' and '*interests' interchangeably and with little uniformity. This amendment is part of a broader set of amendments to the Act which will make the use of these terms more consistent.

Item 8 - Subsection 29(4)

Item 8 inserts 'a specified *interest in' before the first occurring reference to 'property' in subsection 29(4).

The Act currently uses the terms '*property' and '*interests' interchangeably and with little uniformity. This amendment is part of a broader set of amendments to the Act which will make the use of these terms more consistent.

Item 9 - Paragraph 29(4)(a)

Item 9 omits the words 'owns the property' and substitutes 'has the interest'.

The Act currently uses the terms '*property' and '*interests' interchangeably and with little uniformity. This amendment is part of a broader set of amendments to the Act which will make the use of these terms more consistent.

Item 10 - Paragraph 29(4)(b)

Item 10 omits the terms 'property is not owned' and substitutes that term with 'interest is not held'.

The Act currently uses the terms '*property' and '*interests' interchangeably and with little uniformity. This amendment is part of a broader set of amendments to the Act which will make the use of these terms more consistent.

Item 11 - Section 29A

Item 11 omits 'may' and inserts 'must' into section 29A of the Act. The effect of this amendment will be that a court is required to exclude property from a restraining order where certain criteria are satisfied. This amendment aligns the requirement for a court to exclude property from a restraining order, with the requirement for a court to exclude property from a restraining order under section 29 and from a forfeiture order under sections 73 and 94 (as amended by Item 50 ).

Item 12 - Section 29A

Item 12 omits the term 'specified' and substitutes 'a specified *interest in'.

The Act currently uses the terms '*property' and '*interests' interchangeably and with little uniformity. This amendment is part of a broader set of amendments to the Act which will make the use of these terms more consistent.

Item 13 - Paragraph 29A(b)

Item 13 repeals paragraph 29A(b) and replaces it with a provision that refers to an 'interest' held by a person instead of 'property of a person'.

The Act currently uses the terms '*property' and '*interests' interchangeably and with little uniformity. This amendment is part of a broader set of amendments to the Act which will make the use of these terms more consistent.

Item 14 - Section 29A (note)

Item 14 omits the words 'an examination of the applicant' and substitutes 'examinations in relation to the restraining order'. This is a consequential amendment, necessary because of Item 18 which amends paragraph 32(1)(b).

Item 15 - Subsection 30(1)

This item repeals subsection 30(1) and substitutes a new subsection that removes the time limit requiring a person to make an application to exclude property from a restraining order within 14 days of being notified of the application for the order.

The effect of the new paragraph is that, if a restraining order could cover property in which a person claims an interest, that person may apply under section 30 up until the time the restraining order is made. This amendment will encourage people who have an interest in property to apply for an order at an early stage in proceedings. It also corrects the anomalous situation under the existing subsection, where a person who fails to make an application within the time limit has to wait for the restraining order to be made so that they can seek to have the property excluded from the restraining order under section 31.

This item also updates the heading to section 30 by omitting 'after notice of the application for the order' and substituting 'before restraining order has been made'.

Item 16 - Subsection 31(1)

Item 16 repeals subsection 31(1) and inserts new subsections (1) and (1A).

Currently, a person can only apply under subsection 31(1) for an order to exclude property after he or she has been notified of the restraining order. The effect of this subsection is that a person who has a lawfully obtained interest in property, but was not notified of the restraining order, may be ineligible to apply under this section to have their interest in the property excluded from the restraining order.

This amendment will allow any person, who claims an interest in the property specified in the restraining order, to apply for an exclusion order regardless of whether notice has been provided to the person. Subsections 31(1) and (1A) provide that an application may be made at any time after the restraining order is made. An application must be made to the court that made the restraining order.

This item also updates the heading to section 31 by omitting 'notice of the order' and substituting 'restraining order has been made'.

Item 17 - At the end of subsection 31(6)

Item 17 inserts a new sentence at the end of subsection 31(6) to align this subsection with subsection 75(3). This item implements recommendation D5 of the Sherman Report.

Under subsections 31(6) and 75(3) of the Act the CDPP is required to give notice of the grounds on which it proposes to contest an application to exclude property from a restraining order or forfeiture order respectively. However, subsection 75(3) provides that notice need not be given until the CDPP has had a reasonable opportunity to examine the applicant. This ensures the CDPP has an opportunity to explore an applicant's property for any links to proceeds of crime, prior to a court considering whether to exclude that property from forfeiture. There is no equivalent provision in subsection 31(6).

This item inserts a new sentence into subsection 31(6) which clarifies that the CDPP does not need to give notice of the grounds on which it proposes to contest an application until it has had a reasonable opportunity to conduct examinations in relation to the restraining order.

Item 18 - Paragraph 32(b)

Item 18 omits 'an *examination of the applicant' and substitutes '*examinations in relation to the application'.

Currently under the Act, a court must not hear an application to exclude specified property from a restraining order unless the CDPP has been given a reasonable opportunity to conduct an examination of the applicant. However, there are some cases where the CDPP may need to examine not only the applicant but also one or more other persons prior to the hearing of the exclusion application. This can arise for example, where property of a third party is restrained on the basis that it is subject to the effective control of the suspect, and the third party applies for the application for the property to be excluded on the basis that the property is not in fact subject to the suspect's effective control. In this case, it may be necessary for the CDPP to have the opportunity to examine not only the third party applicant, but also the suspect, prior to the hearing of the exclusion application.

This amendment will ensure the CDPP is given the opportunity to examine any person that may have information relevant to an application for an exclusion order, prior to the application being heard by a court.

Items 18 and 28 implement recommendation D6 of the Sherman Report.

Item 19 - Application

This item sets out the application of amendments to Division 3 of Part 2-1 of the Act (excluding property from restraining orders), that are contained in this Part. The amendments apply in relation to restraining orders applied for on or after the commencement of this item, whether the conduct constituting the offence to which the restraining order relates occurs before, on, or after the commencement of this item.

Item 20 - Subsection 73(1)

This item inserts the words 'a specified *interest in' before 'property' in subsection 73(1).

The Act currently uses the terms '*property' and '*interests' interchangeably and with little uniformity. This amendment is part of a broader set of amendments to the Act which will make the use of these terms more consistent.

Item 21 - Paragraph 73(1)(b)

This item omits the reference to 'the applicant's property' and substitutes 'property in which the applicant has an interest.'

The Act currently uses the terms '*property' and '*interests' interchangeably and with little uniformity. This amendment is part of a broader set of amendments to the Act which will make the use of these terms more consistent.

Item 22 - Paragraphs 73(1)(c), (d) and (e)

This item repeals paragraphs 73(1)(c), (d) and (e) and introduces new paragraphs 73(1)(c) and (d) in relation to excluding property from a forfeiture order.

Currently, paragraph 73(1)(d) specifies the test which allows a third party to apply for exclusion of property from a forfeiture order under sections 47 and 49. Paragraph 73(1)(c) specifies the test that applies to a suspect. At present, the provisions are more onerous for a third party than for a suspect, as a third party must show that they were not involved in the commission of any of the offences to which the application relates. The same requirement does not apply to a suspect. It is anomalous that a third party would face a more difficult test than a suspect. This item ensures that all parties have the same test when they apply for an exclusion order.

This item repeals these provisions and inserts a new test in paragraph 73(1)(c) that applies equally to suspects and third parties in relation to exclusion from a forfeiture order under section 47 and 49. Under this test, before granting an exclusion order, a court must be satisfied that the applicant's interest is not proceeds of unlawful activity or, if the forfeiture order was based on a serious offence, an instrument, of that offence.

A new test is also added in subsection 73(1)(d) that applies to a forfeiture order under section 48. Under this test, before granting an exclusion order, a court must be satisfied that the applicant's interest in property is not proceeds, or an instrument of, any of the offences to which the forfeiture order or forfeiture application relates.

Items 23 and 24 - Paragraphs 73(2)(a),(b), (c) and (d)

These items omits the term 'property' from the above paragraphs and substitutes that term with 'interest'.

The Act currently uses the terms '*property' and '*interests' interchangeably and with little uniformity. These amendments are part of a broader set of amendments to the Act which will make the use of these terms more consistent.

Item 25 - Subsection 74(1)

This item omits the reference to 'the *person's property' and substitutes 'property in which the person claims an *interest.'

The Act currently uses the terms '*property' and '*interests' interchangeably and with little uniformity. This amendment is part of a broader set of amendments to the Act which will make the use of these terms more consistent.

Item 26 - Subsections 74(2) and (3)

This item repeals subsections 74(2) and (3) and inserts new provisions governing when a person can make an application for an exclusion order after a forfeiture order has been made.

This item will ensure consistency between the application provisions for exclusion of property from a restraining order (section 31) and exclusion of property from a forfeiture order.

Under the new provisions, once a forfeiture order has been made, subsection 74(2) enables a person who claims an interest in property specified in that forfeiture order, to apply to have that interest in property excluded.

Subsection 74(3) restricts the ability for a person to apply for an order, if the person appeared at the hearing of the forfeiture application, or if the person was notified of the application for the forfeiture order and did not appear at the hearing of that application. In these instances a person can only make an application where the court gives leave.

Where a person seeks the leave of the court, subsection 74(4) provides that the court may only grant leave if certain circumstances apply. If the person was notified of the application for a forfeiture order and failed to appear at the hearing of that application, the court may grant leave if the person had a good reason for not appearing. If the person did appear, the court may grant leave if that person now has new evidence (which was not available at the time of hearing). Paragraph 74(4)(c) also provides the court with a discretion to grant leave if there are special grounds.

The aim of this amendment is to encourage people to make an application for property to be excluded, prior to forfeiture of property. This will assist in the timely administration of the Act, as a court can consider an application to exclude property within the context of the forfeiture proceedings. The circumstances where a person is required to seek the court's leave are limited to situations where a person has already had a reasonable opportunity to raise their claim to an interest in property prior to a forfeiture order being made (either because they have been given notice of the application for forfeiture and did not appear, or appeared at the hearing of the forfeiture application and new evidence is available that was not available at the time of hearing).

Items 27 - Subsection 75(3)

Item 27 omits the words 'examine the applicant under Part 3-1" and substitutes 'conduct *examinations in relation to the application'. This item is consequential on the amendment of section 76 by Item 28.

Item 28 - Section 76

Item 28 omits the words 'examine the applicant under Part 3-1" and substitutes 'conduct *examinations in relation to the application.'

Currently under the Act, the court must not hear an application to exclude specified property from a forfeiture order unless the CDPP has been given a reasonable opportunity to conduct an examination of the applicant. However, there are some cases where the CDPP may need to examine not only the applicant but also one or more other persons prior to the hearing of the exclusion application.

Item 28 will ensure the CDPP is given the opportunity to examine any person that may have information relevant to an application for an exclusion order, prior to the application being heard by a court.

Items 18 and 28 implement recommendation D6 of the Sherman Report.

Item 29 - Subdivision C of Division 5 of Part 2-2 (heading)

This item repeals the current heading to Subdivision C of Division 5 of Part 2-2, and replaces it with 'compensating for proportion of property not derived or realised from commission of any offence'. This more accurately reflects the new wording of subsection 77(1), as amended by Item 30.

Item 30 - Subsection 77(1)

Item 30 repeals subsection 77(1) and replaces it with a new subsection relating to making a compensation order.

Currently, section 77 refers to compensation being available if, when the property first became proceeds of that offence a proportion of the property was not acquired using the proceeds of an offence. This limits a court's consideration to a particular moment in time, which could frustrate the purpose of the Act. For example, if a $500,000 house was purchased with a deposit of $50,000 derived from crime and a legitimate loan of $450,000, only 10% of the value was obtained with illegitimate funds when the property first became the proceeds of crime. If mortgage payments are subsequently made entirely with proceeds of crime, a court might be prevented from considering the later use of illegitimate funds because they are not relevant to when the house first became proceeds. This could result in compensation being paid where it should not be paid.

Under the new subsection 77(1), before making a compensation order, a court must be satisfied that the portion of the applicant's interest that is to be compensated was not derived or realised, directly or indirectly, from the commission of any offence, and is not an instrument of any offence.

Item 31 - Paragraph 77(2)(b)

Item 31 inserts the words 'once the property has vested absolutely in it' into paragraph 77(2)(b).

This amendment clarifies that the Commonwealth is not required to carry out the directions specified by the court under paragraph 77(2)(b) until the property vests absolutely in the Commonwealth. The current phrasing of paragraph 77(2)(b) could arguably require the Commonwealth to handle property where it only has a limited ability to deal with that property in practice. For example, for certain types of property the Commonwealth only gains an equitable interest on the making of a forfeiture order and the property does not vest absolutely in the Commonwealth until certain registration requirements have been complied with. For the period that the Commonwealth only has an equitable interest, the Commonwealth is limited in its ability to dispose of property because it is not listed as the registered owner. This amendment ensures that an obligation is not placed on the Commonwealth that is contrary to its actual ability to deal with property.

Item 32 - Section 78

Item 32 repeals section 78 and inserts a new section on applying for compensation orders.

This item aligns section 78 with the provisions relating to applying for an order to exclude property from a restraining order (under section 31) or a forfeiture order (under section 74, as amended by Item 26 ).

Under the new provisions, subsection 78(1) sets out the process for applying for a compensation order prior to forfeiture. This subsection states that a person who claims an interest in property that is specified (or could be specified) in an application for a forfeiture order may apply to a court for a compensation order.

If a forfeiture order has been made, subsection 78(2) enables a person who claims an interest in property specified in that forfeiture order to apply to the court that made the forfeiture order, for a compensation order.

Subsection 78(3) restricts the ability of a person to apply under subsection 78(2), if a person was notified of the application for the forfeiture order and did not apply for a compensation order prior to forfeiture, or if they appeared at the forfeiture order hearing. In these instances a person can only make an application where the court gives leave.

Where a person seeks the leave of the court, subsection 78(4) provides that the court may only grant leave if certain circumstances apply. If the person was notified of the application for a forfeiture order and failed to make an application for compensation prior to forfeiture, the court may grant leave if a person had a good reason for not making an application. The court may also grant leave if that person has new evidence (which was not available at the time of hearing) or if the court is satisfied that there are special grounds for granting leave.

The aim of these amendments is to encourage people to make an application for property to be compensated, prior to forfeiture of property. This will assist in the timely administration of the Act, as a court can consider an application for compensation within the context of the forfeiture proceedings. The circumstances where a person is required to seek the court's leave are limited to situations where a person has had a reasonable opportunity to exercise their claim to property prior to forfeiture (either because they have been given notice of the application for forfeiture or have appeared at the hearing of the forfeiture application and new evidence is now available), and have not done so.

Item 33 - At the end of subsection 79(3)

Item 33 amends subsection 79(3) to provide that the CDPP need not give notice of the reasons that it proposes to contest an application for compensation until it has had a reasonable opportunity to conduct examinations in relation to the application. This amendment is consequential on Item 103 , which inserts section 180B.

Item 34 - At the end of Subdivision C of Division 5 of Part 2-2

Item 34 inserts a new section 79A, which provides that a court must not hear an application for a compensation order until the CDPP has had a reasonable opportunity to conduct examinations in relation to the application. This amendment is consequential on Item 103 , which inserts section 180B.

Item 35 - Application

This item sets out the application of amendments of this Part applying Subdivisions B and C of Division 5 of Part 2-2. The application of these amendments is determined by reference to either the date of application for a restraining order, or the date of application for a forfeiture order.

Where the provisions relate to a forfeiture order that was or would be made under sections 47 or 49 of the Act, the date of application for the restraining order (upon which the forfeiture order relies) is the relevant date for determining when these amendments apply. The restraining order must be applied for on or after the commencement of this item for these amendments to apply. This is regardless of whether the conduct constituting the offence (which led to the commencement of confiscation action) occurred or occurs before, on or after the commencement.

Where the provisions relate to a forfeiture order that was or would be made under section 48 of the Act, the date of application for the forfeiture order is the relevant date for determining the application of the amendments. The forfeiture order must be applied for on or after the commencement of these amendments to apply. This is regardless of whether the conduct constituting the offence (which led to the commencement of confiscation action) occurred or occurs before, on or after the commencement.

Item 36 - Section 91 (simplified outline)

This item inserts a simplified outline that indicates there are cases in which compensation is payable to the Commonwealth.

Item 37 - Paragraph 92(1)(a)

Item 37 omits the word 'the' and substitutes 'a' in paragraph 92(1)(a).

This amendment is to remove ambiguity as to the identity of 'the person'. Referring to 'the person' in section 92 may leave the provision open to being interpreted by reference to 'the person' in other sections. This could have unintended consequences for the operation of the section. By referring to 'a person' in paragraph 92(1)(a) it removes the possibility of this term being interpreted by reference to other sections. The reference to 'a person' in paragraph 92(1)(a) links all subsequent references to 'the person' in section 92 back to the person referred to in paragraph 92(1)(a).

Item 38 - Subparagraph 92(1)(b)(i)

Item 38 inserts the words 'under section 17 or 18' after 'order' in subparagraph 92(1)(b)(i).

This item clarifies that automatic forfeiture under section 92 is only intended to apply to property subject to a restraining order under sections 17 or 18. By specifically referring to sections 17 and 18, it removes the possibility of property that is subject to restraining orders under sections 19, 20 and 20A being subject to automatic forfeiture.

Item 39 - Paragraph 92(3)(a)

Item 39 omits the reference to 'day of the conviction' and substitutes '*conviction day'. This amendment is consequential on Item 66 , which amends the definition of 'conviction day' in paragraph 333(1)(a).

Item 40 - After section 92

Item 40 inserts section 92A after section 92 of the Act. Section 92A will require the CDPP to take reasonable steps to give certain people notice of the date of automatic forfeiture.

Currently under the Act, there is no requirement that a defendant or any other person be notified of the potential for automatic forfeiture. This creates a risk that a person may have their property forfeited to the Commonwealth without knowing the date that forfeiture is due to take place or having the opportunity to consider their rights in relation to the property. The purpose of this amendment is to ensure that a person who may have an interest in property will be given notice of the automatic forfeiture and their associated rights in relation to that property.

Subsection 92A(1) sets out the people to whom the CDPP must give notice to including any person who has (or claims) an interest or whom the CDPP reasonably believes may have an interest in the property that will be subject to automatic forfeiture. Paragraphs 92A(1)(a),(b) and (c) state what the notice must contain, which includes the date that the property is due to be forfeited and the rights the person has to seek certain orders in relation to the property. Those orders include extending the period before property is forfeited, exclusion of property from the restraining order or from forfeiture, and compensation.

Subsection 92A(2) provides that the CDPP does not need to give a notice to a person if that person has made an application for an exclusion order (under sections 30, 31 or 94) and an application under section 93 to extend the period before property is forfeited.

Item 41 - Paragraph 93(1)(a)

Item 41 omits the last occurring reference to 'day of' and substitutes 'conviction day for'. This amendment is consequential on Item 66 which amends the definition of 'conviction day' in paragraph 333(1)(a).

Items 42 and 43 - Paragraphs 93(1)(b) and (c)

These items omit the reference to '31' and substitutes 'references to sections 30, 31 or 94'.

If a person is convicted of a serious offence, section 92 of the Act provides that six months after the conviction is recorded, any property covered by a restraining order relating to that offence is forfeited to the Commonwealth.

Currently under section 93, a court may extend the time period before property is forfeited under section 92, if a person has applied for property to be excluded from a restraining order under section 31. However, it is also possible for a person to make an application for property to be excluded from a restraining order under section 30 or from forfeiture under section 94. These items amends section 93 to provide that a court may also extend the time period before property is forfeited if a person has applied for property to be excluded under sections 30 and 94.

These items implements Recommendation D14 of the Sherman Report.

Item 44 - Subsection 93(1)

Item 44 omits the last occurring reference to 'day of' and substitutes 'conviction day for'. This amendment is consequential on Item 66 which amends the definition of 'conviction day' in paragraph 333(1)(a).

Item 45 - Subsection 93(2)

Item 45 omits the reference to '31' and substitutes '30, 31 or 94'. This item is consequential on Items 42 and 43 which amends paragraphs 93(1)(b) and (c).

Item 46 - Subsection 93(2)

Item 46 omits the reference to 'day of' and substitutes 'conviction day for'. This amendment is consequential on Item 66 which amends the definition of 'conviction day' in paragraph 333(1)(a).

Item 47 - Subsection 93(3)

Item 47 omits the reference to '31' and substitutes '30, 31 or 94'. This item is consequential on Item 42 which amends paragraphs 93(1)(b) and (c).

Item 48 - At the end of section 93

Item 48 inserts new subsection 93(4).

The effect of this subsection is that, when an order extending the date of forfeiture is made under section 93, the CDPP will be required to give certain people a written notice.

Subsection 93(4) specifies whom the CDPP must provide notice to, including a person who has or claims an interest in the property that may be forfeited, and any person that the CDPP reasonably believes may have an interest in the property.

Paragraphs 93(4)(a) and (b) state what must be included in the contents of the notice. This includes the date on which the property is due to be forfeited and the effect of subsections 93(2) and (3). This amendment ensures that people who have an interest in the property are made aware of the date of forfeiture.

Item 49 - Subsection 94(1)

This item omits 'the *restraining' and inserts 'a *restraining'. This is to maintain consistent wording with section 94A, which is inserted by Item 57.

Item 50 - Subsection 94(1)

This item omits 'may' and inserts 'must' into subsection 94(1) of the Act. The effect of this amendment will be that a court is required to exclude property from forfeiture where certain criteria are satisfied. This amendment aligns the requirement for a court to exclude property from forfeiture, with the requirement for the court to exclude property from a restraining order and a forfeiture order under section 29 (as amended) and section 73 respectively.

Item 51 - Paragraphs 94(1)(a),(b) and (c)

Item 51 repeals paragraphs 94(1)(a),(b) and (c) and inserts two new paragraphs.

Under the current section 94, only a suspect can apply under the section to have property excluded from forfeiture. Currently, where a third party claims an interest in property they can either apply for an order to exclude property from the restraining order, or wait until forfeiture has occurred and apply for recovery of the property.

This amendment corrects this anomaly and expands the provision so that it applies equally to third parties and suspects. The effect of this amendment is that a court must exclude property from forfeiture where it is satisfied that a person has an interest in property covered by a restraining order that the interest is not proceeds of unlawful activity or an instrument of unlawful activity, and that the interest has been lawfully acquired.

Item 52 - Paragraph 94(1)(d)

Item 52 omits the word 'the' and substitutes 'a' in paragraph 94(1)(d). This item is consequential on Item 51, which amends section 94 to allow either the person convicted of the serious offence or a third party to make an application.

Item 53 - Paragraph 94(1)(e)

Item 53 inserts the words 'applicant's interest in the' before 'property' in paragraph 94(1)(e).

The Act currently uses the terms '*property' and '*interests' interchangeably and with little uniformity. This amendment is part of a broader set of amendments to the Act which will make the use of these terms more consistent.

Item 54 - Paragraph 94(1)(f)

Item 54 omits the term 'defendant's' and replaces that term with 'applicant's'. This item is consequential on Item 51, which amends section 94 to allow either the person convicted of the serious offence or a third party to make an application.

Item 55 - At the end of subsection 94(5)

Item 55 inserts the words 'However, the DPP need not do so until it has had a reasonable opportunity to conduct *examinations in relation to the application'.

This amendment clarifies that the CDPP does not need to give notice of the grounds on which it proposes to contest an application until it has had a reasonable opportunity to conduct examinations in relation to the restraining order.

This item aligns subsection 94(5) with similar provisions in subsections 31(6) (as amended) and 75(3).

Item 56 - At the end of section 94

Item 56 inserts subsection 94(6) at the end of section 94.

New subsection 94(6) provides that an application for an exclusion order must not be heard until the CDPP has had a reasonable opportunity to conduct examinations in relation to an application. This amendment will ensure the CDPP has an opportunity to explore whether the relevant property has any links to proceeds of crime, prior to a court considering whether to exclude that property from forfeiture.

This item is based on similar provisions in sections 32 and 76.

Item 57 - After section 94

Item 57 inserts a new section 94A after section 94 of the Act.

This item corrects an anomaly in the Act, whereby compensation is available if property has been forfeited to the Commonwealth under a forfeiture order but not if it has been automatically forfeited under section 92.

Section 94A inserts a new provision relating to the granting of compensation where property has been forfeited under section 92. This amendment will ensure that where property that was automatically forfeited was acquired with both the proceeds of an offence and legitimately obtained funds, the owner of the forfeited property is compensated for the legitimately obtained proportion of the property. This provision has been modelled on section 77 of the Act, which allows for compensation where a forfeiture order has been made.

Under subsection 94A(1), the court must be satisfied that the applicant has an interest in the property, and that a proportion of the value of the applicant's interest was not derived or realised, directly or indirectly, from the commission of any offence, and is not an instrument of any offence. Once the court is satisfied of this, the court must make a compensation order.

Subsection 94A(2) provides that the order must specify the proportion of the value of that property that was not derived or realised from the commission of any offence and is not the instrument of any offence, and direct the Commonwealth to dispose of the property and pay the applicant that proportion of the sum received after the costs and disbursements of the Official Trustee are paid.

Subsection 94A(3) allows a person who claims an interest in property that is to be forfeited under section 92 to apply to the court for a compensation order at any time.

Subsection 94A(4) restricts the ability for a person to make an application for a compensation order if the person received notice of automatic forfeiture and did not apply for a compensation order prior to forfeiture occurring. In these instances a person can only make an application where the court gives leave.

Where a person seeks the leave of the court, subsection 94A(5) provides that the court may only grant leave if it is satisfied that:

•

the person had a good reason for not making a compensation application prior to forfeiture,

•

the person has evidence relevant to their application for compensation that was not available before forfeiture occurred, or

•

there are special grounds for granting the leave.

The aim of these amendments is to encourage people to make an application for property to be compensated, prior to forfeiture of property. The circumstances where a person is required to seek the court's leave are limited to situations where a person has either been given an indication of their right to seek certain orders in relation to their interest in property prior to forfeiture or their actions indicate that they are aware of their rights in this regard. This includes when a person has been given a notice under subsection 92A(1).

Subsection 94A(6) provides that the person must give the CDPP notice of the application for compensation and the grounds on which compensation is being sought. Subsection 94A(8) requires the CDPP to give the applicant notice of any grounds on which it proposes to contest the application. However, the CDPP does not need to provide this notice until it has had a reasonable opportunity to conduct examinations in relation to the order.

Subsection 94A(9) provides that a court must not hear an application for compensation until the CDPP has had a reasonable opportunity to conduct examinations in relation to the order.

Item 58 - Subsection 102(1)

Item 58 omits (1) from the start of subsection 102(1). This amendment is a consequence of Item 62 which repeals subsections 102(2) and (3).

Item 59 - Subsection 102(1)

This item omits 'may' and inserts 'must' into subsection 102(1) of the Act.

The effect of this amendment will be that a court is required to make an order directing the Commonwealth to transfer the applicant's interest back to the applicant or requiring the Commonwealth to pay the applicant an amount equal to the value of their interest, where certain criteria are satisfied. This amendment aligns the requirement for a court to make an order under section 102, with the requirement for a court to exclude property from a restraining order under section 29 (as amended by Item 1 ) or from a forfeiture order under sections 73 and 94 (as amended by Item 50 ).

Item 60 - Paragraph 102(1)(b)

Item 60 repeals paragraph 102(1)(b) and substitutes a new paragraph 102(b). The effect of this amendment is to change the test for recovery of property under section 102.

The purpose of this amendment is to align the test for recovery of property under section 102 with the test for exclusion of property under section 94. Currently, the test for exclusion of property could be viewed as more difficult to prove than the test for recovery of property, as it contains an additional requirement that the court must be satisfied that the applicant's interest in property was lawfully acquired. This creates an anomalous situation where a person who unsuccessfully applies for exclusion of property may be able to apply for recovery of their property after forfeiture has occurred.

Under the new paragraph 102(b), before making an order a court must be satisfied that the applicant had an interest in the property that was forfeited and that the interest was not the proceeds of unlawful activity or an instrument of unlawful activity. The court must also be satisfied that the applicant's interest in the property was lawfully acquired.

Item 61 - Subparagraph 102(1)(d)(ii)

This item omits the words 'declaring that there is payable by the Commonwealth' and substitutes 'directing the Commonwealth to pay'.

This amendment is to make subparagraph 102(1)(d)(ii) more consistent with the wording of subparagraphs 77(2)(b)(ii) and 94(2)(b)(ii), which contain similar directions.

Item 62 - Subsections 102(2) and (3)

Item 62 repeals subsections (2) and (3). This item is a consequence of Item 60 , which inserts a new test for recovery of property into section 102.

Item 63 - Section 104

Item 63 repeals the existing section 104 and inserts a new section 104 in relation to applying for orders under sections 102 and 103. This amendment will align the application provision under section 104 with similar provisions under sections 31, 74, 78, and 94A.

Under new subsection 104(1), a person who claims an interest in property that has been forfeited under section 92, may apply to the court at any time for an order to transfer the property back to the applicant (under section 102) or an order allowing the applicant to buy back the forfeited property (under section 103).

Subsection 104(2) limits the ability of a person to apply for an order under section 102 if they have previously been given a notice under subsection 94A(1) in relation to the property (or were not required to be given notice due to subsection 92A(2)), and they either did not make an application for the property to be excluded (under sections 29 or 94), or made and appeared at the hearing of an application under sections 29 or 94. In these instances a person can only make an application where the court gives leave.

Where a person seeks the leave of the court, subsection 104(3) provides that the court may only grant leave if certain circumstances apply. If the person received a notice under section 92A (or was not required to be provided with a notice due to subsection 92A(2)) and failed to make an application under section 29 or 94, the court may grant leave if the person had a good reason for not making an application. If the person made an application and appeared at the hearing of the application, the court may grant leave if that person now has new evidence (which was not available at the time of hearing). Paragraph 104(3)(c) also provides the court with a discretion to grant leave if there are special grounds.

The aim of these amendments is to encourage people to make an application for exclusion of property prior to forfeiture of property, rather than waiting until after forfeiture. The circumstances where a person is required to seek the court's leave are limited to situations where a person has either been given an indication of their right to seek certain orders in relation to their interest in property prior to forfeiture (or their actions indicate that they are aware of their rights in this regard), and that person has either chosen not to make an application or made (and appeared at) that application. A person is not required to seek the leave of the court if they are applying for an order under section 103. This is because there is no equivalent pre-forfeiture provision to section 103.

Subsection 104(4) provides that the person must give the CDPP notice of the application for an order under sections 102 or 103 and the grounds on which the order is being sought. Subsection 104(6) requires that the CDPP give the applicant notice of any grounds on which it proposes to contest the application. However, the CDPP does not need to provide this notice until it has had a reasonable opportunity to conduct examinations in relation to the order.

Subsection 104(7) provides that a court must not hear an application for an order under section 102 until the CDPP has had a reasonable opportunity to conduct examinations in relation to the order.

Item 64 - Paragraph 106(b)

This item removes the reference to 'subparagraph 102(1)(d)(i)' and replaces it with 'subparagraph 102(d)(i)'. This is necessary because Item 58 omits subsection (1) from section 102.

Item 65 - Application

This item sets out the application of amendments to Part 2-3 of the Act (forfeiture on conviction of a serious offence) that are contained in this Part. The amendments apply in relation to property covered by a restraining order made on or after the commencement of this item, whether the conduct constituting the offence occurred or occurs before, on, or after that commencement.

Item 66 - Paragraph 333(1)(a)

This item amends the definition of 'conviction day' in paragraph 333(1)(a) of the Act. Paragraph 333(1)(a) provides that 'conviction day' is the day on which a person was convicted of the offence. Subsection 333(2) provides that the day on which a person was convicted of the offence is taken to be 'the first day on which the court acted on the finding that the offence was proved against the person (whether or not the court passed sentence on that day in relation to the offence)'.

This definition reflects the common law position (see, for example, Griffiths v R (1977) 137 CLR 293; DPP (Vic) v McCoid [1988] VR 982; Della Patrona v DPP (Cth ) ( No.2 ) (1995) 38 NSWLR 257). However, the common law position is complex and has created uncertainty as to the exact 'conviction day' in certain circumstances. For example, if the court exercises discretion not to impose a penalty, can this be interpreted to be acting on a finding that the offence was proved? It is imperative that the 'conviction day' is a clearly defined date, as the date that property is automatically forfeited is determined by reference to this date.

The item amends paragraph 333(1)(a) to provide that the 'conviction day' is taken to mean the date at which the court passes sentence. This will include circumstances where a person pleads or is found guilty, but the court does not impose a fine, term of imprisonment or other punishment. The item will provide certainty for persons whose property is being forfeited, and to the CDPP in meeting its obligation to notify all relevant persons that property is to be forfeited on a certain day.

Item 67 - Application

This item sets out the application of amendments to paragraph 333(1)(a) of the Act, as contained in this Part. The amendments apply in relation to a person about whom a court passes sentence on or after the commencement of this item, whether the conduct constituting the offence concerned occurred or occurs before, on or after the commencement.

Part 2 - Pecuniary Penalty Orders

Proceeds of Crime Act 2002

Item 68 - Subparagraph 121(4)(a)(i)

This item amends subparagraph 121(4)(a)(i) to add a reference to property being subject to the effective control of a person. Section 121 directs a court how to determine the value of a pecuniary penalty order. Subparagraph 121(4)(a)(i) directs the court to consider a person's property that is covered by a restraining order, but makes no reference to property of another person that is under the person's effective control. This omission can result in a court not taking into consideration the full range of criminal benefits a person has gained.

This item inserts a reference to property being under a person's effective control, so that a pecuniary penalty order is determined by the court having regard to all benefits a person has derived.

Items 69 and 70 - Paragraphs 122(1)(a) and (b)

These items amend paragraphs 122(1)(a) and 122(1)(b) by removing the references to a person's 'request or control'. These items implement recommendation D17 of the Sherman Report.

The effect of paragraphs 122(1)(a) and 122(1)(b) (as they currently stand) is that, for the purpose of calculating a pecuniary penalty order, a payment that was made to a third party at the 'request or direction' of the defendant is treated as if it was a payment made to the defendant. However, the Sherman Report identified that, in some cases, a payment will be made to a third party not because of anything the defendant has said or done, but because of the way a particular scheme operates. For example, if a person lodges a fraudulent claim for payment on behalf of a company, the resulting payment will, as a matter of course, be made to the company and not the person. The CDPP is therefore required to prove that the defendant impliedly requested or directed that money or a benefit went into the hands of a third party. This creates an unnecessary hurdle for the CDPP which is contrary to the intention of the Act.

These amendments address this potential loophole.

Item 71 - Paragraph 124(1)(c)

This item amends paragraph 124(1)(c) by inserting a reference to 'other unlawful activity'. Section 124 determines how a pecuniary penalty order is to be calculated. Paragraph 124(1)(c) refers to evidence given about the value of the person's property during or after the 'illegal activity or other unlawful activity'. However, at the end of the paragraph, only illegal activity is referred to. The omission of 'other unlawful activity' appears to be a drafting error; there is no policy justification for mentioning 'other unlawful activity' in the subparagraphs contained in paragraph (c), but not at the end of paragraph (c).

This item corrects this unintended omission by inserting the reference to 'other unlawful activity' at the end of paragraph 124(1)(c). This means that the full range of unlawful activity undertaken by the person can be taken into account by the court when determining a pecuniary penalty order.

Item 72 - Paragraph 124(5)(a)

This item amends paragraph 124(5)(a) to add a reference to property being subject to the effective control of a person. Section 124 directs a court how to determine the value of a pecuniary penalty order. Paragraph 124(5)(a) directs the court to consider a person's property that is covered by a restraining order, but makes no reference to property of another person that is under the person's effective control. This omission can result in a court not taking into consideration the full range of criminal benefits a person has gained.

This item inserts a reference to property under a person's effective control, so that a pecuniary penalty order is determined by the court having regard to all benefits a person has derived.

Items 73 and 74 - Section 130 and paragraph 130(a)

These items amend section 130 to ensure that the formula for calculating pecuniary penalty orders does not result in a person being required to account for criminal benefits twice.

Section 130 provides that a pecuniary penalty order can be reduced by an amount equal to the value of any property that has been forfeited (or an application has been made for forfeiture). This is to prevent the Commonwealth from penalising a person twice - once by forfeiting property, and again by imposing a pecuniary penalty order. The current wording of section 130 requires that a pecuniary penalty order be reduced by an amount equal to the value of any property forfeited to the Commonwealth (or the subject to a forfeiture application) which is, or was, the proceeds of the offence to which the pecuniary penalty order relates. However, under section 116, pecuniary penalty orders are calculated taking into account benefits obtained from the offence and any 'unlawful activity'.

These items insert references to 'unlawful activity' in section 130 to rectify a drafting error. This means that pecuniary penalty orders can be reduced to take into account the value of property that has, or will be forfeited, the proceeds of any offence and any unlawful activity.

Items 75 and 76 - Subsection 133(1) and after subsection 133(2)

These items amend section 133, which relates to the ability to vary a pecuniary penalty order, and implement Recommendation D19 of the Sherman Report.

Section 130 provides that a pecuniary penalty order must be reduced by an amount equal to the value of any property forfeited to the Commonwealth, or subject to a forfeiture application. However, if, after forfeiture, property is excluded or recovered or a person is compensated for a portion of the property that was not tainted with the proceeds of crime, there is currently no ability under section 133 to vary the pecuniary penalty order to take account of this. This means that a person will not account for the full value of their offences, because the pecuniary penalty order would have been reduced to account for 'forfeited' property that a person does not, in the end, actually forfeit.

These items provide that the amount of a pecuniary penalty order may be increased if a property has, or will, be forfeited, and one of the following orders has been made:

•

an order to exclude an interest in property from forfeiture,

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an order directing the Commonwealth to pay an amount of compensation to a person, or

•

an order to recover an interest in the property.

The court determines the amount of the increase to the pecuniary penalty order, taking into account:

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the value of the interest at the time that the exclusion or recovery or was made

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in the case of compensation, the amount the Commonwealth paid in compensation to the person, and

•

any other matter the court considers relevant.

Item 77 - Application

This item sets out the application of amendments by this Part to Division 2 of Part 2-4 of the Act (pecuniary penalty order amounts). The amendments apply in relation to pecuniary penalty orders applied for on or after the commencement of this item, whether the conduct constituting the offence concerned occurred or occurs before, on or after that commencement.

Item 78 - At the end of section 134

This item inserts new subsection 134(6), which empowers a court to hear an application of the CDPP for a pecuniary penalty order, outside of the time limits in section 134 if it is in the interests of justice to do so.

Section 134 currently provides time limits in which applications for pecuniary penalty orders must be made. However, there are certain circumstances in which these time limits can be contrary to the intention of the Act.

If property is forfeited from a person and, at the time of forfeiture, the CDPP believes that the entire property was, or was obtained with, the proceeds of crime, the CDPP will not seek a pecuniary penalty order (as to do so would effectively punish the person twice). However, if that property, or a portion of that property, is later excluded from forfeiture, the CDPP might not be able to seek a pecuniary penalty order if the applicable time limits in subsections 134(2) and (3) have expired.

By way of example, assume a person defrauds the Commonwealth of $1 million, and owns a house worth $1 million. Following an investigation, it appears that the house was purchased using the proceeds of the fraud, so the house is restrained and then forfeited. Subsequently, another person demonstrates that they contributed $250,000 in legitimate funds to purchase the house, and is therefore entitled to be compensated for this amount. The person who committed the offence has therefore only forfeited 75% of the value of the offence. If the CDPP was aware of this at the time of restraint, a pecuniary penalty order would have been issued for the $250,000. However, if the CDPP became aware after forfeiture, it is prevented by section 134 from obtaining a pecuniary penalty order.

This item amends section 134 to provide that the CDPP may apply to the court for a pecuniary penalty order despite the time limits in subsections 134(2) and (3), if the court is satisfied that it is in the interests of justice to allow the application. This item ensures that persons are adequately held to account for the full amount of the benefits they have unlawfully derived.

Items 79 and 80 - Subsections 136(2), (3) and (4)

These items implement Recommendation D20 of the Sherman Report by amending section 136 so that the CDPP must provide a defendant with any affidavit that will be relied upon in a pecuniary penalty order hearing, within a reasonable time before the court conducts a hearing.

Section 136 currently provides that the CDPP must give a person written notice of the application for the pecuniary penalty order and any supporting affidavit. In practice, however, applications for pecuniary penalty orders are often made at the time a restraining order is sought or shortly thereafter (to ensure that the restraining order does not lapse). This makes it difficult for the CDPP to provide a person with notice of an application and supporting affidavits, as at an early stage of proceedings, the information stated in the affidavits might not yet be available.

To better reflect the practical operation of the Act, these items amend section 136 to provide that the CDPP must give a copy of any affidavit supporting an application for a pecuniary penalty order to the affected person within a reasonable time before the hearing of the application. This item also ensures fairness to the person affected by the application, so that they can receive complete information within a reasonable time before the hearing of the application.

Item 81 - Application

This item sets out the application of amendments made by this Part to Division 3 of Part 2-4 of the Act (how pecuniary penalty orders are obtained). The amendments apply in relation to applications made for pecuniary penalty orders on or after the commencement of this item, whether the conduct constituting the offence concerned occurred or occurs before, on or after the commencement.

Items 82, 83, 84, 85 - Subsections 146(1), (2) and (3)

These items implement Recommendation D21 of the Sherman Report by amending section 146 to allow a court to vary a pecuniary penalty order where the order was made on the basis of a number of convictions, and one conviction was subsequently quashed.

Currently, section 146 provides that a pecuniary penalty order made in relation to a person's conviction of a serious offence is discharged if that conviction is quashed (even if the pecuniary penalty order relates to a person's conviction of other offences that have not been quashed) and the CDPP does not apply to have the pecuniary penalty order confirmed within 14 days of the quashing of the conviction. If the CDPP does apply to have the order confirmed, under section 149 it is required to prove the quashed offence to a civil standard (that is, the balance of probabilities).

The effect of the current subsection 146(1) is that if a pecuniary penalty order relates only to indictable offences (or a serious offence is not confirmed under section 149), the entire pecuniary penalty order will be discharged, even if the quashed offence only accounts for a small part of the total benefit.

For example, assume that a person is convicted of ten fraud offences, each involving a benefit of $5,000. As a result, the CDPP obtains a pecuniary penalty order of $50,000. If a person appeals one of those ten convictions and has their conviction set aside or quashed, the entire pecuniary penalty would be discharged. This occurs even though convictions in relation to $45,000 worth of fraud still stand.

Item 82 amends subsection 146(1) to provide that if a conviction is quashed, a pecuniary penalty is discharged unless the CDPP applies to the court within 14 days to have the pecuniary order confirmed or varied. Item 91 inserts a new section 149A which sets out the procedure for varying a pecuniary penalty order.

Items 86 - Section 147 (including the note)

This item is a consequential amendment arising from the introduction of new section 149A ( Item 91 ). Section 147 currently provides that the CDPP must give written notice of an application for confirmation of a pecuniary penalty order. This amendment includes the words 'or variation' so that the CDPP is now required to give written notice of an application for confirmation or variation of a pecuniary penalty order. This item also amends the heading to section 147 by inserting 'or variation' after 'confirmation'. This ensures that the heading reflects that the provision relates to notice of an application for confirmation or variation of a pecuniary penalty order.

Items 87 - Subsection 148(1)

This item is a consequential amendment arising from the introduction of new section 149A ( Item 91 ). Subsection 148(1) currently provides that a person may appear and adduce evidence at the hearing of the application for confirmation of the order. This item inserts the words 'or variation' so that a person may appear and adduce evidence at the hearing of the application for confirmation or variation of the order.

Items 88, 89 and 90 - Subparagraphs 148(2)(a)(i) and (ii) and paragraph 148(2)(a)

These amendments clarify the operation of section 148, where a pecuniary penalty is made in relation to multiple offences. Currently, section 148 could be narrowly interpreted to mean that the court could only have regard to the transcript of a single offence. These amendments clarify that in determining an application to confirm or vary a pecuniary penalty order, the court may have regard to transcripts relating to any of the offences to which the pecuniary penalty relates.

Item 91 - After section 149

This item inserts new section 149A, which enables the court to vary a pecuniary penalty order. The section provides that the court may vary a pecuniary penalty order by reducing the pecuniary amount if it is satisfied that the order relates to more than one offence, and one or more of those offences has not been quashed. The section empowers a court to determine the amount of variation to the pecuniary penalty order, having regard to:

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transcripts and evidence of the offence(s) for which the person was convicted

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transcripts and evidence given in proceedings relating to the application for the pecuniary penalty order, or to vary the amount of the order, and

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any other matter the court considers relevant.

The power to vary a pecuniary penalty order is necessary to ensure that a pecuniary penalty order can still be enforced against a person who has some (but not all) of their convictions quashed.

Item 92 and 93 - Subsections 150(1) and (2)

These items are consequential amendments arising from the introduction of new section 149A (Item 91). Section 150 provides that, if the court confirms a pecuniary penalty order, the order is taken not to be affected by the quashing of the person's conviction of the offence. It also provides that if a court decides not to confirm a pecuniary penalty order, the order is discharged.

These items insert references to variation of a pecuniary penalty order under section 149A, so that section 150 now provides that, if the court confirms the pecuniary penalty order under section 149, or varies the order under section 149A, the order is taken not to be affected by the quashing of the person's conviction of the offence. It also provides that if a court decides not to confirm or vary a pecuniary penalty order, the order is discharged.

Item 94 - Application

This item sets out the application of amendments made by this Part to Division 5 of Part 2-4 of the Act (the effect of pecuniary penalty orders on convictions being quashed). The amendments apply in relation to a conviction that is quashed on or after the commencement of this item, whether conduct constituting the offence concerned occurred or occurs before, on or after that commencement.

Items 95, 96 and 97 - Paragraphs 335(6)(a), (b) and subsection 335(6)

These items implement Recommendation D31 of the Sherman Report by granting magistrates jurisdiction to determine conviction-based pecuniary penalty and forfeiture orders, if the conviction is dealt with summarily by a magistrate of the same court.

Subsection 335(6) provides that magistrates may exercise 'proceeds jurisdiction (that is, the jurisdiction to make certain orders). However, the present drafting of subsection 335(6) implies that only the magistrate who convicted the person has the appropriate jurisdiction. This is an unintended consequence, which could create unnecessary delay for both parties and magistrates in trying to secure court time before the actual magistrate who convicted the person. Accordingly, Items 96 and 97 amend subsection 335(6) to clarify that any magistrate belonging to the same court as the convicting magistrate may determine conviction-based pecuniary penalty and forfeiture orders.

Item 95 amends paragraph 336(6)(a) to extend the jurisdiction of magistrates to apply to pecuniary penalty orders made under subparagraph 116(1)(b)(i). This amendment is necessary because, presently, after a magistrate convicts a person, there is no ability for the magistrate to make a pecuniary penalty order in relation to that person. The CDPP is therefore forced to apply to a superior court to commence fresh proceedings to apply for a pecuniary penalty order. This amendment will benefit both the CDPP and the person to whom the pecuniary penalty order relates, as it enables an application to be heard and decided quickly and efficiently and without any additional costs incurred by bringing the application to a higher court.

Item 98 - Application

This item sets out the application of amendments made by this Part to subsection 335(6) of the Act. The amendments apply in relation to a person convicted before a magistrate on or after the commencement of this item, whether the conduct constituting the offence occurred or occurs before, on or after the commencement.

Part 3 - Examinations

Proceeds of Crime Act 2002

Item 99 - Paragraph 180(1)(b)

This item amends the wording of paragraph 180(1)(b) to omit the reference to 'a person whom the restraining order states to be a suspect...' and replace it with 'a person who is a suspect in relation to the restraining order'. This is because, in practice, restraining orders do not name suspects. Rather, suspects are named in the affidavit supporting the application for a restraining order. This amendment implements Recommendation D22(a) of the Sherman Report.

Item 100 - Subsection 180(1)

This item inserts an asterisk before 'affairs' in subsection 180(1), to indicate that the term has now been defined in the Dictionary to the Act contained in section 338.

Item 101 - Subsection 180(1)

This item removes the reference to 'the nature and location of any property' from subsection 180(1). Because the term 'affairs' is now defined in the Dictionary to the Act in section 338, there is no longer a need to refer to what may be included in the definition of 'affairs' in the subsection.

Item 102 - Application

This item sets out the application of amendments made by this Part to section 180 of the Act. The amendments apply in relation to restraining orders applied for on or after the commencement of this item, whether the conduct constituting the offence concerned occurred or occurs before, on or after the commencement.

Item 103 - After section 180

This item inserts new sections 180A - 180E after section 180, to permit the court to make an examination order in certain circumstances where a restraining order is not in place. These circumstances are where:

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an application is made to have property excluded from a forfeiture order

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an application is made for compensation for the proportion of property that did not involve proceeds of an offence, after the property has been forfeited

•

an application is made to recover the interest in forfeited property that is neither the proceeds of unlawful activity nor an instrument of unlawful activity, and

•

a confiscation order has been made but not satisfied.

This item gives effect to Recommendation D22(b) of the Sherman Report and reflects the position in Western Australia, the Northern Territory and the Australian Capital Territory, that an examination order is not dependent on a restraining order being in force. The item enables identification of property for enforcement action and to examine whether it is appropriate to provide compensation or permit recovery of property, without the requirement that a restraining order be in place.

180A Examination orders relating to applications for exclusion from forfeiture

Section 180A enables the court to which an application is made for an order to exclude property from forfeiture under sections 73 or 94, to make an order for the examination of any person, including a person who has or claims an interest in property (paragraph 180A(1)(a)) or the spouse or de facto partner of a person who has or claims an interest in the property (paragraph 180A(1)(b)). It may also include persons such as lawyers, accountants, bankers and other advisers of the persons stated in paragraphs 180A(1)(a) and (b). The examination is in relation to the 'affairs' of the persons stated in paragraphs 180A(1)(a) and (b). 'Affairs' is defined in section 338 of the Act.

The examination order ceases to have effect when the application for an order to exclude property from forfeiture is either withdrawn or decided upon by the court.

The insertion of section 180A overcomes an anomaly that currently exists in the Act. Under section 76, an application for an order to exclude property from forfeiture must not be heard until the CDPP has had a reasonable opportunity to examine. However, under section 180, an examination order cannot occur unless a restraining order is in place, and a restraining order ceases to have effect when a forfeiture order is made. Thus, the CDPP is unable to obtain an examination order after forfeiture, but is also unable to participate in the hearing of an application to exclude property from forfeiture until it has had a reasonable opportunity to examine. This amendment ensures that the CDPP has had the opportunity to examine relevant persons before an exclusion order is made.

180B Examination orders relating to applications for compensation

Section 180B enables the court to which an application for an order for compensation is made under sections 77 or 94A, in relation to property that has or may be forfeited, to make an order for the examination of any person, including a person who has or claims an interest in property (paragraph 180B(1)(a)) or the spouse or de facto partner of a person who has or claims an interest in the property (paragraph 180B(1)(b)). It may also include persons such as lawyers, accountants, bankers and other advisers of the persons stated in paragraphs 180B(1)(a) and (b). The examination is in relation to the 'affairs' of the persons stated in paragraphs 180B(1)(a) and (b). 'Affairs' is defined in section 338 of the Act.

The examination order ceases to have effect when the application for compensation is either withdrawn or decided upon by the court.

This provision will address an anomaly in the Act. Currently, if a person applies for compensation before property is forfeited (that is, when a restraining order is still in place), the CDPP can apply for an examination order. However, if a person applies for compensation after property has been forfeited, a restraining order is no longer in place, so there is no basis on which to obtain an examination order. This section will enable the CDPP to apply for examinations in relation to application for compensation when a restraining order is not in place. These examinations are necessary to determine the circumstances giving rise to an application for compensation.

180C Examination orders relating to applications under section 102

Section 180C enables the court to which an application is made under section 104 to recover forfeited property under section 102, to make an order for the examination of any person, including a person who has or claims an interest in property (paragraph 180C(1)(a)) or the spouse or de facto partner of a person who has or claims an interest in the property (paragraph 180C(1)(b)). It may also include persons such as lawyers, accountants, bankers and other advisers of the persons stated in paragraphs 180C(1)(a) and (b). The examination is in relation to the 'affairs' of the persons stated in paragraphs 180C(1)(a) and (b). 'Affairs' is defined in section 338 of the Act.

The examination order ceases to have effect when the application to recover forfeited property is either withdrawn or decided upon by the court.

This provision will address an anomaly in the Act. Currently, if a person applies to recover property before it is forfeited (that is, when a restraining order is still in place), the CDPP can apply for an examination order. However, if a person applies to recover property after it has been forfeited, a restraining order is no longer in place, so there is no basis on which to obtain an examination order. This section will enable the CDPP to apply for examinations in relation to recovery applications when a restraining order is not in place. These examinations are necessary to determine the circumstances giving rise to an application for recovery.

180D Examination orders relating to enforcement of confiscation orders

Where a confiscation order has been made but not satisfied, the court that made the confiscation order may, under section 180D, make an order for the examination of any person, including a person against whom the confiscation order was made (paragraph 180D(1)(a)) or the spouse or de facto partner of a person against whom the confiscation order was made (paragraph 180D(1)(b)). It may also include persons such as lawyers, accountants, bankers and other advisers of the persons stated in paragraphs 180D(1)(a) and (b). The examination is in relation to the 'affairs' of the persons stated in paragraphs 180D(1)(a) and (b). 'Affairs' is defined in section 338 of the Act.

The examination order ceases to have effect when the confiscation order is finally determined, withdrawn or otherwise disposed of.

This provision will assist to ensure that confiscation orders made under the Act are given effect. It will enable the CDPP to locate any additional property which has been forfeited, or on which it is necessary to rely in order to satisfy a pecuniary penalty order or literary proceeds order.

180E Examination orders relating to restraining orders revoked under section 44

Section 180E enables a court that revoked a restraining order under section 44 to make an order for the examination of any person, including a person whose property is, or a person who has an interest in property that is, the subject of the restraining order (paragraph 180E(1)(a)) or the spouse or de facto partner of a person referred to in paragraph 180E(1)(a) (paragraph 180E(1)(b)). It may also include persons such as lawyers, accountants, bankers and other advisers of the persons stated in paragraphs 180E(1)(a) and (b). The examination is in relation to the 'affairs' of the persons stated in paragraphs 180E(1)(a) and (b). 'Affairs' is defined in section 338 of the Act.

The examination order ceases to have effect when the restraining order would have ceased to have had affect, assuming it had not been revoked under section 44.

This provision will address an anomaly in the Act that is created by section 44. Section 44 provides that, if a person provides security or an undertaking in relation to restrained property, then the restraining order is set aside. However, the ability to conduct examinations is currently tied to the existence of a restraining order. Without a restraining order in place, there is no ability to conduct an examination under the Act to determine relevant information about the nature and location of property which may be proceeds of crime.

This provision will enable applications to be made for examinations despite the revocation of a restraining order under section 44.

Item 104 - Application

This item sets out the application of sections 180A and 180B (as inserted by Item 103 ). The application of sections 180A and 180B is determined by reference to either the date of application for a restraining order, or the date of application for a forfeiture order.

Where the application for exclusion or compensation (under sections 73 or 77) relates to a forfeiture order that was or would be made under sections 47 or 49 of the Act, the date of application for the restraining order (upon which the forfeiture order relies) is the relevant date for determining the application of sections 180A and 180B. The restraining order must be applied for on or after the commencement of this item for sections 180A and 180B to apply. This applies regardless of whether the conduct constituting the offence (which led to the commencement of confiscation action) occurred or occurs before, on or after the commencement.

Where the application for exclusion or compensation (under sections 73 or 77) relates to a forfeiture order that was or would be made under section 48 of the Act, the date of application for the forfeiture order is the relevant date for determining the application of sections 180A and 180B. The forfeiture order must be applied for on or after the commencement of this item for sections 180A and 180B to apply. This applies regardless of whether the conduct constituting the offence (which led to the commencement of confiscation action) occurred or occurs before, on or after the commencement.

Where the application is for exclusion or compensation (under sections 94 or 94A), the date of application for the restraining order is the relevant date for determining the application of sections 180A and 180B. The restraining order must be applied for on or after the commencement of this item, regardless of whether the conduct constituting the offence occurred or occurs before, on or after the commencement.

Sections 180C applies in relation to an application for recovery of property after forfeiture, where that forfeiture is based on a restraining order that is applied for on or after the commencement of this item, regardless of whether the conduct constituting the offence occurred or occurs before, on or after the commencement.

Section 180E applies in relation to restraining orders applied for on or after the commencement of this item, regardless of whether the conduct constituting the offence occurred or occurs before, on or after the commencement.

Section 180D applies in relation to confiscation orders applied for on or after the commencement of this item, whether the conduct constituting the offence concerned occurred or occurs before, on or after the commencement.

Item 105 - Subsection 181(1)

This item inserts an asterisk before 'affairs' in subsection 181(1), to indicate that the term has now been defined in the Dictionary to the Act contained in section 338.

Item 106 - Subsection 181(1)

This item removes the reference to 'the nature and location of any property' from subsection 181(1). Because the term 'affairs' is now being defined in the Dictionary to the Act in section 338, there is no longer a need to refer to what may be included in the definition of 'affairs' in the subsection.

Item 107 - Application

This item sets out the application of amendments to section 181 made by this Part. Section 181 applies in relation to convictions quashed on or after the commencement of this item, whether the conduct constituting the offence concerned occurred or occurs before, on or after that commencement.

Item 108 - Section 182

This item inserts '(1)' at the beginning of the section. It is a consequential amendment arising from the insertion of new subsection 182(2).

Item 109 - At the end of section 182

This item inserts new subsection 182(2), which requires a court to consider an application made by the CDPP for an examination order ex parte , if the CDPP requests that the court do so. This item implements Recommendation D22(d) of the Sherman Report. The Sherman Report noted the necessity to examine persons as soon as possible after restraining orders are obtained in order to preserve property and progress confiscation proceedings.

Expressly allowing the CDPP to apply for examination orders ex parte will enable the CDPP to make such an application at the same time as an application for a restraining order. This will reduce court burden and assist authorised examiners to conduct examinations early to ensure that all relevant property is identified quickly and, if appropriate, restrained early in an investigation.

Presently, the sole requirement for the DPP to satisfy in applying for an examination order under section 180 is that a restraining order is in force. Thus, there currently exists an implied ability for the DPP to apply for an examination order ex parte . This item expressly confirms the ability of the court to consider an application for an examination order ex parte .

Item 110 - Subsection 187(4)

This item inserts an asterisk before 'affairs' in subsection 187(4), to indicate that the term has now been defined in the Dictionary to the Act contained in section 338.

Item 111 - After paragraph 187(4)(a)

This item inserts additional circumstances in which an examination must not relate to a person's affairs. The item states that an examination must not relate to a person's affairs if the person is no longer a person whose affairs can be subject to examination under sections 180, 181, 180A, 180B, 180C, 180D or 180E. This item is consequential on the inclusion of new sections 180A, 180B, 180C, 180D and 180E.

Item 112 - Paragraph 187(5)(b)

This item is a consequential amendment. It includes references to new sections 180A, 180B, 180C, 180D and 180E, it marks that the term 'affairs' is now defined in the Dictionary and it omits the reference to 'the nature and location of any property', as this is now included in the definition of 'affairs'. The effect of the paragraph is that an examined person may be required by an approved examiner to answer a question that is relevant to the affairs of persons in sections 180, 180A, 180B, 180C, 180D, 180E and 181.

Item 113 - Application

This item sets out the application of amendments to sections 182 and 187. These sections apply in relation to an examination order applied for on or after the commencement of this item.

Item 114 - Section 195 (penalty)

This item increases the penalty for the offence of failing to attend an examination from six months and/or 30 penalty units, to two years and/or 120 penalty units, and implements Recommendation D24 of the Sherman Report. For example, the penalty for failing to attend an examination under the Australian Securities and Investments Commission Act 2001 is two years imprisonment and/or 100 penalty units. The increase reflects the seriousness of the offence and is more likely to act as a deterrent for offenders who may be tempted to avoid examination questions in an attempt to protect illicit wealth.

Item 115 - Subsection 196(1) (penalty)

This item increases the penalty for offences relating to appearance at an examination from six months months and/or 30 penalty units, to two years and/or 120 penalty units. These offences are:

•

refusing or failing to be sworn or affirmed

•

refusing or failing to answer a question that is required to be answered

•

refusing or failing to produce a document specified in the examination notice, or

•

leaving the examination before being excused by the approved examiner.

This item implements Recommendation D24 of the Sherman Report. The increase ensures that the offences are commensurate with other equivalent Commonwealth offences. For example, the penalty for failing to attend an examination under the Australian Securities and Investments Commission Act 2001 (ASIC Act) is two years imprisonment and/or 100 penalty units. The increase reflects the seriousness of the offences and is more likely to act as a deterrent for offenders who may be tempted to avoid examination questions in an attempt to protect illicit wealth.

Item 116 - After section 197

This item introduces a new offence of giving false or misleading information at an examination. A person commits this offence if they attend an examination and give an answer or produce a document and the answer or document is either false or misleading or omits a matter or thing, without which the answer or document is false or misleading. The penalty of this offence is, consistent with the increased penalties for other examination offences, imprisonment of two years and/or 120 penalty units.

This item implements Recommendation D25 of the Sherman Report. The Report considered that, while the Criminal Code 1995 (Cth ) (Criminal Code) offences for using false or misleading information or documents may be used in addition to the specified offences in Division 4 of the Act, the penalties attached to these offences (12 months imprisonment) were in a lower range than equivalent provisions in State and Territory confiscation legislation and other Commonwealth legislation (such as the ASIC Act referred to above). The Sherman Report recognised that the Criminal Code offences were very general and intended to be used in a wide variety of circumstances, and recommended that, commensurate with the approach in the ASIC Act, a new offence should be created to address the particular circumstance of an examination order.

Item 117 - Subparagraph 269(a)(ii)

This item inserts an asterisk before 'affairs' in subparagraph 269(a)(ii), to indicate that the term has now been defined in the Dictionary to the Act contained in section 338.

Item 118 - Section 338

This item inserts a new definition of 'affairs' in the Dictionary in section 338 of the Act, to clarify its meaning. The term is used in the context of conducting examinations to elicit information about a person's property.

This amendment became necessary after diverging views in the interpretation of the term arose in judgments in NSW and QLD (legislation in those States contain provisions closely worded to section 180 of the Act). In NSW, Greg James J held in NSWCC v Murchie (2000) 49 NSWLR 465, that the term 'affairs' encompassed matters which are relevant to the existence of serious crime related activity or illegal activity by a person to whom a restraining order relates. In other words, 'affairs' can encompass the asking of questions solely relevant to the commission of criminal conduct by a person, if that conduct was potentially relevant to a confiscation outcome in the matter.

By contrast, in QLD, in Meredith v State of Queensland [2007] 1 Qd R 334, the Queensland Court of Appeal held that there must be at least an arguable connection between the activity of a suspect and the property of the suspect to support the proposed line of questioning (in other words, 'affairs' meant 'financial affairs').

The new definition of 'affairs' is intended to pick up the interpretation in Murchie , by providing that the affairs of a person includes, but is not limited to, the nature and location of the person's property (or property in which the person has an interest), and any of the person's activities that are, or may be, relevant to whether or not the person has engaged in unlawful activity of a kind relevant to the making of an order under the Act.

Item 119 - Section 338 (definition of examination order )

This item is a consequential amendment to insert references to new sections 180A, 180B, 180C, 180D and 180E in the Dictionary definition of 'examination order'.

Part 4 - Notices

Proceeds of Crime Act 2002

Item 120 - After paragraph 202(5)(c)

This item inserts new paragraph 202(5)(ca) in subsection 202(5), which defines the scope of a 'property-tracking document'. It will ensure that a document relevant to identifying, locating or quantifying property suspected of being proceeds of an indictable offence, foreign indictable offence or indictable offence of Commonwealth concern, or an instrument of a serious offence, is included in the definition of 'property-tracking document'. This item implements Recommendation D26(a) of the Sherman Review.

The current definition of 'property-tracking document' is person-directed. That is, it is linked to 'a person' either being convicted of, charged with, being proposed to be charged with, or being reasonably suspected of having committed, one of the relevant types of offences. There is no provision covering a situation where the identity of the person who committed the offence is not known. This means that production orders are currently unavailable where property has been restrained or may be restrained under section 19 of the Act (which permits restraint of property without reference to 'a person'). This item remedies the gap in the definition and will allow production orders to be used where the identity of the person is not known.

Item 121 - Paragraph 202(5)(d)

This item is a consequential amendment. It includes a reference to new paragraph 202(5)(ca) in paragraph 202(5)(d), so that that paragraph now defines a 'property-tracking document' to include a document relevant to identifying or locating any document necessary for the transfer of property referred to in paragraph (c) or (ca).

Item 122 - Paragraph 202(5)(f)

This item is a consequential amendment. It includes a reference to new paragraph 202(5)(ca) in paragraph 202(5)(f), so that that paragraph now defines a 'property-tracking document' to include a document that would assist in the reading or interpretation of a document referred to in paragraph (a), (b), (c), (ca), (d) or (e).

Item 123 - Subsection 202(6)

This item is a consequential amendment. It includes a reference to new paragraph 202(5)(ca) in subsection 202(6). This clarifies that, for the purposes of subparagraph 202(5)(c)(ii) and paragraph 202(5)(ca), it is sufficient that a document is relevant to identify, locating or quantifying proceeds of some offence or other of a kind referred to in that paragraph or subparagraph. It does not need to be relevant to identifying, locating or quantifying proceeds of a particular offence.

Item 124 - Subsection 202(6)

This item is a consequential amendment. It changes the phrase 'of a kind referred to in that subparagraph' to 'of a kind referred to in that provision'. This is because new paragraph 202(5)(ca) is now referred to in subsection 202(6). Thus, a reference to 'that subparagraph' is incorrect, as there are now references to a subparagraph and a paragraph.

Item 125 - After paragraph 203(1)(c)

This item inserts new paragraph (ca) into subsection 203(1), which deals with the contents of production orders. The new paragraph requires that the manner and form in which documents are to be produced must be specified in the production order.

This item implements Recommendation D26(b) of the Sherman Report. It is designed to enable documents produced under a production order to be received electronically. As noted in the Sherman Report, electronic receipt of documents has the potential to be cost and time efficient, particularly when dealing with a large number of documents.

Item 126 - Subsection 203(2)

This item repeals subsection 203(2) and replaces it with two new subsections governing the time in which documents, the subject of a production order, must be produced. New subsection 203(2) provides a minimum period of 14 days after the production order is made before documents must be produced. If a magistrate who made the production order is satisfied that it is appropriate, the time period may be shortened to no less than three days after the day on which the production order is made.

New subsection 203(3) provides the matters to which a magistrate must have regard when deciding whether to specify an earlier time for production under subsection 203(2). These are: the urgency of the situation, and any hardship that may be caused to the person required to produce documents or make documents available under the production order.

This provision provides for situations where there is a genuinely urgent need for documents to be produced in less than 14 days. The specified minimum of three days provides certainty for the person complying with the order by setting a clear parameter for the minimum time for compliance.

Item 127 - At the end of section 211

This item inserts new subsection (3) at the end of section 211, which is a defence to the offence of failing to comply with a production order. It states that, if a person failed to comply with a production order only because they did not produce the specified document or documents within the time specified in the order, and the person took all reasonable steps to produce the document or documents within that time, it is a defence against the offence in subsection 211(1).

This new item provides a safeguard for those who may be required to comply with a shortened production time under subsection 203(2).

Item 128 - Application

This item sets out the application of amendments made by this Part to Part 3-2 of the Act (production orders). The amendments apply in relation to production orders applied for on or after the commencement of this item, whether the conduct constituting the offence occurred or occurs before, on or after the commencement.

Item 129 - Paragraphs 213(1)(a) and (b)

This item is a consequential amendment, resulting from the changed definition of 'account' (which is amended to include closed accounts). The item introduces the past tense when referring to accounts. Accordingly, paragraph 213(1)(a) is amended to refer to an account that 'is or was' held by a specified person, and paragraph 213(1)(b) is amended to refer to whether a person 'is or was' a signatory to an account.

Item 130 - Paragraph 213(1)(d)

This item is a consequential amendment, resulting from the changed definition of 'account' (which is amended to include closed accounts). The item removes 'such', so that paragraph 213(d) is no longer linked to paragraph 213(c) (which refers to a current account). This has the effect of removing the inference that the account referred to in paragraph 213(d) is an open account.

Item 131 - Paragraph 213(1)(e)

This item is a consequential amendment, resulting from the changed definition of 'account' (which is amended to include closed accounts). The item introduces the past tense when referring to accounts. Accordingly, paragraph (1)(e) is amended to refer to persons who 'hold or held' accounts.

Item 132 - After paragraph 213(1)(e)

This item introduces two new situations in which an authorised officer may provide written notice to a financial institution. These are: to determine whether a stored value card was issued to a person by a financial institution, and to obtain details of transactions made using a stored value card over a specified period not exceeding six months. A stored value card is defined in section 338 of the Act. Enabling authorised officers to obtain information about stored value cards will assist in identifying proceeds of crime and ensuring these funds are not dispersed.

Item 133 - At the end of subsection 213(3)

This item implements Recommendation 4 of the Sherman Report by expanding the list of officers who may give notices to financial institutions under section 213. Section 213 notices require financial institutions to provide information about accounts held by them to authorised officers. The expanded list names the Commissioner of Taxation, the Chief Executive Officer of Customs and the Chairperson of the Australian Securities and Investments Commission as officers who may give a notice to a financial institution.

Including these officers in the list of authorised officers is necessary given the importance of section 213 notices as effective information gathering tools under the Act. The limited number of authorised officers has meant that officers from named agencies have had to issue notices on behalf of other agencies, creating critical delays in identifying property that should be restrained. This amendment will assist in overcoming the delays currently caused by the limited number of authorised officers. The amendment does not allow the power to issue a notice to be delegated for the new specified officers, which safeguards against possible misuse of the power.

Item 134 - Section 214

This item inserts '(1)' at the beginning of the section. It is a consequential amendment arising from the insertion of new subsection 214(2).

Item 135 - Paragraph 214(d)

This item amends paragraph 214(1)(d) so that an authorised officer who issues a notice requiring a financial institution to provide information must have regard to the record-keeping capabilities of the financial institution, to the extent that those record keeping capabilities are known to the officer. The intent of this provision is to place a positive obligation on the authorised officer to consider whether the financial institution is reasonably able to comply with the request being made. This provision is included because the time in which information or documents must be produced has been amended to allow for production in less than 14 days (but no less than three days) after giving the notice.

Item 136 - Paragraph 214(e)

This item replaces paragraph (e), which provides that information must be provided by a financial institution to the authorised officer within 14 days of the notice, with a new paragraph which enables provision of information in less than 14 days (but not less than three days) if the authorised officer issuing the notice believes that a lesser timeframe is appropriate. In forming the belief that it is appropriate to specify a lesser timeframe, the authorised officer must have regard to the matters in new subsection 214(2). Receipt of information from financial institutions in a shortened timeframe will, in appropriate situations, ensure that property obtained with the proceeds of crime that is capable of restraint is quickly identified before it can be dissipated.

Item 137 - At the end of section 214

This item inserts new subsection 214(2), which specifies the matters to which an authorised officer must have regard in deciding whether to require production of information under a notice to a financial institution in less than 14 days. The authorised officer must have regard to the urgency of the situation and any hardship that may be caused by the financial institution by the reduced timeframe. Receipt of information from financial institutions in a shortened timeframe will, in appropriate situations, ensure that property obtained with the proceeds of crime that is capable of restraint is quickly identified before it can be dissipated.

This item sets the parameters for the use of shortened timeframes and ensures that adequate consideration is given by authorised officers in determining that a shorter time frame is necessary. The item is intended for use in genuinely urgent situations only. It does not exist to be used merely for matters of convenience for the authorised officer. For example, if the investigating agency has been lax in drafting and giving a notice to a financial institution, it would not be sufficient justification to reduce the time in which a financial institution has to comply with the notice.

Item 138 - Section 218

This item inserts '(1)' at the beginning of the section. It is a consequential amendment arising from the insertion of new subsection 218(2).

Item 139 - At the end of section 218

This item inserts new subsection 218(2), which provides a defence to the offence of failing to comply with a notice given under section 213. If a person from a financial institution does not produce the required information or document within the specified period, and that person took all reasonable steps to provide the information, then, provided the information is produced as soon as practicable, the defence is made out.

This item is a safeguard to ensure that persons who are genuinely unable to provide the required information within the specified time are not exposed to a penalty.

Item 140 - Application

This item sets out the application of amendments made by this Part to Part 3-3 of the Act (notices to financial institutions). The amendments apply in relation to a notice given under section 213 of the Act on or after the commencement of this item, whether the conduct constituting the offence concerned occurred or occurs before, on or after that commencement.

Item 141 - Subsection 219(1)

This item expands the subject matter about which a monitoring order may be made. Currently, monitoring orders may only be made in respect of transactions conducted through an account. This item expands the provision to enable monitoring orders to be made with respect to transactions made by using a stored value card. 'Stored value card' is defined in the Dictionary to the Act in section 338; essentially, it is cash held in another form. This provision enables a judge to make an order that a financial institution provide information about transactions made using a stored value card that was issued to a person by a financial institution.

This item closes a gap that currently exists in the information-gathering powers under the Act. Information-gathering powers, such as monitoring orders and notices to financial institutions, are currently only exercisable with respect to 'accounts' held by financial institutions. Because a stored value card is different to an 'account', there was no way in which to obtain information on transactions made using these cards. Law enforcement agencies have identified that products falling within the definition of 'stored value card' have been known to be used to launder money from the proceeds of narcotics and pay drug couriers.

Item 142 - Paragraph 219(2)(a)

This is a consequential amendment arising from the introduction of the term 'stored value card'. The subsection provides the grounds on which a judge must be reasonably satisfied before making a monitoring order. This item amends the phrase in paragraph 219(2)(a) from 'the person in respect of whose account...' to 'the person in respect of whose account or card...'.

Item 143 - Paragraph 219(2)(b)

This is a consequential amendment arising from the introduction of the term 'stored value card'. Subsection 219(2) provides the grounds on which a judge must be reasonably satisfied before making a monitoring order. This item amends the phrase in paragraph 219(2)(b) from 'the account is being used...' to 'the account or card is being used...'.

Item 144 - Subsection 219(3)

This is a consequential amendment arising from the introduction of the term 'stored value card'. Subsection 219(3) provides that, if an account is being used to commit a money laundering offence, it does not matter whether the person holding that account is involved in the offence. This subsection has been amended to refer to an account or stored value card.

Item 145 - Paragraph 220(1)(a)

This is a consequential amendment arising from the introduction of the term 'stored value card'. It amends paragraph 220(1)(a), which requires that the name in which an account is believed to be held must be specified in a monitoring order. The paragraph now requires that the name in which an account is believed to be held, or the name of the person to whom the stored value card was issued, must be specified in the monitoring order.

Item 146 - Application

This item sets out the application of amendments made by this Part to Part 3-4 of the Act. The amendments apply in relation to monitoring orders applied for on or after the commencement of this item, whether the conduct constituting the offence concerned occurred or occurs before, on or after that commencement.

Item 147 - Section 338 (definition of account )

This item amends the definition of 'account' in Dictionary to the Act, contained in section 338. The new definition of 'account' is modelled on the definition in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML-CTF Act), and includes credit card accounts, loan accounts, trust account and closed accounts. The widened definition will enable investigating agencies to exercise greater information-gathering powers.

Item 148 - Section 338

This item inserts the definition of 'stored value card' in the Dictionary to the Act, contained in section 338. The definition is adopted from the AML-CTF Act. It is intended to cover instances where cash is held, not in an account, but in some other form. Stored value cards may be loaded with purchased credit, to be redeemed at a place that honours the card. The amendments will allow information to be obtained from E-Merchants who market gift cards to merchants such as Australia Post, Coles Myer, Woolworths and Travelocity.

Part 5 - Ancillary Orders

Proceeds of Crime Act 2002

Item 149 - After paragraph 39(1)(c)

This item implements Recommendation D7(b) of the Sherman Report by inserting new paragraph 39(1)(ca) to correct an ambiguity in paragraph 39(1)(d). Paragraph 39(1)(d) currently empowers a court to make an order directing the owner of restrained property to give a sworn statement setting out particulars of, or dealing with, 'the property'. On a narrow reading of this provision, it could be argued that a sworn statement need only be in relation to the restrained property, and not other property owned by the person. This argument was made (but ultimately not adjudicated on) in DPP v Loades [2004] SADC 158, and on appeal at [2005] SASC 227.

To put the matter beyond doubt, new paragraph 39(1)(ca) has been inserted to empower the court to make any order directing the suspect in relation to the restrained property to give a sworn statement setting out all of his or her interest in property, and his or her liabilities. This will assist the CDPP, particularly at an early point in the investigation, to establish the suspect's net asset position. It is necessary to establish a person's net assets in order to determine what property, if any, to make the subject of a restraining order.

Items 150 and 151 - Paragraph 39(1)(d)

These items implement Recommendation D7(a) of the Sherman Report by inserting references to a 'previous owner of property' in paragraph 39(1)(d). Paragraph 39(1)(d) currently provides that the court may make an order directing the owner of restrained property to give a sworn statement setting out particulars of, and dealings with, the property. The CDPP has identified that, in order to avoid potential confiscation action under the Act, suspects will sometimes divest themselves of property to family members or associates. This item addresses this situation by enabling the court to direct a previous owner of property (who may be the suspect) to give a sworn statement setting out particulars of, or dealings with, the property.

Item 152 - After paragraph 39(1)(d)

This item builds upon Recommendation D7(a) of the Sherman Report. It inserts new paragraph 39(1)(da), which empowers the court to direct a person other than the owner or previous owner of property, to give a statement within a specified period setting out particulars of, or dealings with, the property. Like Items 150 and 151 , this item will enable the CDPP to obtain relevant information from persons who may have knowledge of circumstances in which property has been divested to another to avoid confiscation action. This item goes beyond Recommendation D7(a) as it is not limited to a previous owner of the property, but applies to any other person whom the court reasonably suspects to have information relevant to identifying, locating or quantifying the property. For example, it could apply to a mortgage broker or a real estate agent.

Item 153 - Paragraph 39(1)(g)

This item expands the operation of paragraph 39(1)(g), and in doing so, implements Recommendation D7(c) of the Sherman Report. Presently, paragraph 39(1)(g) enables a court to make an order requiring a person whose property is covered by a restraining order to do anything necessary or convenient to bring the property within the jurisdiction. This item expands the operation of that paragraph to apply to persons who have effective control of property covered by a restraining order.

This item will apply to, for example, persons suspected of serious criminal activity that may hold property offshore through third party structures, such as companies and trusts.

Item 154 - After subsection 39(3)

This item inserts new subsection 39(3A), which empowers the court to consider applications for ancillary orders made ex parte .

This provision has been included to clarify the ambiguity between subsections 39(3) and (4). Subsection 39(3) provides that a person who applies for an ancillary order must give written notice of the application to all relevant parties. However, paragraph (4)(a) suggests that an ancillary order may be made by a court at the same time that it makes a restraining order (which can be made ex parte under subsection 26(4) of the Act).

In DPP v Xu [2005] NSWSC 191, the court held that applications for ancillary orders can only ever be made following an application on notice. In its submission to the Sherman Report, the CDPP noted several instances in which the interpretation taken by the court will delay ancillary orders being made, and might impede the proper operation of the Act. These are where the DPP has to return to court for an order:

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requiring the owner of restrained property to give a sworn statement about the particulars of, and their dealings with, the property

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about the manner in which the Official Trustee is to exercise its power in respect of restrained property

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directing persons to assist the Official Trustee to take custody and control of property, and

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that a person whose property has been restrained take action to bring the restrained property within jurisdiction.

The Sherman Report recommended that the Act be amended to allow ancillary orders to be made ex parte (Recommendation D7(d)). This item gives effect to that Recommendation, and in doing so, ensures the proper operation of the Act.

Item 155 - After subsection 39(4)

This item inserts new subsection 39(4A), which provides that the court may direct the CDPP to give notice of an application for an ancillary order to specified persons. This item will ensure that persons who may be affected by an application for an ancillary order are notified of the application. While subsection 39(3) requires a person who applies for an ancillary order to give written notice to all other persons entitled to make an application, this item will ensure that written notice is provided to all potentially affected persons (that is, third parties), not just those entitled to make an application.

This item also inserts new subsection 39(4B), which requires the CDPP to give written notice to any person affected by an ancillary order made ex parte . This item is a consequential amendment arising from Item 154 (which specifically provides that applications for ancillary orders can be made ex parte ). The item ensures that all persons whom the CDPP reasonably believes may be affected by an ancillary order made ex parte are notified of the order.

Item 156 - After section 39

This item inserts new section 39A, which abrogates the privilege against self incrimination with respect to a sworn statement about particulars of, or dealings with, property given under paragraph 39(1)(d) or (da) of the Act. This item implements recommendation D7 of the Sherman Report.

In DPP v Xu [2005] NSWSC 191, the court held that the privilege against self incrimination had been impliedly repealed by the requirement that a suspect declare an interest in property under paragraph 39(1)(d). The purpose of this item is to reflect the court's finding by making it express in the legislation that the privilege against self-incrimination does not apply to sworn statements made in relation to paragraphs 39(1)(d) or (da).

The provision contains direct use immunity, so that the sworn statement is not admissible in civil or criminal proceedings against the person who made the statement, except in certain specified circumstances. These circumstances are:

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criminal proceedings for false or misleading information

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proceedings on an application under the Act

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proceedings ancillary to applications under the Act, or

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proceedings for enforcement of a confiscation order.

Derivative use immunity does not apply to this provision for operational reasons. As criminal proceedings and proceeds of crime proceedings are often conducted simultaneously, a defendant could use a derivative use immunity (if it were included in this provision) to frustrate a prosecution. For example, if a defendant made certain admissions in a statement and provided similar information elsewhere, he or she could claim that the investigating agency or CDPP obtained the similar information from, for example, a statement about his or her interests in property or liabilities (made under paragraph 39(1)(ca)) and this similar information would then be inadmissible in a prosecution.

The investigating agency or CDPP would then face the very onerous task of proving the source of prosecution information (that is, proving it was not derived from the statement). As a consequence, the CDPP and or investigating agency would be required to quarantine information in anticipation that an application to exclude might be made, which is not desirable.

This item also inserts new section 39B, which enables a person to apply to revoke an ancillary order. This item will enable a person affected by an ancillary order heard ex parte , to apply to have the order revoked. This item ensures that a person the subject of an ancillary order is not prejudiced by an order being made against them in their absence.

Under the provision, the effect of the ancillary order is stayed until the court hears the application for revocation, and if the ancillary order directed a person to do a thing within a specified period, the court may vary the order to extend that period.

Item 157 - Section 40 (note)

This item amends the note to section 40 to include a reference to a person who has effective control of property covered by a restraining order.

Item 158 - Application

This item sets out the application of amendments made by this Part to Division 5 of Part 2-1 of the Act (further orders). The amendments apply where ancillary orders relate to restraining orders applied for on or after the commencement of this item, whether the conduct constituting the offence concerned occurred or occurs before, on or after the commencement.

Part 6 - Evidence

Proceeds of Crime Act 2002

Items 159, 160, 162 and 163 - Subsection 64(2), paragraph 64(2)(a), subsection 138(2) and paragraph 138(2)(a)

These items implement Recommendation D11 of the Sherman Report, which states that subsections 64(2) and 138(2) should be amended so that the court can have regard to the transcript of proceedings against the suspect for any offence which constitutes unlawful activity. The Sherman Report considered that the current provision, which limits the court's regard to transcripts of conviction-based proceedings, was unnecessarily constraining. In its submission to the Sherman Report, the CDPP submitted that since non-conviction based confiscation proceedings now form an important part of the Commonwealth confiscation regime, it is appropriate that the court may have regard to transcripts of proceedings that do not result in conviction when determining applications for forfeiture and pecuniary penalty orders. This submission was endorsed by the Sherman Report.

The following example was mentioned in the Sherman Report. If a person was found not guilty because of a hung jury, and the CDPP applied for a forfeiture order or pecuniary penalty order against that person on the basis that his or her guilt was proven to a civil standard, current subsections 64(2) and 138(2) would not expressly permit a court to have regard to the transcript of the relevant proceedings.

The Sherman Report noted that the court should not be restricted to looking only at transcripts of proceedings which relate to the specific offence which forms the basis of the forfeiture order or pecuniary penalty order. The Report noted that there may be cases in which the alleged offence which forms the basis of a forfeiture order application or a pecuniary penalty order application is technically different from an offence of which a person has been convicted. The Report argued that, in such circumstances, it would seem artificial if the wording of subsections 64(2) and 138(2) are interpreted so as not to permit the court to have regard to transcript from the relevant proceedings.

Further, the Sherman Report noted that evidence and convictions relating to other offences may be relevant to the determination of confiscation applications. For example, where a person is alleged to have committed a 'serious offence' under the Act, the person will be liable to forfeit not only proceeds of the specific offence, but also property which represents proceeds of other 'unlawful activity'.

These items, therefore, remove the references to conviction of an indictable offence (which limit the provisions), and permit the court to have regard to transcripts of any proceedings for an offence that constitutes unlawful activity.

Item 161 - Application

This item sets out the application of amendments made by this Part to section 64 of the Act. The amendments apply in relation to forfeiture orders applied for on or after the commencement of this item, whether the conduct constituting the offence occurred or occurs before, on or after the commencement.

Item 164 - Application

This item sets out the application of amendments made by this Part to section 138 of the Act. The amendments apply in relation to pecuniary penalty orders applied for on or after the commencement of this item, whether the conduct constituting the offence concerned occurred or occurs before, on or after that commencement.

Item 165 - After section 318

This item inserts new provision 318A, which allows statements made at an examination to be admissible as evidence in proceedings under the Act, in certain circumstances where the maker of those statements is absent or unavailable to appear as a witness (for example, if they are deceased). This item also inserts new section 318B, which requires a party to give notice of their intention to adduce the statements as evidence and allows for objections to be made to the admission of such statements.

Currently, subsection 318(2) provides that, in proceedings under the Act, the transcript of an examination is evidence of the answers given by a person to a question put to the person in the course of the examination. On its face, subsection 318(2) makes the transcript of an examination directly admissible in the following proceedings:

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on an application for an order

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ancillary to an application for an order, or

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for enforcement of an order.

However, this matter is not without doubt, as the hearsay rule could prevent admission of examination transcripts if the examinee is not available to support the transcript with testimony. Because of the uncertainty surrounding this issue, the Sherman Report recommended that transcripts of an examination should be admissible as evidence of answers given by an examinee, as if the examinee was giving evidence in court (Recommendation D30). New section 318A implements the effect of this recommendation, but contains two important safeguards.

First, subsection 318A(4) lists matters to which a court should have regard in determining the weight given to a statement as evidence. These matters include:

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the length of time between the matters occurring and the making of the statement

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any motive the absent witness may possess for concealing or misrepresenting a material matter, and

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any other circumstances from which an inference may be reasonably drawn about the accuracy of the statement.

Second, evidence relevant to the credibility of the absent witness is admissible, but not if it would have been inadmissible had the absent witness been called and cross-examined.

Section 318B provides that the party wishing to adduce the statements as evidence must give written notice to the other party at least 14 days prior to the hearing of the proceedings. If the other party objects, they may give the adducing party a notice stating their objections. If they do so, the court can either determine the objections or leave the determination until the hearing. If the other party does not provide a notice stating their objections, they are not entitled to object to the adducing of the statements as evidence at the hearing unless the adducing party consents or the court gives leave. This provision ensures that the procedure for adducing evidence is fair to both parties.

These two provisions are based on provisions contained in the Australian Securities and Investments Commission Act 2001 (Cth). These provisions were preferred to those contained in the Evidence Act 1995 (Cth) (the Evidence Act) for two reasons:

First, proceeds of crime proceedings are generally heard in either the court that convicted the defendant or a State Supreme Court. As the Evidence Act has not been replicated in all jurisdictions, the provisions for an unavailable witness are not available uniformly in every State.

Second, the provisions in this item are more comprehensive than those in the Evidence Act. For example, section 318A deals with the weight to be given to the statement, which is desirable given the nature of applications made under the Act (that is, applications to deal with the property of a person who may not have been convicted of an offence).

Item 166 - Application

This item sets out the application of new sections 318A and 318B. These sections apply in relation to statement made at an examination on or after the commencement of this item, whether the conduct constituting the offence concerned occurred or occurs before, on or after the commencement.

Part 7 - Definitions

Proceeds of Crime Act 2002

Item 167 - Subsection 19(4)

Item 167 omits the word, "indictable" in subsection 19(4) of the Act. This will ensure consistent references to offences.

Section 19(1) of the Act permits a court to restrain property upon application by the CDPP, and if there are reasonable grounds to suspect that property is the proceeds of a "terrorism offence," "indictable offence," "foreign indictable offence" or "indictable offence of Commonwealth concern."

Section 19(4) of the Act provides that reasonable grounds do not need to be based on a finding of the commission of a particular "indictable offence." However, section 19(4) does not contain any reference to a "terrorism offence," a "foreign indictable offence" or an "indictable offence of Commonwealth concern." The different references could suggest that reasonable grounds to suspect that property is the proceeds of these three types of offences must be based on the commission of a particular offence. This is not the intended process for restraining orders.

Insertion of Note

A Note is inserted after section 19 of the Act to amend the heading to section 19. Instead of reading, "Restraining orders - people suspected of committing indictable offences etc," it will read, "Restraining orders - property suspected of being the proceeds of indictable offences etc."

This will more accurately reflect the fact that section 19 of the Act allows restraint action to be taken directly against an asset, rather than as a result of the conduct of a specific and known suspect.

Item 168 - Application

This item sets out the application of amendments made by this Part to section 19 of the Act. These amendments apply in relation to restraining orders applied for on or after the commencement of this item, whether the conduct constituting the offence concerned occurred or occurs before, on or after that commencement.

Items 169, 170 and 171 - Subsection 337(3), after subsection 337(4) and at the end of section 337

Items 169, 170 and 171 are related amendments to the definition of "effective control" under section 337 of the Act. The Act specifies a number of circumstances where a person is taken to have "effective control" over property, even though the person may not have a legal or equitable interest in the property. Concerns have arisen regarding potential gaps in the definition of "effective control." Items 169, 170 and 171 will address these concerns and were recommendation D32 of the Sherman Report.

Item 169 repeals subsection 337(3) of the Act. That subsection described when property is under the effective control of a person where the person is one of two or more beneficiaries under a discretionary trust. Although it was never intended that the presumption in subsection 337(3) was absolute, in practice, it has been interpreted in that way by the courts and proved difficult to use in practice.

An absolute presumption that beneficiaries have effective control over equal shares, regardless of all of the circumstances, may result in a portion of illegitimate funds being placed outside the reach of law enforcement authorities. It is for this reason that Item 169 repeals subsection 337(3) of the Act. It will now be open to the CDPP to present the facts of each particular case, without a presumption operating in the background.

Item 170 inserts new subsection 337(5A) after subsection 337(5). This amendment overcomes the difficulty created by the fact that, at different stages of proceedings under the Act, property will be subject to the "effective control" of different people.

For example, before proceedings under the Act are commenced, property will likely be subject to the effective control of a suspect. However, in deciding whether to make a pecuniary penalty order, it is most likely that the property to which the pecuniary penalty order relates will be restrained under a restraining order and is arguably no longer under the effective control of a suspect.

For the avoidance of doubt, Item 170 states that, in determining whether or not property is subject to the effective control of a person, the effect of any order made in relation to the property under the Act is to be disregarded.

Item 171 clarifies that the concept of "effective control" does not require 'sole' control of property. This will ensure that "effective control" covers situations where property is under the control of more than one person.

This problem was identified in the context of jointly controlled bank accounts. It is probable that evidence of effective control would displace a shared trust, but the Sherman Report advised it would be prudent to remove any doubt. This amendment ensures that a court can determine that property is under the effective control of the suspect where property is controlled by more than one person.

Items 172 and 173 - paragraphs 337A(1)(a) and (2)(a)

Items 172 and 173 are related amendments concerning the definition of "foreign indictable offence." They amend the definition of "foreign indictable offence" so the definition will no longer be linked to an application for a restraining order or confiscation order.

The existing definition of "foreign indictable offence" states that "if an application is made for a restraining order or confiscation order..." and certain other criteria are satisfied, then unlawful conduct "is treated as having constituted a foreign indictable offence at all relevant times." Thus the definition appears to be predicated on an application for a restraining order or confiscation order under the Act having been made.

This has implications for investigative powers under the Act, which are designed to be used before a restraining order is applied for, such as production orders and search warrants under the Act. Item 172 gives effect to the above by inserting the words, "production order, search warrant," before "restraining" in paragraph 337A(1)(a) of the Act.

Item 173 is required to enable law enforcement authorities to access production orders and search warrants, before a restraining order is obtained. This amendment does this by inserting the words, "production order, search warrant," after "freezing" in paragraph 337A(2)(a) of the Act.

Item 174 - Subsection 337A(3)

Item 174 repeals subsection 337A(3) of the Act. Subsection 337A(3) states that "offence against a law of a foreign country" includes an offence triable by a military commission of the United States of America established under a Military Order of 13 November 2001 made by the President of the United States of America and entitled "Detention, Treatment, and Trial of Certain Non-Citizens in the War Against Terrorism."

On June 29 2006, the Supreme Court of the United States handed down its decision in Hamdan v Rumsfeld which found the military commissions established by the military order to be invalid. In light of the Supreme Court's decision, it is appropriate to remove subsection 337A(3) from the definition of "offence against a law of a foreign country."

Item 175 - Application

This item sets out the application of amendments made by this Part to section 337A of the Act. The amendments apply in relation to an application for a restraining order or confiscation order in relation to conduct that constituted an offence against a law of a foreign country. The application must be made on or after the commencement of this item, whether the conduct constituting the offence concerned occurred or occurs before, on or after the commencement.

Item 176 - Section 338

This item repeals the definition of 'discretionary trust'. This is a consequential amendment arising from the repeal of section 337(3) (Item 169), as that section referred to 'discretionary trust' as defined in the Dictionary in section 338. Without this reference, a definition is no longer required in the Dictionary in section 338.

Item 177 - Section 338 (paragraph (b) of the definition of evidential material )

Item 177 amends paragraph (b) of the definition of "evidential material", and is related to Item 180. This amendment is necessary because, currently, the CDPP is unable to seize evidential material with respect to benefits derived from the commission of a foreign indictable offence or an indictable offence of Commonwealth concern.

These shortcomings are of particular concern because these definitions could prevent search warrants being carried out to investigate the proceeds of foreign offences transferred to Australia, which could frustrate mutual assistance requests from Australia's international partners. The Sherman Report recommended that these changes be made (recommendations D37 and D39.)

Item 178 - Application

This item sets out the application of the amendment made by Item 180 (which amends the definition of 'tainted property'). This amendment applies in relation to search warrants applied for on or after the commencement of this item.

Item 179 - Section 338 (after paragraph (a) of the definition of serious offence )

Item 179 amends the definition of "serious offence" in section 338 of the Act by expanding it to cover two or more related fraud offences which, in aggregate, cause a benefit or loss of more than $10,000.

The existing definition of "serious offence," as it relates to fraud-type offences, refers to an indictable offence that causes a benefit or loss of at least $10,000, punishable by three or more years' imprisonment.

The existing definition does not capture the situation where a person commits a series of related frauds which, in aggregate, cause a benefit/loss of more than $10,000.

A pattern of conduct involving systemic fraud is particularly problematic in areas such as social security, taxation and customs, where each individual fraud may involve less than $10,000, but the total pattern of fraud can involve much larger amounts.

Item 179 inserts paragraph (aa) after paragraph (a) of the definition of "serious offence" in section 338 of the Act. New paragraph (aa) provides that where a person's unlawful conduct consists of an indictable offence (the 3 years offence) punishable by imprisonment for 3 or more years and one or more other indictable offences that, taken together with the 3 years offence, constitute a series of offences that:

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are founded on the same facts or are of a similar character; and

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cause, or are intended to cause, a benefit to the value of at least $10,000 for that person or another person, or a loss to the Commonwealth or another person of at least $10,000

those offences constitute a "serious offence."

Item 180 - Section 338 (paragraph (a) of the definition of tainted property )

This Item is related to Item 177. It amends the definitions of "tainted property" and "evidential material" under section 338 of the Act by including foreign indictable offences and indictable offences of Commonwealth concern. The definitions of tainted property and evidential material are relevant to issuing and executing search warrants issued under Part 3-5 of the Act.

Item 180 amends paragraph (a) of the definition of "tainted property." Tainted property is currently defined only as proceeds or an instrument of an "indictable offence." As a result, the proceeds of a "foreign indictable offence" or an "indictable offence of Commonwealth concern" do not constitute tainted property for the purposes of the Act and cannot be seized using search warrants under Part 3-5 of the Act.

Item 181 - Application

This item sets out the application of Item 177 , which amends the definition of 'evidential material'. The amendment applies in relation to search warrants applied for on or after the commencement of this item.

Item 182 - Section 338 (paragraph (b) of the definition of unlawful activity )

Item 182 amends paragraph (b) of the definition of "unlawful activity" under section 338 of the Act by omitting the words, "that may be dealt with on indictment (even if it may be dealt with as a summary offence in some circumstances)." The effect of this amendment is to extend the definition of "unlawful activity" to cover any offence against the law of a State or Territory.

Currently, the definition of "unlawful activity" applies to any offences against Commonwealth law or the laws of a foreign country, but applies only to indictable offences under State and Territory law (excluding State/Territory summary offences). This limit did not exist in the Proceeds of Crime Act 1987 and the Sherman Report recommended the definition be amended to encompass these offences (recommendation D38).

Without the amendments, it is possible that a person may avoid the effect of "person directed" forfeiture or automatic forfeiture following conviction by showing that property was derived from the commission of summary offences against State or Territory law.

Part 8 - Technical amendments relating to orders

Proceeds of Crime Act 2002

Item 183 - At the end of subsection 45(1)

Item 183 of Schedule 1 will allow a restraining order to remain in effect where an appeal against a conviction has been successful, but a new trial has been ordered.

Item 183 inserts new paragraph (h) into subsection 45(1) of the Act. Paragraph 45(1)(c) of the Act provides that a restraining order based on a conviction ceases to be in force 28 days after a person's conviction for the offence is quashed or set aside.

This is appropriate where the quashing order is the end of the matter, but a problem arises when a person's conviction is set aside and the same matter is to be re-tried. A lapsed order in this situation increases the risk of criminal proceeds being dissipated.

This amendment is supported by the Sherman Review and will save CDPP resources because it will no longer be required to return to court and obtain a new restraining order in relation to the same alleged offence where a new trial is ordered following a quashed or set aside conviction.

Insert of Note

The Note inserted after subsection 45(1) amends the heading to section 49 of the Act. Instead of reading, "Forfeiture orders - conduct constituting indictable offences etc," it will read, "Forfeiture orders - property suspected of being the proceeds of indictable offences etc."

This will more accurately reflect the fact that section 49 of the Act allows confiscation action to be taken directly against an asset, rather than as a result of the conduct of a specific and known suspect.

Item 184 - Application

This item sets out the application of the amendment made by this Part to section 45 of the Act. The amendment applies in relation to restraining orders applied for on or after the commencement of this item, whether the conduct constituting the offence concerned occurred or occurs before, on or after that commencement.

Items 185, 186, 190 and 191 - Section 84, at the end of section 84, section 110 and at the end of section 110

Items 185, 186, 190 and 191 remove certain technical requirements from sections 84 and 110 of the Act, to address unintended consequences that limit a court's ability to issue orders confirming confiscation of criminal assets.

Sections 84 and 110 permit a court to confirm a conviction-based forfeiture order (under section 48) if a conviction is quashed or overturned on appeal. A court is permitted to confirm conviction-based forfeiture if it is satisfied that it could have made a forfeiture order under sections 47 or 49 (which allow non-conviction-based forfeiture). Without a confirmation order, conviction-based forfeiture becomes void if a conviction is quashed or overturned on appeal.

A problem arises because forfeiture orders are generally based on previously issued restraining orders and non-conviction forfeiture orders under sections 47 and 49 rely on restraining orders issued under different sections to conviction based forfeiture orders under section 48 of the Act. Forfeiture under section 47 is based on a restraining order issued under section 18. Forfeiture under section 49 is based on a restraining order issued under section 19. However, conviction-based forfeiture under section 48 will usually flow from restraining orders issued under section 17. Indeed, section 48 permits a court to order property forfeited without any previous restraining order if it is satisfied that a person obtained benefits from the crime for which they were convicted.

The result is that a court cannot be satisfied it could have made a forfeiture order under sections 47 or 49 of the Act, because the applicable restraining orders for those sections will likely not exist.

The Sherman Review recommended that these changes be made (recommendation D13.) Mr Sherman noted that, "these proposals remove certain anomalies in the drafting of ss. 84 and 110 and do not raise issues of substance or questions of fairness. The proposals are in accord with the intended grounds for, and effects of, confirmation orders. The power to make confirmation orders remains at the discretion of the court."

Item 185 is necessary because Item 186 inserts new subsection (2) into section 84. Item 185 makes the existing section 84, new subsection 84(1).

Item 186 deems the requirements of paragraphs 84(1)(a) and 84(1)(b) to have been satisfied. This overcomes the problem described above that a court cannot be satisfied it could have made a forfeiture order under sections 47 or 49, because the applicable restraining orders for those sections likely do not exist.

Item 190 is necessary because Item 191 inserts new subsection (2) into section 110. Item 190 makes the existing section 110, new subsection 110(1).

Item 191 deems the requirements of paragraphs 110(1)(a) and 110(1)(b) to have been satisfied. This overcomes the problem described above that a court cannot be satisfied it could have made a forfeiture order under sections 47 or 49, because the applicable restraining orders for those sections likely do not exist.

Item 187 - Application

This item sets out the application of amendments made by this Part to section 84 of the Act. The amendments apply in relation to applications made to by the CDPP, on or after the commencement of this item, for a pecuniary penalty order to be confirmed.

Items 188 and 189 - Subsections 85(1) and (2)

These items insert consequential amendments arising from the insertion of subsection 84(1) ( Item 185 ). They amend the references in subsections 85(1) and (2) to paragraph 84(b), so that they now refer to paragraph 84(1)(b).

Item 192 - Application

This item sets out the application of amendments made by this Part to section 110 of the Act. These amendments apply in relation to applications made by the CDPP, on or after the commencement of this item, for a forfeiture order to be confirmed.

Items 193 and 194 - Subsections 111(1) and (2)

These items insert consequential amendments arising from the insertion of subsection 110(1) ( Item 190 ). They amend the references in subsections 111(1) and (2) to paragraphs 110(a) and (b), so that they now refer to paragraphs 110(1)(a) and (b).

Item 195 - Paragraph 316(1)(b)

Item 195 amends subsection 316(1) of the Act so the court must seek the consent of all persons likely to be affected by an order when considering making orders by consent, not the people who have an 'interest' in the property.

Currently, a court may make an order with the consent of the applicant in the proceedings and 'everyone whom a court has reason to believe has an interest in the property that is the subject of the proceeding' (subsection 316(1)). 'Interest' under the Act is very widely defined and, among other things, includes a 'right, power or privilege in connection with the property or thing, whether present or future and whether vested or contingent'.

Under section 316, a court must seek the consent of every party with an interest, whether or not they will be affected by the order. For example, an order for the Official Trustee to take custody and control of an item of real property will not affect the interests of a registered mortgagee (which are protected by a registered charge over the property) but this person has to be involved in the court process under existing section 316.

The effect of existing section 316 is that, in some cases, a person who only has a 'technical' interest in the relevant property may prevent consent orders from being made, even where all persons with a real interest in the property have agreed.

A more appropriate basis for making consent orders is to require a court to seek the consent of those people whom a court has reason to believe would be affected by the orders. Item G3A achieves this by omitting from paragraph 316(1)(b) the words, "has an interest in the property that is the subject of the proceeding," and substituting, "would be affected by the order."

Item 196 - Paragraph 316(2)(b)

Item 196 amends subsection 316(2) of the Act to overcome an anomaly whereby parties can consent to dispensing with the requirement under paragraph 47(1)(b) of the Act that property to be forfeited must have been subject to a restraining order under s 18 for at least 6 months, but cannot make a similar consent agreement with respect to paragraph 49(1)(b) of the Act (which states that property to be forfeited must have been subject to a restraining order under section 19 for at least 6 months.)

Given the nature of section 49 orders (forfeiture of proceeds and instruments) it would be useful for such orders to be able to be made without reference to a requirement that they be restrained for 6 months. Item 196 enables this by inserting references to section 49 forfeiture orders relating to property suspected of being proceeds of indictable offences into paragraph 316(2)(b).

Both of these amendments were recommended by the Sherman Review (Recommendation D29). Mr Sherman commented that the amendment of paragraph 316(1)(b), "seems to balance the various interests appropriately but reduces the prospect of "mischief" by third parties." In relation to 316(2)(b), Mr Sherman said, "it makes sense that parties can agree in a settlement to dispense with the six month requirement and the Act should make this clear."

Item 197 - Application

This item sets out the application of amendments made by this Part to section 316 of the Act. The amendments apply to proceedings under Chapter 2 of the Act, whether commenced before, on or after the commencement of this item.

Part 9 - Confiscated Assets Account

Proceeds of Crime Act 2002

Items 198, 199, 200, 201, 202 and 203 - Subsections 296(2), 297(1), 297(2) and section 399 (definitions of distributable funds and suspended funds )

These items remove all references to 'distributable' and 'suspended' funds in Part 4-3 of the Act. In doing so, they implement Recommendation 13(a) of the Sherman Report, which called for the abandonment of the distinction between distributable and suspended funds in the CAA.

The distinction was originally included in the Act to allow the Inspector General in Bankruptcy to 'quarantine' funds to meet forthcoming payments to be made out of the CAA, to reduce the possibility of there being insufficient funds to make the required payments.

In practice, the distinction has placed an administrative burden on ITSA without having significant effect on managing the risk of there being insufficient funds when a payment needs to be made. The Sherman Report noted ITSA's submission that:

...in a contemporary accounting environment, [the process of determining suspended and distributable funds] is becoming less relevant...The provision of budgets, projections, commitments and accrual information may serve stakeholders better than a regular report of the balances for distributable and suspended moneys in the CAA.

The Sherman Report endorsed these comments, concluding that the distinction between distributable and suspended funds seemed '...to serve no purpose that ordinary prudent accounting measures cannot serve'.

As the terms serve no practical purpose in the day to day administration of the CAA, these items remove them to facilitate efficient administration.

Item 204 - At the end of subsection 296(1)

This item inserts paragraph 296(1)(h) into subsection 296(1). The effect of the amendment is to include amounts paid to the Commonwealth in settlement of proceedings connected with the Act as amounts that must be credited to the CAA.

Subsection 296(1) of the Act identifies the source of funds credited to the CAA. Presently, monies paid to the Commonwealth in the settlement of proceedings under the Act are not provided for in subsection 296(1). This amendment expressly provides for such payments to be made into the CAA, to make clear on the face of the legislation the source of CAA funds.

Item 205 - Application

This item sets out the application of amendments made by this Division to paragraph 296(1)(h) of the Act. The amendments apply to amounts paid to the Commonwealth on or after the commencement of this Division, in settlement of proceedings connected with this Act, whether the settlements occurred before, on or after that commencement.

Item 206 - At the end of section 55

This item inserts a new subsection at the end of section 55 which clarifies what the court should have regard to when calculating an order under paragraph 55(2)(a). The new subsection provides that the amount specified in an order under paragraph 55(2)(a) should be determined either wholly or partly by reference to the difference between the amount received from disposing of all of the property and any payments (of a kind referred to in paragraph 70(1)(b)) which are incurred as a result of the disposal of the property. These payments include remuneration of the Official Trustee and any costs, charges and expenses that the Official Trustee incurs in connection with the disposal of the property.

This amendment will ensure that a court can make an order that takes into account the eventual sale price of a property and the costs incurred in disposing of the property.

Items 207 and 208 - After paragraph 297(1)(f), paragraph 297(g)

These items insert paragraph 297(1)(fa) into subsection 297(1) (which defines the purposes for which funds are paid out of the CAA), and make a consequential amendment to paragraph 297(1)(g). These items implement Recommendation D10 of the Sherman Report.

The Sherman Report identified three sources of payments that are not expressly provided for in the Act. The sources are payments to:

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a person for their interest in property (section 55)

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an amount to relieve hardship (section 72), and

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a person who successfully obtains a compensation order (section 77)

The Sherman Report recommended that these payments be made out of the proceeds of the sale of forfeited property, and out of the CAA where the proceeds have been paid into that account. As it raises constitutional issues for payments to be made out of the proceeds of the sale of forfeited property (as the Constitution requires that money be drawn by appropriation under law), subsection 297(1) has been amended to provide the above named sources of payment may be made out of the CAA.

A consequential amendment has also been made to paragraph 297(1)(g). Paragraph 297(1)(g) currently provides that payments made under paragraph 73(2)(d) and subparagraph 102(d)(ii) are payments 'by way of restitution'. These payments are now included in paragraph 297(1)(fa), so that they are described as 'payments the Commonwealth is directed to make by an order...'. The remaining payments stated in paragraph 297(1)(g), paragraph 88(1)(b) and subsection 289(2) are now described as payments made 'under arrangement', as this is a more accurate description of the nature of these payments.

Item 209 - Application

This item sets out the application of amendments made by this Division to paragraphs 297(1)(fa) and (g) of the Act. The amendments apply in relation to orders and arrangements made on or after the commencement of this Division.

Part 10 - Other amendments

Administrative Decisions (Judicial Review) Act 1977

Item 210 - After paragraph (ya) of Schedule 1

Item 210 of Schedule 1 of the Bill amends Schedule 1 of the Administrative Decisions (Judicial Review) Act 1977 by adding a new class of decision that is not subject to judicial review under the AD(JR) Act. The class of decision is decisions of the CDPP to apply for an order under the Act.

Section 5 of the AD(JR) Act provides an aggrieved person with the right to have any decision of an administrative character made under an 'enactment,' reviewed in court. This right is limited by other sections of the AD(JR) Act, in circumstances where judicial review of a decision is not appropriate.

This includes decisions to prosecute criminal matters (paragraph (xa) of Schedule 1 to the AD(JR) Act) and 'related criminal justice process decisions' (section 9A of the AD(JR) Act.) This is appropriate because judicial review can lead to fragmentation of criminal justice proceedings.

As with criminal proceedings, questions about the validity of proceedings under the Act can be examined during the course of proceedings under the Act and a separate stage of review is not necessary. Currently, the CDPP is exempt from the operation of the AD(JR) Act in the context of gathering information through examinations (paragraph (ya) of Schedule 1 to the AD(JR) Act).

Item 211 - Application

This item sets out the application of Item 210. The amendment made by the item applies in relation to decisions made on or after the commencement of this item.

Proceeds of Crime Act 2002

Items 212, 213, 215, 217 and 218 - Paragraphs 142(3)(a), 169(3)(a), 302(a), 302C(a) and 307(3)(a)

These items rectify an anomaly in the Act whereby a suspect's ownership of property could defeat a charge placed over that property to enforce penalties or secure fees. The amendment will ensure that charges created under the Act can be effectively enforced.

Charges are created against property subject to restraint under the Act to enforce penalties or secure fees (see sections 142, 169, 302A and 307 of the Act.) These charges are expressed to be subject to every 'encumbrance' on the property that came into existence before the charge and that would otherwise have priority over the charge. The charges have priority over all other 'encumbrances.'

'Encumbrance' is defined under section 338 of the Act to include an 'interest', which is itself defined under section 338 to include 'a legal or equitable interest' in property. This definition includes ownership of property. It is arguable that this means that charges over property are subordinate to a suspect's ownership of property and could never be enforced. By this interpretation, a court might be powerless to enforce the pecuniary penalty order it has made.

Items 212, 213, 215, 217 and 218 address this situation. They amend paragraphs 142(3)(a), 169(3)(a), 302(a), 302C(a) and 307(3)(a) by stating that, while a charge is subject to encumbrances that came into existence before the charge, this does not include a suspect's encumbrance over his or her property. The interests of third parties will still continue to have priority over charges created by the Act.

Item 214 - Part 4-4 (heading)

Item 214 repeals the heading to Part 4-4 of the Act. The words, "Charges over restrained property for payment of certain amounts," are deleted and replaced with, "Charges over restrained property to secure certain amounts payable to the Commonwealth."

This new heading more accurately reflects the nature of Part 4-4, under which charges created under the Act secure property to pay amounts to the Commonwealth such as penalties or fees.

Item 216 - Division 2 of Part 4-4 (heading)

Item 216 repeals the heading of Division 2 of Part 4-4 of the Act. This heading is no longer needed because the Crimes Legislation Amendment (Serious and Organised Crime) Bill (No 1) 2009 repealed sections 300-302 of the Act, which was Division 1 of Part 4-4 of the Act. Sections 302A, 302B and 302C are the remaining sections of Part 4-4 and now come under Division 1 of Part 4-4 of the Act.

Item 219 - Application

This item sets out the application of amendments made by this Part to sections 142, 169, 302, 302C and 307 of the Act. The amendments apply in relation to charges created on or after the commencement of this item.

Item 220 - After section 315

Item 220 inserts new section 315A into the Act. It will remove any doubt about whether a court is able to hear and determine orders simultaneously, although a court is not required to do so.

There is no provision that expressly permits a court to simultaneously hear and determine more than one application under the Act. This is in contrast to subsection 141(2) of the Confiscation Act 1997 (Vic). This amendment will improve court processes by allowing a court to determine, for example, applications for forfeiture and exclusion of forfeiture, at the same time.

Item 221 - Application

This item sets out the application of amendments made by this Part to section 315A of the Act. The amendments apply in relation to applications made on or after the commencement of this item.