House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Home Affairs, the Hon Peter Dutton MP)

GENERAL OUTLINE

1. Profit is at the heart of transnational serious and organised crime. Criminal groups are constantly shifting their operations to create, maintain and disguise illicit financial flows. Driven by the possibility of commercial benefit, organised crime groups no longer adhere to particular associations or crime-types, and instead fluidly adjust their activities to maximise their illicit gains and avoid law enforcement detection. These amendments will increase the pressure on transnational, serious and organised crime groups by targeting the financial benefits they gain from their illicit activities.

2. The Bill contains a range of measures to improve and clarify Commonwealth arrangements targeting the criminal business model, ensuring that law enforcement has suitable tools to detect illicit financial flows through effective information-gathering, confiscate relevant assets and prosecute responsible individuals.

3. The Bill amends the Crimes Act 1914 (Crimes Act), Criminal Code Act 1995 (the Criminal Code), the COAG Reform Fund Act 2008 and the Proceeds of Crime Act 2002 (the POC Act) to:

•

update Commonwealth money laundering offences to address the behaviour of modern money laundering networks and remove unnecessary obstacles to securing convictions and appropriate sentencing outcomes

•

clarify that the obligations imposed on investigating officials under Part IC of the Crimes Act do not apply to undercover operatives

•

ensure that buy-back orders under the POC Act cannot be used by criminal suspects and their associates to buy back property forfeited to the Commonwealth or delay POC Act proceedings

•

clarify that the POC Act permits courts to make orders confiscating the value of a debt, loss or liability that has been avoided, deferred or reduced through criminal offending

•

clarify the operation of the POC Act in relation to the restraint and confiscation of property located overseas

•

strengthen information-gathering powers under the POC Act by increasing penalties for non-compliance and clarifying the circumstances in which information gathered under these powers can be disclosed and used, and

•

expand the Official Trustee in Bankruptcy's (Official Trustee's) powers to deal with property, gather information and recover costs under the POC Act to allow the Official Trustee to discharge its functions in a more cost-effective manner.

4. The Bill contains 7 schedules.

Schedule 1 - Money Laundering

5. Money laundering networks are typically led by 'controllers' who issue directions to others to deal with particular money or other property. They intentionally keep these individuals ignorant of its criminal origins while themselves operating at an arm's-length to avoid criminal liability. The criminal origins of money or other property is also typically obscured through complex legal and administrative arrangements, strict information compartmentalisation, encrypted communication services, and other methodologies employed to severely frustrate law enforcement's efforts to identify predicate offending (and therefore show that money or property is the proceeds of crime).

6. The Bill amends Division 400 of the Criminal Code to ensure that Commonwealth money laundering offences can be more effectively used to target these modern money laundering networks. The amendments extend money laundering offences to persons who cause a dealing with money or other property to occur, or engage in conduct in relation to money or other property. This ensures that offences capture the 'controllers' of these networks who do not typically deal with money or other property directly and instead send instructions to another person to locate, move or otherwise engage in conduct that affects money or other property. These controllers are at the heart of money laundering operations and should not be beyond the reach of anti-money laundering laws.

7. The Bill also targets members of these networks who remain wilfully blind to the nature and origins of proceeds of crime that they deal with as a means of avoiding money laundering offences. The Bill does this by creating new offences of engaging in conduct in relation to 'proceeds of general crime', which remove the need to link money or other property to a kind of indictable offence (as outlined in Lin v The Queen [2015] NSWCCA 204) and instead take an 'all crimes' approach to predicate offending.

8. This will have the effect of ensuring that money or other property will be 'proceeds of general crime' where evidence of the circumstances in which the money or other property was handled are such as to give rise to the irresistible inference that it is wholly or partly derived or realised, directly or indirectly, from crime generally. Property may be 'proceeds of general crime' for example, if it cannot be linked to legitimate income or is grossly disproportionate to the defendant's legitimate income, there is a strong nexus between the defendant and known criminal entities, and the parties to a relevant transaction engage in practices to conceal their activities (for example, by communicating through encrypted networks).

9. Under these proposed 'proceeds of general crime' offences, the prosecution must prove that:

•

the defendant intentionally engaged in one or more instances of conduct in relation to money or other property; and

•

one instance of the defendant's conduct, or two or more instances taken together, relate to money or other property collectively valued at $100,000 or more; and

•

the person believed, was reckless or was negligent as to whether the money or other property was 'proceeds of general crime' in each instance; and

•

each instance of the defendant's conduct concealed or disguised one or more particular aspects of the money or other property (including, but not limited to, its value or location); and

•

the defendant was reckless as to this result occurring in each instance.

10. This ensures that offences are not used to prosecute relatively trivial behaviour and can only be used where the conduct of the person conceals or disguises aspects of the property, which may make it more difficult for law enforcement to trace it or identify its criminal origins.

11. Amendments will also provide that, for the offence of attempting to commit an offence under Division 400 that requires a person to be reckless or negligent as to whether property is 'proceeds of general crime' or 'proceeds of indictable crime', recklessness will be the relevant fault element in relation to this circumstance (section 11.1 of the Criminal Code would otherwise apply knowledge as the relevant fault element). This will assist the prosecution in establishing criminal liability in cases where money laundering organisations have obscured the actual criminal origins of money and made tracing efforts impossible, as the prosecution does not need to establish that property was actually proceeds of crime for an offence of attempting a 'proceeds of general crime' or 'proceeds of indictable crime' offence.

12. The Bill also creates another tier of offences relating to money or other property valued at $10,000,000 or more, which is intended to address the most serious cases of money laundering. It also introduces a new offence of dealing with money or other property valued at $1,000,000 or more where it is reasonable to suspect that the money or other property was 'proceeds of indictable crime', filling a gap in existing offence provisions at existing section 400.9.

13. The Bill also addresses a vulnerability in the existing mistake of fact exemption at section 400.10 of the Criminal Code as outlined by the Victorian Court of Appeal in Singh v The Queen [2016] VSCA 163. It does so by providing that a person who believes that money or other property is of a certain value must maintain this belief for the duration of their dealing with the property to rely on the exemption under existing section 400.10.

Schedule 2 - Investigation of Commonwealth offences

14. The Bill amends the Crimes Act to clarify that the obligations imposed on investigating officials under Part IC, including the requirement under section 23F, to caution a person who is under arrest or who is a protected suspect before starting to question the person, do not apply to undercover operatives. This also includes those obligations listed in Division 2, in their capacity as undercover operatives. The requirements imposed upon investigating officials in Division 2 relate to the arrest and detention of persons and would only be exercised by officers acting overtly. The purpose of these amendments is to ensure that any evidence gained by undercover operatives is admissible (subject to the court's ultimate discretion regarding admissibility of any evidence). The Bill also brings the definition of the term 'investigating official' under the Crimes Act into line with the Evidence Act 1995.

Schedule 3 - Buy-backs

15. The Bill amends the POC Act to ensure that criminal suspects and their associates are not afforded an opportunity to buy back forfeited property, and to ensure that a court hearing a buy back application is required to consider whether the applicant's financial circumstances are such that the forfeited property will not be repurchased with illicit funds or unexplained wealth. Law enforcement are granted appropriate information-gathering powers to achieve these objectives and procedural changes ensure that a person cannot use buy-back applications to frustrate or unnecessarily delay proceeds of crime proceedings.

Schedule 4 - Benefit

16. The Bill clarifies the definition of 'benefit' under the POC Act, explicitly providing that this definition includes the avoidance, deferral or reduction of a debt, loss or liability. This could include, for example, the criminal evasion of import duties, excises or taxation. This amendment reflects the existing operation of the POC Act, which allows pecuniary penalty orders, and literary proceeds orders to be made in relation to both a benefit gained and loss avoided through criminal conduct.

Schedule 5 - Jurisdiction of courts

17. The Bill clarifies that orders made by a court with proceeds jurisdiction under the POC Act can be made in respect of property located overseas. These amendments are designed to reinforce how the existing application of the POC Act, in conjunction with international asset recovery mechanisms and other domestic legislation such as the Mutual Assistance in Criminal Matters Act 1987, apply in relation to property located overseas.

Schedule 6 - Information

18. The Bill strengthens the enforcement of information-gathering powers under the POC Act by increasing penalties for serious non-compliance offences, and allowing enhanced restraint and confiscation action to be taken where a person commits a non-compliance offence under existing section 195, 196 or 197A of the POC Act in relation to an examination notice. These amendments are aimed at enhancing compliance with investigation powers under the POC Act and ensuring that suspects are unable to frustrate POC Act proceedings by seeking to obstruct the information-gathering process.

19. The Bill also clarifies and expands the circumstances in which documents or information obtained using information-gathering powers under the POC Act can be subsequently disclosed to, and used by, particular bodies for particular purposes, including: the enforcement of non-compliance offences under the POC Act, mutual assistance and extradition, and professional disciplinary functions.

Schedule 7 - Official Trustee

20. The Bill enhances the powers of the Official Trustee, who has responsibility for managing the Confiscated Assets Account and property seized and confiscated under the POC Act.

21. In particular, the Bill ensures that the Official Trustee can use its powers to gather information and deal with property in relation to property forfeited under the POC Act or subject to a direction under existing sections 282 and 282A, allowing this property to be located and preserved during appeal periods. Amendments have also been made to allow the Official Trustee to tailor its written notices to obtain information in a more precise fashion and to clarify notice requirements when disposing of property by consent.

22. To assist the Official Trustee in meeting its cost-recovery obligations, the Bill also makes amendments to allow the Official Trustee to recover its remuneration, expenses and costs directly from the Confiscated Assets Account, including expenses and costs incurred under relevant provisions of the Mutual Assistance in Criminal Matters Act 1987, the Crimes Act and the Customs Act 1901. Minor amendments are also made to assist the Official Trustee in meeting its obligations under the A New Tax System (Goods and Services Tax) Act 1999.

23. The Bill also transfers purely administrative tasks that are currently the responsibility of the Minister under the POC Act, including transferring property to a person under court order, to the Official Trustee. The Minister will be able to decide whether to transfer forfeited interests to a person where this is contested by a person who had this interest before forfeiture, and will be able to authorise a senior Departmental officer to exercise this power.

24. The Bill also allows the Minister to make payments from the Confiscated Assets Account to the States and Territories through the COAG Reform Fund, while maintaining the existing ability to provide direct grants to the States and Territories or other organisations such as local councils and community organisations.

25. The amendments also provide that money (other than a penalty) paid to the Commonwealth by a person under a Commonwealth or foreign deferred prosecution agreement that represents benefits or property derived from, or used or intended to be used in the commission of, unlawful criminal activity in Australia or in a foreign country must be credited to the Confiscated Assets Account. This recognises that such money or property may otherwise be subject to confiscation action under the POC Act.

FINANCIAL IMPACT STATEMENT

26. The measures in this Bill will have no financial impact.

ABBREVIATIONS

NOTES ON CLAUSES

Preliminary

Clause 1 - Short title

1. This clause provides for the short title of the Act to be the Crimes Legislation Amendment (Economic Disruption) Act 2020 (the Act).

Clause 2 - Commencement

2. Subclause 2(1) provides for the commencement of each provision in the Act, as set out in the table contained in the subclause.

3. Item 1 of the table at subclause 2(1) provides that sections 1 to 3 of the Act, and anything in this Act not elsewhere covered by this table, commences the day after the Act receives the Royal Assent.

4. Item 2 of the table at subclause 2(1) provides that Part 1 of Schedule 1 to the Act commences the day after the Act receives the Royal Assent.

5. Item 3 of the table at subclause 2(1) provides that Part 2 of Schedule 1 to the Act commences the later of:

(a)

immediately after the commencement of the provisions covered by table item 2, and

(b)

the commencement of Part 6 of Schedule 1 to the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Act 2020.

6. Item 3 of the table further clarifies that the provisions do not commence at all if the event mentioned in paragraph (b) does not occur. This acknowledges that Part 2 of Schedule 1 to the Act makes amendments to ensure that Part 6 of Schedule 1 to the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Act 2020 can operate in relation to the 'proceeds of general crime offence provisions' and 'proceeds of indictable crime' offence provisions as inserted by Part 1 of Schedule 1 to the Act.

7. Item 4 of the table at subclause 2(1) provides that Schedules 2 to 6 to the Act commence the day after the Act receives the Royal Assent. Item 5 of the table at subclause 2(1) provides that Part 1 of Schedule 7 to the Act commences the day after the Act receives the Royal Assent.

8. Item 6 of the table at subclause 2(1) provides that Part 2 of Schedule 7 to the Act commences at the later of:

(a)

immediately after the commencement of the provisions covered by table item 5, and

(b)

the commencement of Part 1 of Schedule 2 to the Crimes Legislation Amendment (Combatting Corporate Crime) Act 2020.

9. Item 6 of the table further clarifies that the provisions do not commence at all if the event mentioned in paragraph (b) does not occur. This acknowledges that Part 2 of Schedule 7 to the Act makes amendments relating to the proposed 'Commonwealth deferred prosecution agreements' in Part 1 of Schedule 2 to the Crimes Legislation Amendment (Combatting Corporate Crime) Act 2020, which will only come into effect upon the commencement of this Act.

10. A note to the table establishes that this table relates only to the provisions of this Act as originally enacted. This table will not be amended to deal with any later amendments of this Act.

11. Subclause 2(2) clarifies that any information in column 3 of the table at subclause 2(1) is not part of this Act. This subclause sets out that information may be inserted in this column, or information in it may be edited, in any published version of this Act.

Clause 3 - Schedules

12. This clause provides that legislation that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

Schedule 1 - Money Laundering

Criminal Code Act 1995

13. This Schedule amends Division 400 of the Criminal Code to ensure that Commonwealth money laundering offences can be more effectively used to target modern money laundering networks and their methodologies. Money laundering is the most significant and widespread enabler of serious and organised crime impacting Australia, including crimes that directly threaten the safety of Australians such as illicit drug and firearms trafficking, and terrorism. Money laundering enables criminal organisations to retain and reinvest profits obtained from their illicit activities and flourish at the expense of the societies in which they operate.

14. Money laundering networks often structure their criminal activities to avoid liability under the more serious offence provisions at existing sections 400.3 to 400.8 of the Criminal Code. They do this by: obscuring the criminal origins of the money or other property that they launder through complex legal and administrative arrangements, strict information compartmentalisation, encrypted communication services, and other methodologies; ensuring that their trusted operatives remain wilfully blind as to the criminal origins of the money or other property, and; dealing with money or other property at an arms-length. These methodologies aim to ensure that trusted operatives are only ever liable for less serious offences whilst the network controllers avoid criminal liability by never directly participating in relevant transactions.

15. As a result of these arrangements, increasingly large sums of cash are now being dealt with by money laundering networks in Australia. Where prosecutions have been possible, the available evidence is often only sufficient to support a lesser offence of dealing with money or other property reasonably suspected of being proceeds of crime under existing section 400.9, which only attracts a maximum penalty of up to 3 years imprisonment or a fine of 180 penalty units, or both. This has led to serious cases of money laundering attracting inadequate sentences, including cases where individuals have laundered over $10,000,000. This significantly reduces the disruption and deterrent effect that these offences have on money laundering networks that operate in and intentionally target Australia.

16. These problems have been further exacerbated by a vulnerability in the partial exemption at existing section 400.10 of the Criminal Code as outlined by the Victorian Court of Appeal in Singh v the Queen [2016] VSCA 163 (Singh). In Singh, the court found that a person could rely on the partial exemption to an offence contrary to section 400.9 where they had a mistaken but reasonable belief as to the value of money or other property at or before the time they dealt with the money or other property. Once the elements of an offence contrary to existing section 400.9 were established, if the person continued to deal with the money or other property and subsequently discovered that its true value was higher than their original belief, they could still rely on the partial exemption to ensure that they were only liable for dealing with the lower value of property that they originally believed they were dealing with, rather than the true value they discovered during the dealing.

17. The amendments in this Schedule aim to disrupt organised criminal activity in Australia by making it more difficult for money laundering networks to operate. Penalties for more serious money laundering activities will increase, deterring would-be participants and making it harder for these networks to recruit trusted operatives. A number of new offences will also target persons who remain wilfully blind as to the criminal origins of money or other property, control money laundering networks or seek to exploit vulnerabilities in existing section 400.10.

Addressing wilful blindness through 'proceeds of general crime' offences

18. The Schedule creates new offences of engaging in conduct in relation to 'proceeds of general crime' to address situations in which members of money laundering networks remain wilfully blind as to the criminal origins of money or other property and hide these origins through complex legal and administrative arrangements, strict information compartmentalisation, encrypted communication services, and other methodologies.

19. 'Proceeds of crime' offences at existing sections 400.3 to 400.8, which have been reframed as 'proceeds of indictable crime' offences in this Schedule, require the identification of the 'class of indictable offences' from which the money or other property has actually been derived or realised. The defendant must also have believed, been reckless or been negligent as to the money or other property being derived or realised from the same or a different 'class of indictable offence' (see Lin v R [2015] NSWCCA 204). For example, money or other property will be considered 'proceeds of crime' under existing offences where the evidence establishes that it was actually derived from illicit drug importation, and the defendant will have believed that the property is 'proceeds of crime' even if it can only be proved that they believed it was derived from fraud against the Commonwealth.

20. These elements, however, are often impossible to make out against modern money laundering networks. Proving that money or other property was actually derived or realised from a 'class of indictable offence' is often impossible as these networks distance property and money from predicate offending by moving it through foreign jurisdictions and complex legal and administrative arrangements, and by employing encrypted communication services and other methodologies. It is also often impossible to prove that the defendant believed, was reckless or was negligent as to whether money or other property was derived or realised from a 'class of indictable offence', as these networks exercise strict information compartmentalisation to keep their members wilfully blind as to the criminal origins of money or other property.

21. To address these practices, the new offences of 'engaging in conduct in relation to' 'proceeds of general crime' will ensure that money or other property will be 'proceeds of general crime' (as defined under section 400.1 and qualified by subsection 400.13(1)) if the prosecution can establish one or more of the following:

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a particular offence against a law of the Commonwealth, a State, a Territory or a foreign country

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a kind of offence against a law of the Commonwealth, a State, a Territory or a foreign country

•

evidence of the circumstances in which the money or other property was handled are such as to give rise to the irresistible inference that it is wholly or partly derived or realised, directly or indirectly, by any person from crime generally (without the need to specify a particular offence or kind of offence).

22. A person will believe, be reckless or be negligent as to whether money or other property is 'proceeds of general crime' if they believe that, or are reckless or negligent as to whether, one of the following circumstances exist:

•

the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a particular offence against a law of the Commonwealth, a State, a Territory or a foreign country (whether or not this is the same offence the money or other property was actually derived from)

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a kind of offence against a law of the Commonwealth, a State, a Territory or a foreign country (whether or not this is the same kind of offence the money or other property was actually derived from)

•

the property was wholly or partly derived or realised, directly or indirectly, by any person from crime generally (without the need to specify a particular offence or kind of offence).

23. Under these 'proceeds of general crime' offences, however, the prosecution must also prove that: one or more instances of the defendant's conduct related to money or other property collectively valued at $100,000 or more; the defendant's conduct concealed or disguised any or all of the following, and; that the defendant was reckless as to this result occurring:

•

the nature of the money or other property

•

the value of the money or other property

•

the source of the money or other property

•

the location of the money or other property

•

any disposition of the money or other property

•

any movement of the money or other property

•

any rights in respect of the money or other property

•

the identity of any person who has rights in respect of the money or other property

•

the identity of any person who has 'effective control' of the money or other property.

24. This ensures that offences are not used to prosecute relatively trivial behaviour and can only be used where the conduct of the person conceals or disguises particular aspects of the property, which may make it more difficult for law enforcement to trace it or identify its criminal origins.

25. The new 'proceeds of general crime' offences also allow the prosecution to use two or more occasions of conduct relation to money or other property in calculating whether the money or other property was collectively valued at $100,000 or more, ensuring that a person cannot avoid criminal liability by structuring their conduct so it relates to multiple tranches of money or other property under the $100,000 threshold.

26. In addition, amendments will also be made to provide that, for the offence of attempting to commit an offence under Division 400 that requires a person to be reckless or negligent as to whether property is 'proceeds of general crime' or 'proceeds of indictable crime', recklessness will be the relevant fault element in relation to this circumstance (section 11.1 of the Criminal Code would otherwise apply knowledge as the relevant fault element).

27. This will assist the prosecution in establishing criminal liability in cases where money laundering organisations have obscured the actual criminal origins of money and made tracing efforts impossible, as the prosecution does not need to establish that property was actually proceeds of crime for an offence of attempting a 'proceeds of general crime' or 'proceeds of indictable crime' offence.

Addressing money laundering controllers who deal with property at an 'arm's-length'

28. The Schedule makes amendments to extend money laundering offences to controllers of money laundering networks, who do not deal with money or other property directly and instead conduct dealings at an arm's-length by sending instructions to third parties, often through encrypted communication services, to individuals who then deal with the money or property on their behalf.

29. The Schedule expands the concept of 'dealing with money or other property' in the context of 'indictable crime' offences, and introduces the concept of 'engaging in conduct in relation to money or other property' for 'proceeds of general crime' offences. Item 6 of the Schedule expands the concept of 'dealing with money or other property' to include circumstances in which a person intentionally engages in conduct that causes another person to deal with money or other property where the first person is reckless as to whether their conduct would cause this result.

Clarifying the mistaken but reasonable belief of fact as to value exemption

30. The partial exemption at existing section 400.10 has been amended to state that, where a person who engages in conduct in relation to money or other property, or deals with money or other property, wishes to rely on the partial exemption, they must establish that they maintained their mistaken but reasonable belief as to the value of the money or other property for the duration of the conduct or the dealing.

31. For example, a person who possesses a suitcase of money and had a mistaken but reasonable belief that it contained $20,000 derived from drug importation will not be able to rely on the partial exemption if, while the suitcase remained in their possession, they learned that the true value of the money was $500,000 and they continued to deal with the money by possessing the suitcase.

Addressing high-volume money laundering

32. The Schedule introduces another tier of offences relating to money or other property valued at $10,000,000 or more, which is intended to address the most serious cases of money laundering. The new tier includes offences relating to 'proceeds of indictable crime', 'instruments of crime', 'proceeds of general crime' and 'dealing with money or other property reasonably suspected of being proceeds of crime' (see items 9 and 62).

33. The Schedule also introduces a new offence of dealing with money or other property valued at $1,000,000 or more where it is reasonable to suspect that the money or other property was 'proceeds of indictable crime', filling a gap in the existing offence provisions (see item 62).

34. The maximum penalty applying to each offence in Division 400 will depend on: the level of awareness a defendant has as to the link between money or other property and criminal activity; the seriousness of their conduct in relation to this money or other property, and; the value of the money or other property in question.

Part 1 - General Amendments

Division 1 - Amendments

Item 1 - Subsection 400.1(1) of the Criminal Code

35. This item amends existing subsection 400.1(1) to insert definitions of 'director', 'effective control', 'foreign offence' and 'proceeds of general crime offence provision'.

36. The term 'director', in relation to a company means:

•

any person occupying or acting in the position of director of the company, by whatever name called and whether or not validly appointed to occupy or duly authorised to act in the position; and

•

any person in accordance with whose directions or instructions the directors of the company are accustomed to act, other than when those directors only do so: in the proper performance of the functions attaching to the person's professional capacity; or in their business relationship with the person.

37. 'Effective control' has its ordinary meaning, as affected by proposed section 400.2AA.

38. The terms 'director' and 'effective control' are used in the new 'proceeds of general crime offences', specifically in relation to the result that the defendant's conduct concealed or disguised the identity of any person who has 'effective control' of the money or other property. These terms largely replicate the definitions of 'effective control' and 'director' at existing sections 337 and 338 of the POC Act respectively.

39. 'Foreign offence' is defined to mean an offence against a law of a foreign country constituted by conduct that, if it had occurred in Australia, would have constituted an offence against: a law of the Commonwealth; or a law of a state; or a law of a Territory. The term 'foreign offence' is used in the 'proceeds of general crime' definition included at item 3.

40. 'Proceeds of general crime offence provision' means an offence against any of the following provisions: subsection 400.2B(2); subsection 400.2B(3); subsection 400.2B(5); subsection 400.2B(6); subsection 400.2B(8); subsection 400.2B(9); subsection 400.3(1A); subsection 400.3(1B); subsection 400.3(2A); subsection 400.3(2B); subsection 400.3(3A); subsection 400.3(3B); subsection 400.4(1A); subsection 400.4(1B); subsection 400.4(2A); subsection 400.4(2B); subsection 400.4(3A); subsection 400.4(3B).

Item 2 - Subsection 400.1(1) of the Criminal Code (definition of proceeds of crime)

41. This item repeals the existing definition of 'proceeds of crime', as this definition will be replaced with the term 'proceeds of indictable crime' in item 3 to distinguish 'proceeds of indictable crime' offences from the proposed 'proceeds of general crime offence provisions' in Division 400 of the Criminal Code.

Item 3 - Subsection 400.1(1) of the Criminal Code

42. This item amends existing subsection 400.1(1) to insert definitions of 'proceeds of general crime' and 'proceeds of indictable crime'.

'Proceeds of general crime'

43. 'Proceeds of general crime' means any money or other property that is wholly or partly derived or realised, directly or indirectly, by any person from the commission of: an offence against a law of the Commonwealth, a State or a Territory; or a 'foreign offence'. This definition takes an all crimes approach to predicate offending, and does not include any reference to an indictable offences.

44. The 'proceeds of general crime' definition is intended to be read alongside the amendments to existing section 400.11 and proposed subsection 400.13(1) at items 73 and 75 of this Schedule respectively. Proposed subsection 400.13(1) relevantly provides that, to avoid doubt it is not necessary, in order to prove for the purposes of this Division that money or other property is 'proceeds of general crime', to establish that:

•

a particular offence, or an offence of a particular kind, was committed in relation to the money or other property; or

•

a particular person committed an offence, or an offence of a particular kind, in relation to the money or other property.

45. The intended effect of these provisions is that money or other property will be 'proceeds of general crime' if the prosecution can establish one or more of the following beyond reasonable doubt:

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a particular offence against a law of the Commonwealth, a State, a Territory or a foreign country

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a kind of offence against a law of the Commonwealth, a State, a Territory or a foreign country

•

evidence of the circumstances in which the money or other property was handled are such as to give rise to the irresistible inference that it is wholly or partly derived or realised, directly or indirectly, by any person from crime generally (without the need to specify a particular offence or kind of offence).

46. A person will believe, be reckless or be negligent as to whether money or other property is 'proceeds of general crime' if they believe that, or are reckless or negligent as to whether, one of the following circumstances exist:

•

the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a particular offence against a law of the Commonwealth, a State, a Territory or a foreign country (whether or not this is the same offence the money or other property was actually derived from)

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a kind of offence against a law of the Commonwealth, a State, a Territory or a foreign country (whether or not this is the same kind of offence the money or other property was actually derived from)

•

the property was wholly or partly derived or realised, directly or indirectly, by any person from crime generally (without the need to specify a particular offence or kind of offence).

47. Money or other property may be 'proceeds of general crime' for example, if the following circumstances can be established:

•

the money and other property involved in the conduct cannot be linked to a legal source - for example an inheritance, a loan, a gift;

•

the money and other property involved in the conduct is, in the opinion of the trier of fact, grossly out of proportion to the defendant's income and expenditure over a reasonable period within which the conduct occurs;

•

the money and other property involved in the conduct is linked to unjustified increases of assets and movements of assets which do not follow any regular commercial purpose and are not connected to any legal activities, such as the legitimate exchange of goods and services;

•

there is a strong nexus between the defendant and known criminal entities.

48. The manner in which money or property is dealt with will also be relevant to whether this money or property is 'proceeds of general crime'. In a situation in which money or other property is the subject of a transaction or delivery, for example, it may be 'proceeds of general crime' where either of the parties to this transaction or delivery:

•

remain wilfully blind as to any relevant predicate offending; and/or

•

communicate through encrypted devices, encrypted communication apps, or coded language; and/or

•

use covert mechanisms such as an alias to conceal their or others' identities; and/or

•

exchange tokens or license plates as a means of identification; and/or

•

carry out the transaction or delivery on behalf of a third party, who they refuse to identify; and/or

•

are unknown to each other and remain unknown before, during and after the transaction or delivery is carried out; and/or

•

use hire cars, or a combination of various transport mechanisms to execute the transaction or delivery or avoid law enforcement detection - for example, flying to a cash collection location, acquiring cash and driving back; and/or

•

meet at a location not commonly associated with legitimate transactions - for example, parties meet to exchange $1 million in a car park; and/or

•

conduct the transaction or delivery at a speed that would be unwarranted if it was legitimate - for example, $1 million is collected at a particular location and quickly transported to a second, more secure location, to be counted; and/or

•

do not support the transaction or delivery with a written contract or deed - money laundering networks typically accept and transfer cash purely on trust and a verbal understanding that any loss will be covered by the network; and/or

•

do not keep records in relation to the transaction or delivery, particularly where these records must be kept and provided to authorities under law; and/or

•

structure the transaction or delivery to avoid reporting obligations - for example, structuring deposits of cash into bank accounts in a manner that avoids AUSTRAC reporting thresholds; and/or

•

otherwise conducts the transaction or delivery in a manner which indicates it is likely illegitimate - for example, money may be stored in a shipping bag, sent using bank accounts or phones subscribed in false names or 'dummy names' (such as the name of a person who has sold their details) or deposited into bank accounts through structured transactions to avoid reporting obligations.

'Proceeds of indictable crime'

49. 'Proceeds of indictable crime' means:

a.

any money or other property that is wholly or partly derived or realised, directly or indirectly, by any person from the commission of a particular offence against a law of the Commonwealth, a State, a Territory or a foreign country that may be dealt with as an indictable offence (even if it may, in some circumstances, be dealt with as a summary offence); or

b.

any money or other property that is wholly or partly derived or realised, directly or indirectly, by any person from the commission of an offence of a particular kind against a law of the Commonwealth, a State, a Territory or a foreign country that may be dealt with as an indictable offence (even if an offence of that kind may, in some circumstances, be dealt with as a summary offence).

50. This definition reflects the current interpretation of the term 'proceeds of crime' under case law (see Lin v R [2015] NSWCCA 204) and enshrines this interpretation in statute.

51. The definition of 'proceeds of indictable crime' is intended to be read alongside sections 400.11 and 400.13, as amended by this Bill. Proposed section 400.13(1), as outlined at item 75, remains the same in substance as it relates to 'proceeds of indictable crime', specifying that it is not necessary in order to prove that money or other property is 'proceeds of indictable crime' to establish that:

•

for the purposes of paragraph (a) of the definition -a particular person committed an offence in relation to the money or other property

•

for the purposes of paragraph (b) of the definition -a particular offence was committed in relation to the money or other property or a particular person committed an offence in relation to the money or other property.

52. For example, money or other property may be 'proceeds of indictable crime' under paragraph (a) of the definition, where it was derived or realised from an offence of importing tobacco products with the intention of defrauding the revenue, contrary to existing section 233BABAD(1) of the Customs Act 1901 (Cth), notwithstanding that that offence carries a maximum penalty of 10 years imprisonment and therefore may be dealt with as a summary offence pursuant to existing section 4J of the Crimes Act 1914 (Cth).

53. Money or other property may be 'proceeds of indictable crime' under paragraph (b) of the definition, where, for example, it was derived or realised from drug importations, drug trafficking or armed robbery, noting that each 'kind' of offence is a class of indictable offence.

54. A person will believe, be reckless or be negligent as to whether money or other property is 'proceeds of indictable crime' if they believed, or were reckless or negligent as to whether, the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from any particular indictable offence or from a kind of indictable offence (whether or not this is the particular or kind of indictable offence the money or other property was actually derived from). See Lin v R (2010) 265 ALR 445.

55. For example, as is the case at common law, money or other property will be considered to be 'proceeds of indictable crime' under these offences where the evidence establishes that it was actually derived from illicit drug importation and the defendant will have believed that the property is 'proceeds of crime' even if it can only be proved that they believed it was derived from fraud against the Commonwealth.

Item 4 - Paragraph 400.1(3)(b) of the Criminal Code

56. This item omits the term 'proceeds of crime' from current paragraph 400.1(3)(b) and substitutes 'proceeds of indictable crime', ensuring that 'proceeds of indictable crime' offence provisions can be distinguished from 'proceeds of general crime offence provisions'.

Item 5 - Section 400.2 of the Criminal Code

57. This item omits the words "a person" from current section 400.2 and substitutes "(1) For the purposes of this Division, a person". This makes it clear that the definition of 'deals with money or other property' in section 400.2 only applies within Division 400 and is not intended to apply to the Criminal Code as a whole. This also places the existing definition of 'deals with money or other property' within new subsection 400.2(1), allowing for the expansion of this definition in new subsections 400.2(1)-(5).

Item 6 - At the end of section 400.2 of the Criminal Code

58. This item amends the definition of 'deals with money or other property' in existing section 400.2 to extend this term to the behaviour of controllers of money laundering networks. These controllers rarely deal with money or other property directly, and instead send instructions to third parties, often through encrypted services, to deal with the money or other property instead.

59. The term 'deals with money or other property' is used in the 'proceeds of indictable crime' and 'instrument of crime' offences under Division 400. The 'proceeds of general crime' offence provisions use the term 'engages in conduct in relation to money or other property', which is better suited to the conduct of controllers who deal with money or other property at 'arm's-length'.

60. Proposed subsection 400.2(2) states that, for the purposes of Division 400, a person will be taken to have dealt with money or other property if:

a.

the person (the first person) engages in conduct; and

b.

the first person's conduct causes another person to deal with money or other property (within the meaning of subsection 400.2(1)); and

c.

the first person is reckless as to whether the first person's conduct causes the other person to deal with the money or other property.

61. Under existing section 5.6 of the Criminal Code, intention will be implied to the physical element of conduct of 'engaging in conduct' under paragraph 400.2(2)(a). A person must therefore intentionally engage in conduct to satisfy this paragraph.

62. Proposed subsection 400.2(3) states that, for the purposes of proposed subsection 400.2(2), it is immaterial whether the identity of the other person can be established. This is intended to deal with situations in which a controller clearly sends limited instructions to a person, which are subsequently carried out, but the identity of this person remains unclear due to anonymising techniques such as encryption, the use of false subscriber details or transient cash-collectors.

63. Proposed subsection 400.2(4) states that, for the purposes of proposed subsection 400.2(2), the conduct of a person causes another person to deal with money or other property (within the meaning of existing subsection 400.2(1)) if the conduct substantially contributes to the other person dealing with the money or other property (within the meaning of existing subsection 400.2(1).

64. The 'substantial contribution' test is explicitly provided here as it is ideally suited to addressing the behaviour of controllers, whose instructions to those dealing with property often substantially contribute to a dealing occurring, but are not necessarily the only contributing factor or a necessary precondition for the dealing to occur.

65. For example, this 'substantial contribution' test would be satisfied where a controller provides particular details to a cash collector to facilitate the collection of money but does not explicitly order the cash collector to deal with the money in any way. This could include texting a cash collector the location of money, the date it will be in a particular location and/or the identification of a vehicle in which is located.

66. Proposed subsection 400.2(5) states that, for the purposes of proposed subsection 400.2(4), it is immaterial whether the identity of the other person can be established. This is intended to deal with situations in which a controller clearly sends instructions to a person, which are subsequently carried out, but the identity of this person remains unclear due to anonymising techniques such as encryption, the use of false subscriber details or transient cash collectors.

Item 7 - After section 400.2 of the Criminal Code

67. This item inserts proposed section 400.2AA, which qualifies the concept of 'effective control' for the purposes of Division 400. 'Effective control' is to be given its ordinary meaning, subject to the qualifications in proposed section 400.2AA.

68. Proposed section 400.2AA, which is based on the provisions concerning 'effective control' under existing section 337 of the POC Act, is used in the new 'proceeds of general crime offence provisions' specifically in relation to the result that the defendant's conduct concealed or disguised the identity of any person who has 'effective control' of the money or other property.

69. Proposed subsection 400.2AA(1) provides that, for the purposes of Division 400, a person need not have a legal or equitable interest in the money or other property, or a right, power or privilege in relation to it, to have 'effective control' of that money or other property. This recognises that money or other property that is the proceeds or an instrument of crime will frequently be dealt with so as to avoid it being traced back to the person who controls it, including by transferring all interests in the proceeds or instrument to another person.

70. Proposed subsection 400.2AA(2) states that, for the purposes of Division 400, if money or other property is held on trust for the ultimate benefit of a person, the person is taken to have 'effective control' of the money or other property.

71. Proposed subsection 400.2AA(3) enables a court to look behind the corporate veil in order to determine whether particular money or other property is under the 'effective control' of a person. For example, if the property is owned (either partly of wholly) by a company, the court may look to shareholdings in, debentures over or directorships of that company under proposed paragraph 400.2AA(4)(a). The court may also look to any trust which has a relationship to the property under proposed paragraph 400.2AA(4)(b), as well as the relationships (including family relationships) between the various natural persons, companies and/or trusts which have an interest in the property under proposed paragraph 400.2AA(4)(c).

72. Proposed subsection 400.2AA(4) provides that, for the purposes of proposed section 400.2AA, 'family relationships' include (without limitation) the following:

a.

relationships between de facto partners;

b.

relationships of child and parent that arise if someone is the child of a person because of the definition of child in the Dictionary (which includes a child of a person within the meaning of the Family Law Act 1975) and:

c.

relationships traced through relationships mentioned in paragraphs (a) and (b).

73. Proposed subsection 400.2AA(5) provides that, to avoid doubt, for the purposes of Division 400, more than one person may have 'effective control' of money or other property. In the context of jointly controlled bank accounts, this clarifies that all persons with control of these accounts have 'effective control' of them.

Item 8 - Subsection 400.2A(1) of the Criminal Code

74. This item amends existing section 400.2A to ensure that the principles surrounding the application of offences relating to possible instruments of crime apply to the proposed offences of dealing with instruments of crime worth $10,000,000 or more at proposed subsections 400.2B(1), (4) and (7) in item 9 of this Schedule.

Item 9 - After section 400.2A of the Criminal Code

75. This item inserts proposed section 400.2B, which creates an additional tier of money laundering offences relating to money or other property valued at $10,000,000 or more. These offences carry higher penalties than those under section 400.3, as amended by items 10-23 of this Schedule, which involve property valued at $1,000,000 or more. This recognises that a person's conduct will be more serious where it relates to higher values of money or other property.

76. Proposed section 400.2B contains three kinds of money laundering offence.

77. First, proposed section 400.2B includes offences of dealing with money or other property that is 'proceeds of indictable crime' or that will become, or where there is a risk that it will become, an 'instrument of crime'. These offences are at subsections 400.2B(1), (4) and (7), are modelled on the existing offence provisions at sections 400.3-400.8 but involve 'dealing with money or other property' valued at $10,000,000 or more.

78. Second, proposed section 400.2B includes new offences of 'engaging in conduct in relation to money or other property' valued at $10,000,000 or more that is 'proceeds of general crime'. These offences are outlined at subsections 400.2B(2), (5) and (8).

79. Proposed paragraphs 400.2B(2)(a), (5)(a) and (8)(a) provide that the person must engage in conduct in relation to money or other property. Subsection 4.1(2) of the Criminal Code defines 'engage in conduct' to include doing an act or omitting to perform an act. This would include, but not be limited to, the possession of money or other property.

80. The words 'conduct in relation to money or other property' would also include (but not be limited to) instructing, controlling, coordinating, or directing another person to locate, move, collect or otherwise engage in conduct that affects money or other property. For example, instructing a person to structure deposits of cash into bank accounts in a manner that avoids AUSTRAC reporting thresholds under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.

81. 'Engaging in conduct in relation to money or other property' is conduct and, under existing subsection 5.6(1) of the Criminal Code, the relevant fault element is intention. Under existing subsection 5.2(1) of the Criminal Code, a person intends to engage in conduct if they mean to engage in that conduct.

82. Proposed paragraphs 400.2B(2)(b), (5)(b)(c) and (8)(b)(c) provide that money or other property must be 'proceeds of general crime' and the person must either believe, or be reckless or negligent as to the fact, that the money or other property was 'proceeds of general crime'.

83. The proposed definition of 'proceeds of general crime' at section 400.1, when read alongside the qualifying principles at section 400.13, will have the effect of ensuring that money or other property will be 'proceeds of general crime' if the prosecution can establish one or more of the following beyond reasonable doubt:

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a particular offence against a law of the Commonwealth, a State, a Territory or a foreign country

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a kind of offence against a law of the Commonwealth, a State, a Territory or a foreign country

•

evidence of the circumstances in which the money or other property was handled are such as to give rise to the irresistible inference that it is wholly or partly derived or realised, directly or indirectly, by any person from crime generally (without the need to specify a particular offence or kind of offence).

84. A person will believe, or be reckless or negligent as to the fact, that the money or other property was 'proceeds of general crime', if they believe that, or are reckless or negligent as to whether, one of the following circumstances exist:

•

the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a particular offence against a law of the Commonwealth, a State, a Territory or a foreign country (whether or not this is the same offence the money or other property was actually derived from)

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a kind of offence against a law of the Commonwealth, a State, a Territory or a foreign country (whether or not this is the same kind of offence the money or other property was actually derived from)

•

the property was wholly or partly derived or realised, directly or indirectly, by any person from crime generally (without the need to specify a particular offence or kind of offence).

85. Proposed paragraphs 400.2B(2)(c), (5)(d) and (8)(d) provide that a person's conduct must conceal or disguise any or all of the following:

•

the nature of the money or other property - for example, characterising one asset as another in declarations to the Australian Taxation Office or in financial statements, or using illicit funds to make loan repayments in relation to, or to improve, real property

•

the value of the money or other property - for example, through undervaluation or overvaluation or falsifying invoices, receipts or other documentation

•

the source of the money or other property - for example, by providing false information regarding the origins of funds, falsifying supporting documentation or moving funds through third parties, foreign jurisdictions and/or legitimate institutions such as banks or gambling services to conceal the origins of the funds

•

the location of the money or other property - for example, by using transport methods with little regulatory oversight, including transporting large amounts of cash via vehicle or by using hawala remittance services

•

any disposition of the money or other property - for example, through the sale, transfer or swap of, grant of a security interest in or loss or destruction of the money or property

•

any movement of the money or other property - for example, where the money or property is moved through multiple recipients, accounts and business structures, effectively frustrating efforts to trace the money or property

•

any rights in respect of the money or other property - for example, by purchasing assets through companies created using false identification details

•

the identity of any person who has 'effective control' of the money or other property - for example, by ensuring that family members, companies with dummy directors or trusts have legal title to property that is controlled by another anonymous person.

86. Common money laundering methodologies may achieve two or more of these results simultaneously. For example, informal value transfer systems, which move value without a corresponding need to move or remit actual corresponding amounts of money, may conceal or disguise any or all of the above aspects of money or property. This may also be the case for trade-based money laundering, the use of money mules or professional facilitators and particular money laundering methodologies such as cuckoo smurfing, wherein illicit funds are hidden in third party bank accounts.

87. Proposed paragraphs 400.2B(2)(c), (5)(d) and (8)(d) are physical elements of result and, under existing subsection 5.6(2) of the Criminal Code, a person must be reckless as to whether this result would occur. Under existing section 5.4(2) of the Criminal Code, a person is reckless as to a result if he or she is aware of a substantial risk that the result would have occurred and, having regard to the circumstances known to him or her, it is unjustifiable to take that risk.

88. Third, proposed section 400.2B includes offences of engaging in a two or more instances of conduct in relation to money or other property collectively valued at $10,000,000 or more. These offences can be found at proposed subsections 400.2B(3), (6) and (9). These offences function in a similar manner as those under proposed subsections 400.2B(2), (5) and (8), but are designed to capture a person who engages in multiple instances of conduct in relation to money or other property where the collective value of the money or other property is $10,000,000 or more.

89. For example, a court may find that a person, on three separate occasions, intentionally moved an amount of cash, each valued at $4,000,000, to a different person operating under a pseudonym. In each instance, not only was the money was found to be 'proceeds of general crime' and the person believed it was proceeds of crime, but the person was also found to have disguised the location of the money and been reckless as to this result. This would satisfy the offence provision at proposed subsection 400.2B(3), as the collective value of the money from all three occasions is $12,000,000.

90. Pursuant to the structure of existing sections 400.3-400.8, all three kinds of offence have tiered penalties according to the seriousness of the person's fault element as to whether money or other property was proceeds of crime or would become an instrument of crime.

91. Proposed subsections 400.2B(1)-(3) are the most serious offences and are characterised accordingly as 'Tier 1 offences'. The maximum penalty for all these offences is life imprisonment and/or a fine of 2000 penalty units (this fine will be implied under existing subsection 4B(2A) of the Crimes Act 1914). However, the offence applies to dealings or conduct in relation to significant values of money or other property - worth $10,000,000 or more, and where the person believes the money or other property to be 'proceeds of indictable crime', 'proceeds of general crime' or intends that it will become an 'instrument of crime'.

92. Proposed subsections 400.2B(4)-(6) are characterised as 'Tier 2 offences' and apply if the person was reckless about the money or other property being 'proceeds of indictable crime', 'proceeds of general crime' or about the risk that it will become an instrument of crime. Recklessness is a less serious fault element than intent or belief, and the maximum penalty for these offences is therefore lower than 'Tier 1 offences', being punishable by a maximum of imprisonment for 15 years and/or a fine of 900 penalty units.

93. Proposed subsections 400.2B(7)-(9) are characterised as 'Tier 3 offences' and apply if the person was negligent about the money or other property being 'proceeds of indictable crime', 'proceeds of general crime' or about the risk that it will become an instrument of crime. Negligence is a less serious fault element than intent, belief or recklessness, and the maximum penalty for these offences is therefore lower than 'Tier 1 offences' and 'Tier 2 offences', being punishable by a maximum of imprisonment for 6 years and/or a fine of 360 penalty units.

94. Proposed subsection 400.2B(10) applies absolute liability to the circumstance that 'the value of the money and other property is $10,000,000 or more.

95. The Guide to Framing Commonwealth Offences (at part 2.2.6) provides that absolute liability may be justified when applied to a particular physical element if requiring proof of fault would undermine deterrence, there are legitimate grounds for penalising persons lacking 'fault' in respect of that element and there are legitimate grounds for penalising a person who made a reasonable mistake of fact in respect of that element.

96. Proposed subsection 400.2B(10) accords with the usual practice where the Criminal Code applies to an offence. Due to the strict requirements of the Criminal Code in relation to proof of fault in relation to all elements of offences, it is necessary to state that it is not necessary for the prosecution to prove that the defendant knew, or was aware of, the value of the dealing for him or her to be convicted of these offences.

97. This is achieved by providing that absolute liability applies to that element of the offence but providing an exemption where a person has a mistaken but reasonable belief as to the value of money or other property under section 400.10. This is consistent with other offences currently in Division 400.

Items 10-23 - Money or other property valued at $1,000,000 or more

98. These items amend subsection 400.3 to provide that there are three kinds of money laundering offence relating to money or other property valued at $1,000,000 or more. These offences carry lower penalties than those under section 400.2B, which involves property valued at $10,000,000 or more, recognising that a person's conduct will be less serious where it relates to lower values of money or other property.

99. First, items 12, 15-16 and 19-20 replace the term 'proceeds of crime' with 'proceeds of indictable crime' in existing offences, distinguishing the 'proceeds of indictable crime' offences at subsections 400.3(1)-(3) from the 'proceeds of general crime' offences at subsections 400.3(1A)-(1B), (2A)-(2B) and (3A)-(3B).

100. Second, existing section 400.3 has been amended to include offences of 'engaging in conduct in relation to money or other property' valued at $1,000,000 or more that is 'proceeds of general crime'. These offences are outlined at new subsections 400.3(1A), (2A) and (3A).

101. Proposed paragraphs 400.3(1A)(a),(2A)(a) and (3A)(a) provide that the person must engage in conduct in relation to money or other property. Subsection 4.1(2) of the Criminal Code defines 'engage in conduct' to include doing an act or omitting to perform an act. This would include, but not be limited to, the possession or money or other property.

102. The words 'conduct in relation to money or other property' would also include (but not be limited to) instructing, controlling, coordinating, or directing another person to locate, move, collect or otherwise engage in conduct that affects money or other property. For example, instructing a person to structure deposits of cash into bank accounts in a manner that avoids AUSTRAC reporting thresholds.

103. 'Engaging in conduct in relation to money or other property' is conduct and, under subsection 5.6(1) of the Criminal Code, it will be implied that a person must intend to engage in this conduct. Under subsection 5.2(1) of the Criminal Code, a person will intend to engage in conduct in relation to money or other property if they mean to engage in this conduct.

104. Proposed paragraphs 400.3(1A)(b), (2A)(b)(c) and (3A)(b)(c) provide that money or other property must be 'proceeds of general crime' and the person must either believe, or be reckless or negligent as to the fact, that the money or other property was 'proceeds of general crime'.

105. The definition of 'proceeds of general crime' at proposed section 400.1, when read alongside the qualifying principles at proposed section 400.13, will have the effect of ensuring that money or other property will be 'proceeds of general crime' if the prosecution can establish one or more of the following beyond reasonable doubt:

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a particular offence against a law of the Commonwealth, a State, a Territory or a foreign country

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a kind of offence against a law of the Commonwealth, a State, a Territory or a foreign country

•

evidence of the circumstances in which the money or other property was handled are such as to give rise to the irresistible inference that it is wholly or partly derived or realised, directly or indirectly, by any person from crime generally (without the need to specify a particular offence or kind of offence).

106. A person will believe, or be reckless or negligent as to the fact, that the money or other property was 'proceeds of general crime', if they believe that, or are reckless or negligent as to whether, one of the following circumstances exist:

•

the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a particular offence against a law of the Commonwealth, a State, a Territory or a foreign country (whether or not this is the same offence the money or other property was actually derived from)

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a kind of offence against a law of the Commonwealth, a State, a Territory or a foreign country (whether or not this is the same kind of offence the money or other property was actually derived from)

•

the property was wholly or partly derived or realised, directly or indirectly, by any person from crime generally (without the need to specify a particular offence or kind of offence).

107. Proposed paragraphs 400.3(1A)(c), (2A)(d) and (3A)(d) provide that a person's conduct must conceal or disguise any or all of the following:

•

the nature of the money or other property - for example, characterising one asset as another in declarations to the Australian Taxation Office or in financial statements, or using illicit funds to make loan repayments in relation to, or to improve, real property

•

the value of the money or other property - for example, through undervaluation or overvaluation or falsifying invoices, receipts or other documentation

•

the source of the money or other property - for example, by providing false information regarding the origins of funds, falsifying supporting documentation or moving funds through third parties, foreign jurisdictions and/or legitimate institutions such as banks or gambling services to conceal the origins of the funds

•

the location of the money or other property - for example, by using transport methods with little regulatory oversight, including transporting large amounts of cash via vehicle or by using hawala remittance services

•

any disposition of the money or other property - for example, through the sale, transfer or swap of, grant of a security interest in or loss or destruction of the money or property

•

any movement of the money or other property - for example, where the money or property is moved through multiple recipients, accounts and business structures, effectively frustrating efforts to trace the money or property

•

any rights in respect of the money or other property - for example, by purchasing assets through companies created using false identification details

•

the identity of any person who has 'effective control' of the money or other property - for example, by ensuring that family members, companies with dummy directors or trusts have legal title to property that is controlled by another anonymous person.

108. Common money laundering methodologies may achieve two or more of these results simultaneously. For example, informal value transfer systems, which move value without a corresponding need to move or remit actual corresponding amounts of money, may conceal or disguise any or all of the above aspects of money or property. This may also be the case for trade-based money laundering, the use of money mules or professional facilitators and particular money laundering methodologies such as cuckoo smurfing, wherein illicit funds are hidden in third party bank accounts.

109. Proposed paragraphs 400.3(1A)(c), (2A)(d) and (3A)(d) are physical elements of result and, under existing subsection 5.6(2) of the Criminal Code, a person must be reckless as to whether this result would occur. Under existing subsection 5.4(2) of the Criminal Code, a person is reckless as to a result if he or she is aware of a substantial risk that the result would have occurred and, having regard to the circumstances known to him or her, it is unjustifiable to take that risk.

110. Third, existing section 400.3 has been amended to include offences of engaging in a two or more instances of conduct in relation to money or other property collectively valued at $1,000,000 or more. These offences can be found at proposed subsections 400.3(1B), (2B) and (3B). These offences function in a similar manner as those under proposed subsections 400.3(1A), (2A) and (3A), but are designed to capture a person who engages in multiple instances of conduct in relation to money or other property where the collective value of the money or other property is $1,000,000 or more.

111. For example, a court may find that a person, on three separate occasions, intentionally moved an amount of cash, each valued at $400,000, to a different person operating under a pseudonym. In each instance, not only was the money was found to be 'proceeds of general crime' and the person believed it was 'proceeds of general crime', but the person was also found to have disguised the location of the money and been reckless as to this result. This would satisfy the offence provision at proposed subsection 400.3(1B), as the collective value of the money from all three occasions is $1,200,000.

112. Pursuant to the current structure of existing sections 400.3-400.8, all three kinds of offence have tiered penalties according to a person's fault element as to whether money or other property was proceeds of crime or would become an instrument of crime.

113. Existing subsection 400.3(1), as amended by items 11-12, and proposed subsections 400.3(1A) and (1B) are the most serious offences and are characterised accordingly as 'Tier 1 offences'. The maximum penalty for all these offences is 25 years imprisonment and/or a fine of 1500 penalty units. However, the offence applies to dealings or conduct in relation to large values of money or other property - worth $1,000,000 or more, and where the person believes the money or other property to be 'proceeds of indictable crime', 'proceeds of general crime' or intends that it will become an 'instrument of crime'.

114. Existing subsection 400.3(2), as amended by items 14-16, and proposed subsections 400.3(2A) and (2B) are characterised as 'Tier 2 offences' and apply if the person was reckless about the money or other property being 'proceeds of indictable crime', 'proceeds of general crime' or about the risk that it will become an instrument of crime. Recklessness is a less serious fault element than intent or belief, and the maximum penalty for these offences is therefore lower than 'Tier 1 offences', being punishable by a maximum of imprisonment for 12 years and/or a fine of 720 penalty units.

115. Existing subsection 400.3(3), as amended by items 18-20, and proposed subsections 400.3(3A) and (3B) are characterised as 'Tier 3 offences' and apply if the person was negligent about the money or other property being 'proceeds of indictable crime', 'proceeds of general crime' or about the risk that it will become an instrument of crime. Negligence is a less serious fault element than intent, belief or recklessness, and the maximum penalty for these offences is therefore lower than 'Tier 1 offences' and 'Tier 2 offences', being punishable by a maximum of imprisonment for 5 years and/or a fine of 300 penalty units.

116. Existing subsection 400.3(4), as amended by items 22 and 23, applies absolute liability in relation to the circumstance that 'the value of the money and other property is $1,000,000 or more.

117. The Guide to Framing Commonwealth Offences (at part 2.2.6) provides that absolute liability may be justified when applied to a particular physical element if requiring proof of fault would undermine deterrence, there are legitimate grounds for penalising persons lacking 'fault' in respect of that element and there are legitimate grounds for penalising a person who made a reasonable mistake of fact in respect of that element.

118. Existing subsection 400.3(4), as amended by items 22 and 23, accords with the usual practice where the Criminal Code applies to an offence. Due to the strict requirements of the Criminal Code in relation to proof of fault in relation to all elements of offences, it is necessary to state that it is not necessary for the prosecution to prove that the defendant knew, or was aware of, the value of the dealing for him or her to be convicted of these offences.

119. This is achieved by providing that absolute liability applies to that element of the offence but providing an exemption where a person has a mistaken but reasonable belief as to the value of money or other property under section 400.10. This is consistent with other offences currently in Division 400.

Items 24-37 - Money or other property valued at $100,000 or more

120. These items amend subsection 400.4 to provide that there are three kinds of money laundering offence relating to money or other property valued at $100,000 or more. These offences carry lower penalties than those under section 400.3, which involve property valued at $1,000,000 or more, recognising that a person's conduct will be less serious where it relates to lower values of money or other property.

121. First, items 26, 29-30 and 33-34 replace the term 'proceeds of crime' with 'proceeds of indictable crime' in existing offences, distinguishing the 'proceeds of indictable crime' offences at existing subsections 400.4(1)-(3) from the 'proceeds of general crime' offences at proposed subsections 400.4(1A)-(1B), (2A)-(2B) and (3A)-(3B).

122. Second, section 400.4 has been amended to include offences of 'engaging in conduct in relation to money or other property' valued at $1,000,000 or more that is 'proceeds of general crime'. These offences are outlined at proposed subsections 400.4(1A), (2A) and (3A).

123. Proposed paragraphs 400.4(1A)(a), (2A)(a) and (3A)(a) provide that the person must engage in conduct in relation to money or other property. Existing subsection 4.1(2) of the Criminal Code defines 'engage in conduct' to include doing an act or omitting to perform an act. This would include, but not be limited to, the possession or money or other property.

124. The words 'conduct in relation to money or other property' would also include (but not be limited to) instructing, controlling, coordinating, or directing another person to locate, move, collect or otherwise engage in conduct that affects money or other property. For example, instructing a person to structure deposits of cash into bank accounts in a manner that avoids AUSTRAC reporting thresholds.

125. 'Engaging in conduct in relation to money or other property' is conduct and, under existing subsection 5.6(1) of the Criminal Code, it will be implied that a person must intend to engage in this conduct. Under existing subsection 5.2(1) of the Criminal Code, a person will intend to engage in conduct in relation to money or other property if they mean to engage in this conduct.

126. Proposed paragraphs 400.4(1A)(b), (2A)(b)(c) and (3A)(b)(c) provide that money or other property must be 'proceeds of general crime' and the person must either believe, or be reckless or negligent as to the fact, that the money or other property was 'proceeds of general crime'.

127. The definition of 'proceeds of general crime' at section 400.1, when read alongside the qualifying principles at subsection 400.13(1)(as amended by item 75), will have the effect of ensuring that money or other property will be 'proceeds of general crime' if the prosecution can establish one or more of the following beyond reasonable doubt:

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a particular offence against a law of the Commonwealth, a State, a Territory or a foreign country

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a kind of offence against a law of the Commonwealth, a State, a Territory or a foreign country

•

evidence of the circumstances in which the money or other property was handled are such as to give rise to the irresistible inference that it is wholly or partly derived or realised, directly or indirectly, by any person from crime generally (without the need to specify a particular offence or kind of offence).

128. A person will believe, or be reckless or negligent as to the fact, that the money or other property was 'proceeds of general crime', if they believe that, or are reckless or negligent as to whether, one of the following circumstances exist:

•

the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a particular offence against a law of the Commonwealth, a State, a Territory or a foreign country (whether or not this is the same offence the money or other property was actually derived from)

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a kind of offence against a law of the Commonwealth, a State, a Territory or a foreign country (whether or not this is the same kind of offence the money or other property was actually derived from)

•

the property was wholly or partly derived or realised, directly or indirectly, by any person from crime generally (without the need to specify a particular offence or kind of offence).

129. Proposed paragraphs 400.4(1A)(c), (2A)(d) and (3A)(d) provide that a person's conduct must conceal or disguise any or all of the following:

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the nature of the money or other property - for example, characterising one asset as another in declarations to the Australian Taxation Office or in financial statements, or using illicit funds to make loan repayments in relation to, or to improve, real property

•

the value of the money or other property - for example, through undervaluation or overvaluation or falsifying invoices, receipts or other documentation

•

the source of the money or other property - for example, by providing false information regarding the origins of funds, falsifying supporting documentation or moving funds through third parties, foreign jurisdictions and/or legitimate institutions such as banks or gambling services to conceal the origins of the funds

•

the location of the money or other property - for example, by using transport methods with little regulatory oversight, including transporting large amounts of cash via vehicle or by using hawala remittance services

•

any disposition of the money or other property - for example, through the sale, transfer or swap of, grant of a security interest in or loss or destruction of the money or property

•

any movement of the money or other property - for example, where the money or property is moved through multiple recipients, accounts and business structures, effectively frustrating efforts to trace the money or property

•

any rights in respect of the money or other property - for example, by purchasing assets through companies created using false identification details

•

the identity of any person who has 'effective control' of the money or other property - for example, by ensuring that family members, companies with dummy directors or trusts have legal title to property that is controlled by another anonymous person.

130. Common money laundering methodologies may achieve two or more of these results simultaneously. For example, informal value transfer systems, which move value without a corresponding need to move or remit actual corresponding amounts of money, may conceal or disguise any or all of the above aspects of money or property. This may also be the case for trade-based money laundering, the use of money mules or professional facilitators and particular money laundering methodologies such as cuckoo smurfing, wherein illicit funds are hidden in third party bank accounts.

131. Proposed paragraphs 400.4(1A)(c), (2A)(d) and (3A)(d) are physical elements of result and, under subsection 5.6(2) of the Criminal Code, a person must be reckless as to whether this result would occur. Under section 5.4(2) of the Criminal Code, a person is reckless as to a result if he or she is aware of a substantial risk that the result would have occur and, having regard to the circumstances known to him or her, it is unjustifiable to take that risk.

132. Third, existing section 400.4 has been amended to include offences of engaging in a two or more instances of conduct in relation to money or other property collectively valued at $100,000 or more. These offences can be found at proposed subsections 400.4(1B), (2B) and (3B). These offences function in a similar manner as those under proposed subsections 400.4(1A), (2A) and (3A), but are designed to capture a person who engages in multiple instances of conduct in relation to money or other property where the collective value of the money or other property is $100,000 or more.

133. For example, a court may find that a person, on three separate occasions, intentionally moved an amount of cash, each valued at $40,000, to a different person operating under a pseudonym. In each instance, not only was the money was found to be 'proceeds of general crime' and the person believed it was 'proceeds of general crime', but the person was also found to have disguised the location of the money and been reckless as to this result. This would satisfy the offence provision at proposed subsection 400.4(1B), as the collective value of the money from all three occasions is $120,000.

134. Pursuant to the current structure of existing sections 400.3-400.8, all three kinds of offence have tiered penalties according to a person's fault element as to whether money or other property was proceeds of crime or would become an instrument of crime.

135. Existing subsection 400.4(1), as amended by items 25 and 26, and proposed subsections 400.4(1A) and (1B) are the most serious offences and are characterised accordingly as 'Tier 1 offences'. The maximum penalty for all these offences is 20 years imprisonment and/or a fine of 1200 penalty units. However, the offence applies to dealings or conduct in relation to values of money or other property worth $100,000 or more, and where the person believes the money or other property to be 'proceeds of indictable crime', 'proceeds of general crime' or intends that it will become an 'instrument of crime'.

136. Existing subsection 400.4(2), as amended by items 29 and 30, and proposed subsections 400.4(2A) and (2B) are characterised as 'Tier 2 offences' and apply if the person was reckless about the money or other property being 'proceeds of indictable crime', 'proceeds of general crime' or about the risk that it will become an instrument of crime. Recklessness is a less serious fault element than intent or belief, and the maximum penalty for these offences is therefore lower than 'Tier 1 offences', being punishable by a maximum of imprisonment for 10 years and/or a fine of 600 penalty units.

137. Existing subsection 400.4(3), as amended by items 33 and 34, and proposed subsections 400.4(3A) and (3B) are characterised as 'Tier 3 offences' and apply if the person was negligent about the money or other property being 'proceeds of indictable crime', 'proceeds of general crime' or about the risk that it will become an instrument of crime. Negligence is a less serious fault element than intent, belief or recklessness, and the maximum penalty for these offences is therefore lower than 'Tier 1 offences' and 'Tier 2 offences', being punishable by a maximum of imprisonment for 4 years and/or a fine of 240 penalty units.

138. Existing subsection 400.4(4), as amended by items 36 and 37, applies absolute liability in relation to the circumstance that 'the value of the money and other property is $100,000 or more.

139. The Guide to Framing Commonwealth Offences (at part 2.2.6) provides that absolute liability may be justified when applied to a particular physical element if requiring proof of fault would undermine deterrence, there are legitimate grounds for penalising persons lacking 'fault' in respect of that element and there are legitimate grounds for penalising a person who made a reasonable mistake of fact in respect of that element.

140. Existing subsection 400.4(4), as amended by items 36 and 37, accords with the usual practice where the Criminal Code applies to an offence. Due to the strict requirements of the Criminal Code in relation to proof of fault in relation to all elements of offences, it is necessary to state that it is not necessary for the prosecution to prove that the defendant knew, or was aware of, the value of the dealing for him or her to be convicted of these offences.

141. This is achieved by providing that absolute liability applies to that element of the offence but providing an exemption where a person has a mistaken but reasonable belief as to the value of money or other property under section 400.10. This is consistent with other offences currently in Division 400.

Items 38-61 - Money or other property valued at $50,000 or more, $10,000 or more, $1000 or more and of any value

142. These items amend the existing offence provisions at sections 400.5 (which involve with money or other property valued at $50,000 or more), 400.6 (which involve with money or other property valued at $10,000 or more) and 400.7 (which involve with money or other property valued at $1000 or more) and 400.8 (which involve with money or other property of any value).

143. Items 38, 44, 50 and 56 change the headings 'Dealing in proceeds of crime' to 'Proceeds of crime'. This recognises that there are now offences of engaging in conduct in relation to 'proceeds of general crime', as well as offences dealing with 'proceeds of indictable crime'.

144. The remaining items change references to 'proceeds of crime' in current offence provisions to 'proceeds of indictable crime', recognising the change in terminology for these current offences. There are no 'proceeds of general crime' offences for values below $100,000. This ensures that these offences are not used to target relatively trivial conduct.

Items 62-67 - Money or other property reasonably suspected of being proceeds of indictable crime

145. Item 62 amends existing section 400.9 to create two new offence provisions for dealing with money or other property where it is reasonable to suspect that it is 'proceeds of indictable crime'.

146. Proposed subsection 400.9(1AA) applies where a person deals with money or other property where the value of this money and other property is $10,000,000 or more, while proposed subsection 400.9(1AB) applies where a person deals with money or other property where the value of this money and other property is $1,000,000 or more. These offence provisions will otherwise operate in the same manner as those currently provided under proposed subsections 400.9(1) and (1A), which apply where a person deals with money or other property valued at $100,000 or more or any value respectively.

147. The penalties for the new offences are tiered according to the value of money or other property dealt with, with the $10,000,000 offence under proposed subsection 400.9(1AA) attracting a maximum penalty of imprisonment for 5 years and/or a fine of 300 penalty units, while the $1,000,000 offence under proposed subsection 400.9(1AB) carries a maximum penalty of imprisonment for 4 years and/or a fine of 240 penalty units.

148. These offences align the 'reasonable grounds to suspect that property is proceeds of indictable crime' provisions in existing section 400.9 to the offence provisions under proposed section 400.2B and existing section 400.3, which criminalise dealing with 'proceeds of indictable crime' valued at $10,000,000 or more and $1,000,000 or more respectively where a person believes, or is reckless or negligent as to whether, the money or other property is 'proceeds of indictable crime'.

149. Items 63-64 amend existing offence provisions under existing subsections 400.9(1) and (1A) to acknowledge that these provisions relate to 'proceeds of indictable crime'.

150. Items 65-66 amend existing subsection 400.9(2), which outlines circumstances in which the circumstance that it is 'reasonable to suspect that the money or other property is proceeds of indictable crime' for offences under amended section 400.9 will be deemed to be satisfied.

151. These items clarify that the deeming provisions under amended subsection 400.9(2) apply to the circumstance that 'it is reasonable to suspect that the money or other property is proceeds of indictable crime' as it appears in section 400.9. Subsection 400.9(2) therefore applies to this circumstance as it appears at proposed paragraphs 400.9(1AA)(b) and (1AB)(b), as well as existing paragraphs 400.9(1)(b) and (1A)(b).

152. Item 67 extends existing subsection 400.9(4) to provide that absolute liability applies to the following circumstances: it is 'it is reasonable to suspect that the money or other property is proceeds of indictable crime' (paragraphs 400.9(1AA)(b) and (1AB)(b)); at the time of dealing, the value of the money and other property was $10,000,000 or more (paragraphs 400.9(1AA)(c)); and, at the time of dealing, the value of the money and other property was $1,000,000 or more (paragraphs 400.9(1AB)(c)).

153. The Guide to Framing Commonwealth Offences (at part 2.2.6) provides that absolute liability may be justified when applied to a particular physical element if requiring proof of fault would undermine deterrence, there are legitimate grounds for penalising persons lacking 'fault' in respect of that element and there are legitimate grounds for penalising a person who made a reasonable mistake of fact in respect of that element.

154. Applying absolute liability to the circumstance that 'it is reasonable to suspect that the money or other property is proceeds of crime' is necessary to target money laundering networks, which are structured to keep participants at an 'arms-length' from relevant information to avoid criminal liability. This problem is compounded as, even if these structures are not adopted, money laundering is usually conducted separately from the predicate offence and by persons other than the perpetrators of that offence. In this context, members of money laundering networks may only have a reasonable suspicion that money or other property was derived from crime, and may not be able to come to this conclusion with any greater certainty.

155. In this context, the Australian Law Reform Commission's review 'Confiscation that Counts: A Review of the Proceeds of Crime Act 1987', at recommendation 28, recommended that rebuttable presumptions as to when it is reasonable to suspect that property is proceeds of crime be included in relevant offence provisions. This approach was subsequently adopted in existing subsection 400.9(2) and in applying absolute liability to the element that it is reasonable to suspect that money or other property is proceeds of an indictable offence.

156. Applying absolute liability to the circumstance that 'money or other property is equal or above a certain value' accords with the usual practice where the Criminal Code applies to an offence. Due to the strict requirements of the Criminal Code in relation to proof of fault in relation to all elements of offences, it is necessary to state that it is not necessary for the prosecution to prove that the defendant knew, or was aware of, the value of the dealing for him or her to be convicted of these offences.

157. This is achieved by providing that absolute liability applies to that element of the offence but providing an exemption where a person has a mistaken but reasonable belief as to the value of money or other property under section 400.10. This is consistent with other offences currently in Division 400.

Items 69-72 - Mistaken but reasonable belief as to value of money or other property

158. These items amend the mistaken but reasonable belief as to the value of money or other property exemption at existing section 400.10 to apply this partial exemption to new offences involving 'proceeds of general crime' and to address a vulnerability in this partial exemption as identified in Singh v the Queen [2016] VSCA 163.

159. In Singh, the court found that a person could rely on this partial exemption where they had a mistaken but reasonable belief as to the value of money or other property at or before the time they dealt with this property. If the person discovered that the true value of the money or other property was higher than their original belief during their dealing and continued to deal with the property, they could still rely on the exemption to ensure that they are only liable for dealing with the lower value of property that they originally believed, rather than the true value they discovered during the dealing.

160. Item 72 clarifies that, where a person has a mistaken but reasonable belief as to the value of money or other property at or before the time of dealing with the money or other property (for 'proceeds of indictable crime' offences) or the time of engaging in the conduct (for 'proceeds of general crime' offences), they must maintain this belief for the duration of the period of the dealing or conduct (as applicable) to rely on the partial exemption.

161. For example, if before a person possessed a suitcase of money they had a mistaken but reasonable belief that it was valued at $100,000, they must maintain this belief for the duration of their possession of the money to rely on the exemption. If the person opens the suitcase while it is in their possession and discovers that it actually contains $1,000,000, they cannot rely on the partial exemption under section 400.10 and can be found liable for dealing with, or engaging in conduct in relation to, money valued at $1,000,000 or more.

162. The Guide to Framing Commonwealth Offences, at part 4.3.1, provides that offence-specific defences such as section 400.10 should only be used in relation to matters that are:

•

peculiarly within the knowledge of the defendant, and

•

that would be significantly more difficult and costly for the prosecution to disprove than for the defendant to establish the matter.

163. The partial exception at section 400.10 can be justified on the basis that a person's subjective awareness of the value of money or other property is a matter that is peculiarly within their knowledge, and the person ought to lead evidence of these facts rather than the prosecution. Requiring the prosecution to establish this subjective matter beyond reasonable doubt would often be impossible to achieve in practice.

164. Framing these provisions as elements of the offence would require a defendant to be reckless as to the value of money or property. This would severely undermine law enforcement's ability to target money laundering networks, as members of these networks could avoid serious criminal liability by simply refusing to consider the value of the money or other property. This is common in money laundering networks, where those who deal with money or other property directly are often kept wilfully blind as to its origins, value and nature.

Item 73 - At the end of section 400.11 of the Criminal Code

165. This item amends existing section 400.11 to insert proposed paragraph (h), which provides that, in a prosecution for an offence against a provision of Division 400, it is not necessary to prove the existence of any fault element in relation to whether an offence is a 'foreign offence'. Fault elements relevant to this element have nothing to do with the essence of the offence and would be very difficult to establish.

166. This is relevant to the proposed definition of 'proceeds of general crime' under section 400.1, which includes any money or other property that is wholly or partly derived or realised, directly or indirectly, by any person from the commission of a 'foreign offence'. 'Foreign offence' is relevantly defined under proposed changes to existing section 400.1 as an offence against a law of a foreign country constituted by conduct that, if it had occurred in Australia, would have constituted an offence against a law of the Commonwealth, a State or a Territory.

Item 74 - Subsection 400.12(1)

167. Existing section 400.12 allows for the combination of charges in relation to current offences under Division 400, in accordance with recommendation 31 of the Australian Law Reform Commission's review 'Confiscation that Counts: A Review of the Proceeds of Crime Act 1987'. It also prevents the structuring of dealings with a view to manipulating the value based penalty scheme. The provision achieves this by allowing the total value to be taken into account when there are multiple dealings.

168. This item amends existing section 400.12 to clarify that the section does not apply in relation to 'proceeds of general crime provisions'. Unlike provisions relating to 'proceeds of indictable crime' and 'instruments of crime', which may relate to money or other property of any value, 'proceeds of general crime provisions' only apply to money and property valued at $100,000 or more, ensuring that these offences do not apply to relatively trivial offending. This makes section 400.12 an inadequate mechanism by which to address structuring behaviour for these new 'proceeds of general crime provisions'.

169. Instead, the new 'proceeds of general crime provisions' deal with structuring behaviour through introducing specific offences involving one or more instances of conduct in relation to money or other property, where the collective value of this money or other property is above a certain value (at least $100,000). These offences are included at subsections 400.2B(3), (6) and (9), 400.3(1B), (2B) and (3B), and 4004(1B), (2B) and (3B).

Item 75 - Subsection 400.13(1) of the Criminal Code

170. This item repeals existing subsection 400.13(1) and inserts proposed subsections 400.13(1), (1A) and (1B).

171. Proposed subsection 400.13(1) states that, to avoid doubt, it is not necessary, in order to prove for the purposes of this Division that money or other property is 'proceeds of general crime', to establish that:

•

a particular offence, or offence of a particular kind, was committed in relation to the money or other property; or

•

a particular person committed an offence, or an offence of a particular kind, in relation to the money or other property.

172. The proposed definition of 'proceeds of general crime' at existing section 400.1, when read alongside the qualifying principles at proposed subsection 400.13(1), will have the effect of ensuring that money or other property will be 'proceeds of general crime' if the prosecution can establish one or more of the following beyond reasonable doubt:

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a particular offence against a law of the Commonwealth, a State, a Territory or a foreign country

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a kind of offence against a law of the Commonwealth, a State, a Territory or a foreign country

•

evidence of the circumstances in which the money or other property was handled are such as to give rise to the irresistible inference that it is wholly or partly derived or realised, directly or indirectly, by any person from crime generally (without the need to specify a particular offence or kind of offence).

173. A person will believe, or be reckless or negligent as to the fact, that the money or other property was 'proceeds of general crime', if they believe that, or are reckless or negligent as to whether, one of the following circumstances exist:

•

the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a particular offence against a law of the Commonwealth, a State, a Territory or a foreign country (whether or not this is the same offence the money or other property was actually derived from)

•

that the money or other property was wholly or partly derived or realised, directly or indirectly, by any person from the commission of a kind of offence against a law of the Commonwealth, a State, a Territory or a foreign country (whether or not this is the same kind of offence the money or other property was actually derived from)

•

the property was wholly or partly derived or realised, directly or indirectly, by any person from crime generally (without the need to specify a particular offence or kind of offence).

174. Proposed subsection 400.13(1A) provides that, to avoid doubt, it is not necessary in order to prove for the purposes of Division 400 that money or other property is 'proceeds of indictable crime' covered by paragraph (a) of the proposed definition of 'proceeds of indictable crime' in subsection 400.1(1) to establish that a particular person committed an offence in relation to the money or other property.

175. Proposed subsection 400.13(1B) stated that, to avoid doubt, it is not necessary, in order to prove for the purposes of this Division that money or other property is 'proceeds of indictable crime' covered by paragraph (b) of the proposed definition of 'proceeds of indictable crime' in subsection 400.1(1), to establish that: a particular offence was committed in relation to the money or other property; or a particular person committed an offence in relation to the money or other property.

176. Proposed subsection 400.13(1A) and (1B), when read alongside the proposed definition of 'proceeds of indictable crime' at section 400.1, reflects the current interpretation of the term 'proceeds of crime' under case law (see Lin v R [2015] NSWCCA 204) and enshrines this interpretation in statute.

Item 76 - After section 400.14 of the Criminal Code

177. This item will insert proposed section 400.14A, which will provide that where a person attempts to commit an offence listed in subsection 400.14A(1) under Division 400 of the Criminal Code, it is sufficient for the prosecution to prove that he or she was reckless as to whether the money or property was 'proceeds of indictable crime' or 'proceeds of general crime' (as provided by the offence).

178. Where a person commits a primary offence listed under subsection 400.14A(1), they must either be (depending on the offence) reckless or negligent as to the fact that the money or property is 'proceeds of indictable crime' or 'proceeds of general crime'.

179. Under section 5.3 of the Criminal Code, a person is reckless if he or she is aware of a substantial risk with respect to a particular circumstance, and having regard to the circumstances known to him or her, it is unjustifiable to take the risk. Under section 5.5 of the Criminal Code, a person is negligent with respect to a particular circumstance if there is such a great falling short of the standard of care that a reasonable person would exercise in the circumstances and such a high risk that the circumstance exists or will exist, that the conduct merits criminal punishment for the offence.

180. Where a person is charged with an attempted offence against Part 9.1, by virtue of section 11.1 of the Criminal Code, intention and knowledge are the relevant fault elements. That is, under the offence provisions listed under subsection 400.14A(1), the person must either have been aware that the property or money was 'proceeds of general crime' or 'proceeds of indictable crime', or believed that this was the case.

181. Money laundering offences under Division 400 are rarely committed by a single actor, but are instead generally committed by multiple persons making up money laundering networks that abide by strict information compartmentalisation, ensuring that their members rarely know or believe that property is derived from crime.

182. To deal with this, prosecutors may use both the primary offences in Division 400 and the extensions of criminal liability in Part 2.4 to prosecute all those involved in the money laundering network. However, it is very difficult to satisfy the requirement in prosecutions for attempted offences under Division 400 that the person had actual knowledge or a belief that the money or other property they dealt with was proceeds of crime, unless the person has made a direct admission.

183. Applying recklessness as the fault element for attempted offences listed at subsection 400.14A(1) is necessary to ensure that the offences at Division 400 keep pace with criminal methodologies.

184. It is not appropriate to continue with different fault elements for primary and attempted offences against Division 400. The distinction could allow individuals who are involved in money laundering networks to escape liability by employing strict information compartmentalisation often used by these networks, which limit the information available to a participant as to the illicit origins of the money or property they are dealing with. It is therefore appropriate that a person who attempts to commit one of the offences listed at subsection 400.14A(1) should be criminally liable where he or she is aware that, for example, there is a substantial risk that his or her conduct will involve a controlled or border controlled substance and that taking this risk is unjustifiable in the circumstances.

Items 77-79 - Extra-territorial jurisdiction under section 400.15

185. These items ensure that the proposed 'proceeds of general crime' offences have the same extra-territorial reach as existing 'proceeds of indictable crime' offences.

186. Items 77 and 78 achieve this by clarifying that current paragraph 400.15(1)(b) only applies in relation to existing 'proceeds of indictable crime' offences, while item 79 inserts new paragraph 400.15(1)(ba) which states that, in the case of an alleged offence against a 'proceeds of general crime offence provision', a person will commit an offence under Division 400 where:

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the conduct constituting the alleged offence occurs wholly outside Australia (but not on board an Australian aircraft or an Australian ship); and

•

the money or other property is 'proceeds of general crime' in relation to an offence against a law of the Commonwealth, an offence against a law of a State, an offence against a law of the Australian Capital Territory or an offence against a law of the Northern Territory.

Division 2 - Application of amendments

Item 80 - Application of amendments

187. This item provides that amendments made by this Schedule, so far as they relate to a dealing with money or other property, or other conduct engaged in by a person, apply in relation to a dealing with money or other property, or other conduct engaged in by a person, as the case requires, that occurs after the commencement of this item.

Part 2 - Amendments contingent on the commencement of the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Act 2020

Division 1 - Amendments

Criminal Code Act 1995

Item 81-84 - Section 400.10A

188. Item 125 of the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2020 inserts proposed section 400.10A which provides that money or property provided by a law enforcement participant, or a civilian participant acting in accordance with the instructions of a law enforcement officer, during a controlled operation, does not need to be proved to be the proceeds of crime for the purposes of offences under sections 400.3 to 400.8.

189. The item also inserts the definitions of 'civilian participant' (in a controlled operation), 'controlled operation', 'law enforcement officer' and 'law enforcement participant' (in a controlled operation). These definitions are the same as those in the Crimes Act 1914.

190. Items 81-84 of the Bill make consequential amendments to proposed section 400.10A to recognise that existing 'proceeds of crime' offences have been reframed as 'proceeds of indictable crime' offences, and to apply proposed section 400.10A to these reframed 'proceeds of indictable crime' offences.

Item 85 - After section 400.10A of the Criminal Code

191. This item inserts proposed section 400.10B, which ensures that item 125 of the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2020 applies to the proposed 'proceeds of general crime offence provisions'.

192. Proposed subsection 400.10B(1) provides that, in a prosecution for an offence against a 'proceeds of general crime offence provision' by a person in relation to the person engaging in conduct in relation to money or other property, it is not necessary to prove that the money or property is proceeds of general crime if it is proved that, as part of a controlled operation in relation to suspected offences against Division 400 of the Criminal Code, either of the following provided the money or property:

(a)

a law enforcement participant in the controlled operation;

(b)

a civilian participant in the controlled operation, acting in accordance with the instructions of a law enforcement officer.

193. Proposed subsection 400.10B(2) provides that the definitions of 'civilian participant' (in a controlled operation), 'controlled operation', 'law enforcement officer' and 'law enforcement participant' (in a controlled operation). These definitions are the same as those in the Crimes Act 1914.

194. Where a controlled operation occurs, the CDPP will be unable to commence a prosecution under 'proceeds of general crime offence provisions' given that the money or property that the person engages in conduct in relation to is not in fact the 'proceeds of general crime'. Although it may be possible to rely on an extension of criminal liability by charging an individual for conspiracy or attempt, this often renders the prosecution more complex and difficult.

195. The intention of proposed section 400.10B is to ensure that where money or property is provided by a law enforcement or civilian participant as part of a controlled operation that will be sufficient to establish the physical element that the money or property is the 'proceeds of general crime'. This item will apply to all of the 'proceeds of general crime offence provisions' in Division 400. The prosecution will still be required to prove the requisite fault element for each offence.

196. Given the severity of money laundering offences and the adverse consequences caused to society, individuals who are prosecuted following the supply of money in a controlled operation should be subject to the same penalty as individuals who deal with actual proceeds of crime.

Division 2 - Application of amendments

Item 86 - Application of Amendments

197. This item provides that the amendments of section 400.10A of the Criminal Code made by this Part apply in relation to a dealing with money or other property that occurs after the commencement of this item.

198. This item also provides that Section 400.10B of the Criminal Code (as inserted by this Part) applies in relation to conduct engaged in by a person in relation to money or other property after the commencement of this item.

Schedule 2 - Investigation of Commonwealth Offences

Crimes Act 1914

199. This Schedule amends the Crimes Act to clarify that the obligations imposed on investigating officials under Part IC, including the requirement under section 23F, to caution a person who is under arrest or who is a protected suspect before starting to question the person, do not apply to undercover operatives. This also includes those obligations listed in Division 2, in their capacity as undercover operatives. The requirements imposed upon investigating officials in Division 2 relate to the arrest and detention of persons and would, necessarily, only be exercised by officers acting overtly.

200. The purpose of this Schedule is to ensure that any evidence gained by undercover operatives is not considered to have been obtained unlawfully, by reason of the fact that an undercover officer did not comply with the Part IC procedures. Requiring compliance with those obligations would directly undermine any undercover activity undertaken by law enforcement officers.

201. The court would retain its discretion to consider whether or not to admit any evidence obtained in this way, on fairness or other grounds. The amendments made by items 2 to 4 in this Schedule bring the definition of the term 'investigating official' under the Crimes Act into line with the Evidence Act.

Item 1 - Subsection 23B(1) (insert definition of designated official)

202. This item inserts a definition of 'designated official', a new term that is used in the amendment to paragraph 23B(4)(a) in item 5. It provides that a 'designated official' is a member or special member of the AFP, a member of the police force of a State or Territory, or a person who holds an office the functions of which include the investigation of Commonwealth offences and who is empowered by a law of the Commonwealth because of the holding of that office to make arrests in respect of such offences.

Item 2 - Subsection 23B(1) (paragraph (a) of the definition of investigating official)

203. This item amends paragraph (a) of the definition of 'investigating official' under subsection 23B(1) in Part IC of the Crimes Act to insert the words "(other than a member or special member of the AFP who is engaged in covert investigations under the orders of a superior)" after the words "Australian Federal Police". This item is intended to clarify that members or special members of the AFP who are engaging in covert investigations under the orders of a superior are exempt from the obligations imposed on investigating officials under Part IC of the Crimes Act. The terms are consistent with the definition in the Evidence Act, applicable to the requirement in that Act for an investigating official to caution an arrested person before questioning.

Item 3 - Subsection 23B(1) (paragraph (b) of the definition of investigating official)

204. This item amends paragraph (b) of the definition of 'investigating official' under subsection 23B(1) in Part IC of the Crimes Act to insert the words "(other than a member of the police force of a State or Territory who is engaged in covert investigations under the orders of a superior)" after the word "Territory". This item is intended to clarify that members of State or Territory police forces who are engaging in covert investigations under the orders of a superior are exempt from the obligations imposed on investigating officials under Part IC of the Crimes Act.

Item 4 - Subsection 23B(1) (at the end of paragraph (c) of the definition of investigating official)

205. This item amends paragraph (c) of the definition of 'investigating official' under subsection 23B(1) in Part IC of the Crimes Act to add "(other than a person who is engaged in covert investigations under the orders of a superior)" at the end of the paragraph. This item is intended to clarify that office holders with a power of arrest (and within the definition in paragraph (c)) who are engaging in covert investigations under the orders of a superior are exempt from the obligations imposed on investigating officials under Part IC of the Crimes Act.

Item 5 - Paragraph 23B(4)(a)

206. This item amends existing subsection 23B(4) which, in general terms, deems that a person ceases to be arrested or be a protected suspect for the purposes of Part IC of the Crimes Act, where the person is voluntarily taking part in covert investigations being conducted by an investigating official into the involvement of another person in an offence or suspected offence. It removes the term 'investigating official' and replaces it with 'designated official'. The purpose of this amendment is to prevent any complications or uncertainty arising from the amendment to the term 'investigating official' in item 2.

207. Subsection 23B(4) is an important provision suspending Part IC obligations when an arrested person or protected suspect voluntarily takes part in a covert investigation into the conduct of another person. It is currently only triggered where an 'investigating official' is conducting a relevant 'covert investigation'. This amendment refers instead to a 'designated official', a term which is defined to cover the existing range of officers who currently fall within the term 'investigating official'. Specifically, it will not exclude officers who are engaged in covert investigations under the orders of a superior. This amendment is made to ensure that there is no unintended argument that subsection 23B(4) can have no application because the officers who task an arrested person or a protected suspect are said to be 'engaged in covert investigations under the orders of a superior'. That could mean, under the amended definition of 'investigating official', that those officers are not 'investigating officials', which could lead to questions about whether the requirements of subsection 23B(4) are met. Substituting the defined term 'designated official' avoids that situation.

Item 6 - Subsection 23V(3)

208. This item repeals existing subsection 23V(3) of Part IC of the Crimes Act. This subsection permits an 'investigating official' who is engaged in duly authorised covert investigations to defer compliance with subsections 23V(1) and (2) until such time as compliance will not prejudice the covert investigations.

209. Subsection 23V(3) will be repealed as this subsection will not have any practical effect following the proposed amendments to the definition of 'investigating official' made by items 2 to 4 in this Schedule. Subsection 23V(3) refers to an 'investigating official' engaged in covert investigations under the orders of a superior, and under the amended definition of 'investigating official', this subsection would not apply to undercover operatives. Subsection 23V(3) will be repealed to avoid unnecessary confusion on whether this subsection applies to undercover operatives.

Schedule 3 - Buy-backs

Part 1 - Amendments

Proceeds of Crime Act 2002

210. The POC Act currently allows individuals to apply to buy-back their interest in property which was either forfeited to the Commonwealth under court order (section 57) or forfeited by operation of the POC Act where a person is convicted of a serious offence (sections 103 and 104). If a buy-back order is not obtained, a person will generally need to compete with other buyers at a public auction to reacquire the property.

211. Schedule 3 makes amendments to the POC Act to address a number of recent issues that have arisen in relation to buy-back applications.

212. Proposed amendments to sections 57 and 103 ensure that a court may only make a buy-back order where the person who made the application was not involved in, and did not have knowledge of, the offending conduct underpinning any relevant restraining or forfeiture order over the property in question. These sections also require the court to be satisfied that the applicant's financial circumstances are such that they will be able to pay for the property, and pay off any loan used to acquire the property, without using property that is proceeds or an instrument of an offence. This ensures that only parties with 'clean hands' can obtain a buy-back order.

213. Proposed sections 57A and 104A clarify a procedural ambiguity around when an application for a buy-back order should be made and insert provisions to incentivise applicants to apply for buy-back orders before a forfeiture order has been made. This aims to deter individuals from using buy-back applications to unnecessarily prolong POC Act matters and to facilitate the efficient sale of forfeited property.

214. Proposed sections 181A-181B, along with proposed amendments to sections 187 and 202, allow the responsible authority to apply for an examination order or a production order to obtain information and documents relevant to a buy-back application. This ensures that the responsible authority has the information-gathering powers necessary to determine if an applicant is genuine or seeking to buy back property with illicit funds.

215. Finally, proposed amendments to section 338 will provide that, if the subject of an examination notice or a party to the POC Act proceedings commits an offence of failing to abide by examination notice requirements under existing sections 195, 196 or 197A, this will constitute a serious offence for the purposes of the POC Act, enabling the full range of restraint and confiscation action to be taken in relation to this offending.

Item 1 - Section 57

216. This item repeals current section 57 and substitutes new sections 57 and 57A.

Section 57 - Court may make orders relating to buying back forfeited property

217. In recent buy-back cases, individuals have attempted to buy back forfeited property without providing information on where the money to repurchase the property would come from or using money obtained under loans, despite being unable to point to legitimate sources of income that would be used to pay off those loans. These individuals included the suspects in POC Act cases or people thought to have knowledge of the offending underpinning restraint and forfeiture.

218. Current section 57, however, does not explicitly prevent a court from issuing a buy-back order to a person who was involved in, or knew of, the predicate offending underpinning restraint or forfeiture, nor does it explicitly prevent courts from issuing a buy-back order to a person who will likely purchase the property, whether directly or through servicing loan repayments, using proceeds or instruments of crime. This undermines the principal objectives of the Act, which include depriving persons of the proceeds, instruments and benefits of offences.

219. To address this issue, subsection 57(1) provides that a court may only make a buy-back order under section 57 where the conditions provided under this subsection are satisfied.

220. Proposed paragraphs 57(1)(a)-(c) provide that the court must make a forfeiture order against property, the person must make an application under section 57A for a buy-back order under section 57 and the court must be satisfied that the person making the application had an interest in property immediately before the forfeiture order was made. This acknowledges that a person is applying to buy back an interest in property that they had immediately before a forfeiture order was made noting that, under Part 2-2 Division 4 of the POC Act, property will generally vest either absolutely or in equity in the Commonwealth at the time a forfeiture order is made.

221. Proposed paragraphs 57(1)(d)-(e) further provide that the court must be satisfied that the person claiming an interest in the property must not be a 'suspect' in relation to the forfeiture order or, in the case where the property was covered by a restraining order when the forfeiture order was made, must not be a 'suspect' in relation to this restraining order.

222. Section 338 defines 'suspect' to mean, in relation to a restraining order (other than a restraining order made under section 20A) or a confiscation order (other than an unexplained wealth order) - the person who: has been convicted of; or has been charged with, or is proposed to be charged with; or if the order is a restraining order - is suspected of having committed; or if the order is a confiscation order - committed; the offence or offences to which the order relates.

223. Proposed paragraph 57(1)(f) provides that, in a case where the forfeiture order was made under section 47 or 78 of the POC Act - the court must be satisfied that, when the conduct that is the subject of the forfeiture order occurred, the person had no knowledge of the conduct. Paragraph 57(1)(g) further provides that, in a case where the property was proceeds of an offence or an instrument of an offence - the court must be satisfied that, when the property became proceeds of an offence or an instrument of an offence, the person had no knowledge of the conduct constituting the offence.

224. These paragraphs ensure that those who were involved in the offending or were aware of the offending but chose to turn a blind eye to it are not able to benefit by being able to obtain a buy-back order, at the expense of the property being put out for sale to the general public.

225. Proposed paragraph 57(1)(h) requires a court to turn its mind to the source of the amounts that will be used to repurchase the property and whether the financial circumstances of the applicant are such that they will be able to repay any amounts borrowed under a loan used wholly or partially buy back the property, along with their eligible living expenses and any eligible debts. This paragraph provides that the court must be satisfied that these amounts would not be property that is covered by subsection 57(6), which includes any of the following:

(a)

property that is wholly or partly derived or realised by the person, directly or indirectly, from 'unlawful activity';

(b)

property that is used in, or in connection with, the commission of 'unlawful activity';

(c)

property that is intended to be used in, or in connection with, the commission of 'unlawful activity'.

226. Extending this paragraph in this manner is designed to allow greater scrutiny of the person's financial affairs to ensure that the person is able to finance their lifestyle free from the illicitly obtained funds (not just the loan component).

227. This paragraph could be satisfied, for example, by pointing to a legitimate source of income that would indicate the ability to repay a loan that has been obtained to buy back the property and to fund other necessary expenses. Where an applicant cannot do so, there is a risk that they will service the loan or their lifestyle using proceeds or instruments of an offence, and it would not be appropriate to afford them the exclusive right to repurchase the property in these circumstances.

228. Proposed subsection 57(2) provides that, for the purposes of section 57, it is immaterial whether the loan was made under an arrangement entered into before or after the buy-back application. This ensures that the court will consider a situation where a person accesses a redraw facility or refinances an existing loan on a separate property to buy back the forfeited property.

229. Proposed subsection 57(3) further provides that, for the purposes of section 57, 'loan' includes anything that may be reasonably be regarded as equivalent to a 'loan', and 'borrow' has a corresponding meaning. The intention is that these terms be interpreted broadly. This is designed to ensure that the court considers the source of repayments under any equivalent legal arrangement used to obtain funds to buy back the property, including (but not limited to) any encumbrance or security, or a liability incurred, to obtain this amount.

230. Proposed subsection 57(4) provides that each of the following are 'eligible living expenses' of a person: the person's reasonable living expenses; the reasonable living expenses of any of the dependents of the person; the reasonable business expenses of the person. Subsection 57(5) clarifies that, for the purposes of this section, an 'eligible debt of a person is a debt incurred in good faith by the person. These definitions align with the expenses that may be allowed out of restrained property, or a specified part of restrained property, under existing subsection 24(1) of the POC Act.

231. Proposed paragraph 57(1)(i) provides that a court must also be satisfied that it would not be contrary to the public interest for the interest to be transferred to the person and that there is no other reason why the interest should not be transferred to the person. This replicates the current test for issuing a buy-back order under existing section 57, and allows the court to take into account any other relevant considerations.

232. If the criteria at proposed paragraphs 57(1)(a)-(i) are satisfied, proposed paragraphs 57(1)(j)-(k) provide that the court may make an order declaring the nature, extend and value (as at the time when the order is made under proposed subsection 57(1)) of the interest and declaring that the interest may be excluded, under section 89, from the operation of the forfeiture order.

233. The words 'as at the time when the order is made under this subsection' is intended to ensure that the amount payable to obtain the property under existing section 89 is the value of the person's prior interest in the property at the time that the buy-back order was made, not at the time the former forfeiture order was made. Where a buy-back order is made after forfeiture, this will ensure that an applicant pays the full value of the property and does not obtain the property at a discounted price where the property has appreciated in value post-forfeiture.

Section 57A - Applying for an order under section 57

234. Proposed section 57A contains provisions to assist in the timely resolution of POC Act matters and clarifies the procedural requirements underpinning a buy-back application under proposed section 57.

Assisting in timely resolution of POC Act matters

235. In recent buy back cases, applicants have sought to unnecessarily delay POC Act proceedings by making buy-back applications only after the courts have resolved relevant forfeiture orders and applications for exclusion and compensation.

236. Proposed subsections 57A(1)-(5) seek to resolve this issue, and facilitate the more timely resolution of POC Act matters, by aligning the procedure for buy-back orders with existing procedures for exclusion and compensation orders under existing sections 74, 78 and 94A, encouraging an applicant to apply to buy back property before forfeiture so a court can consider all relevant applications in the context of the forfeiture proceedings.

237. Proposed subsection 57A(1) provides that a person may apply to a court for an order under section 57 in relation to an interest in property if an application for a forfeiture order that could specify property in which the person claims that an interest has been made to the court, but the forfeiture order is yet to be made.

238. Proposed subsection 57A(2) provides that a person who claims to have had an interest in property specified in a forfeiture order immediately before the forfeiture order was made may, at any time after the forfeiture order is made, apply to the court that made the forfeiture order for an order under section 57 in relation to the interest.

239. Proposed subsection 57A(3), however, contains qualifications stating that, unless the court gives leave, the person cannot apply under proposed subsection 57A(2) if the person:

•

was notified of the application for the forfeiture order, but did not make an application under subsection 57(1) before the forfeiture order was made; or

•

appeared at the hearing of the application for the forfeiture order.

240. Proposed subsection 57A(4) states that a court may give the person leave to apply if the court is satisfied of one or more of the following:

•

if the person was notified of the application for the forfeiture order but did not make an application under proposed subsection 57A(1) - the person had a good reason for not making an application under subsection (1) before the forfeiture order was made; or

•

in any case, the person now has evidence relevant to the making of the section 57 order that was not available to the person at the time the forfeiture order was made; or

•

in any case, there are other special grounds for granting leave.

241. Proposed subsection 57A(5) provides that the court must not hear an application under subsection (2) if the Official Trustee has taken any action in relation to the property under section 70 and, it would not be practicable for the court to make an order in relation to the interest under section 57.

242. This is designed to deal with situations in which the Official Trustee has already entered into a contract to sell the property or finally disposed of, or otherwise dealt with, the property after appeal periods have elapsed in a manner that makes buying back this property impossible or likely to cause significant cost or inconvenience to the Commonwealth. For example, if the Official Trustee has already sold this property to a third party after all relevant appeal periods have ended, the Commonwealth will no longer have an interest in the property and will be unable to transfer it to the applicant. Similarly, if the Official Trustee had marketed a property and signed a contract of sale with a prospective purchaser, it would not be practicable for a court to entertain an application for buy-back (noting that this could also lead to a contractual dispute between the Commonwealth and the prospective purchaser).

243. Proposed subsection 57A(5) only relates to hearing an application, not making this application, noting that an applicant may not always be aware of whether the Official Trustee has begun to deal with the property, and the court will only be in a position to determine whether it is practicable for it to make an order if it has an application for that order in front of it.

Other matters

244. Proposed subsections 57A(6)-(10) articulate the procedure underpinning the hearing of a buy-back application under section 57, including the identity of the proper respondent to a buy-back application, notice requirements and requirements before a buy-back application can be heard.

245. Proposed subsection 57A(6) provides that an applicant under subsection 57A(1) or (2) must give written notice to the responsible authority of both the application and the grounds on which the order is sought. This replicates current subsection 14(1) of the Proceeds of Crime Regulations 2019 and moves it into the POC Act.

246. Proposed subsection 57A(7) provides that the responsible authority may appear and adduce evidence at the hearing of an application under subsection 57A(1) or (2), while proposed subsection 57A(8) provides that, to avoid doubt, the responsible authority may represent the Commonwealth in proceedings relating to an application under proposed subsection 57A(1) or (2). Proposed subsections 57A(7) and 57(8) replicate current subsection 14(2) and 14(4) of the Proceeds of Crime Regulations 2019 and moves these subsections into the POC Act.

247. The purpose of proposed subsections 57A(7) and (8) is to make it abundantly clear that it is the 'responsible authority' (and not the Minister) that is the emanation of the Commonwealth responsible for the conduct of the relevant proceedings. It should also be noted that there are many other provisions of the POC Act that permit the 'responsible authority' to 'appear and adduce evidence' at hearings, but do not explicitly permit the 'responsible authority' to represent the Commonwealth in associated proceedings. It is not necessary to include a provision equivalent to proposed subsection 57A(8) for those provisions, as it is clear from their legislative context that the 'responsible authority' is the emanation of the Commonwealth that may represent the Commonwealth in relevant proceedings.

248. Proposed subsection 57A(9) provides that the responsible authority must give an applicant under proposed subsection 57A(1) or (2) notice of any grounds on which it proposes to contest the application. This subsection replicates current subsection 14(3) of the Proceeds of Crime Regulations 2019 and moves this subsection into the POC Act.

249. Proposed subsection 57A(9) provides, however, the authority need not do so until it has had a reasonable opportunity to conduct examinations in relation to the application. Proposed subsection 57A(10) provides that an application under proposed subsection 57A(1) or 57A(2) must not be heard until the responsible authority has had a reasonable opportunity to conduct examinations in relation to the application.

Item 2 - Section 103

250. This item repeals section 103 and substitutes proposed section 103, which outlines the conditions that must be satisfied before a person buys back property forfeited under existing section 92.

251. In recent buy-back cases, individuals have attempted to buy back forfeited property without providing information on where the money to repurchase the property would come from or using money obtained under loans, despite being unable to point to legitimate sources of income that would be used to pay off those loans. These individuals have been suspects in POC Act cases or people thought to have knowledge of the offending underpinning restraint and forfeiture.

252. Current section 103, however, does not explicitly prevent a court from issuing a buy-back order to a person who was involved in, or knew of, the predicate offending underpinning restraint or forfeiture, nor does it explicitly prevent courts from issuing a buy-back order to a person who will likely purchase the property, whether directly or through servicing loan repayments, using proceeds or instruments of crime. This undermines the principal objectives of the Act, which include depriving persons of the proceeds, instruments and benefits of offences.

253. To address this issue, proposed subsection 103(1) provides that, where property is forfeited to the Commonwealth under existing section 92, the court that made the underlying restraining order may only make a buy-back order where the conditions provided under this subsection are satisfied.

254. Proposed paragraphs 103(1)(a)-(b) provide that the person who claims to have had an interest in the property before forfeiture must have made an application under proposed section 104A for an order under proposed section 103 and the court must be satisfied that the person had the interest immediately before the forfeiture. This acknowledges that a person is applying to buy back an interest in property that they had immediately before forfeiture noting that, under existing Division 2 of Part 2-3 of the POC Act, property forfeited under existing section 92 generally either absolutely or in equity in the Commonwealth at the time of forfeiture.

255. Proposed paragraphs 103(1)(c) further provide that the court must be satisfied that the person claiming an interest in the property must not be a 'suspect' in relation to the restraining order. Existing section 338 relevantly defines 'suspect' to mean, in relation to a restraining order (other than a restraining order made under existing section 20A), the person who: has been convicted of; or has been charged with, or is proposed to be charged with; or if the order is a restraining order - is suspected of having committed; the offence or offences to which the order relates.

256. Proposed paragraph 103(1)(d) provides that the court must be satisfied that, at time when the offence mentioned at paragraph 92(1)(a) was committed, the person did not have knowledge of the conduct constituting the offence.

257. Paragraph 103(1)(e) further provides that, in a case where the property was proceeds of an offence or an instrument of an offence - the court must be satisfied that, when the property became proceeds of an offence or an instrument of an offence, the person had no knowledge of the conduct constituting the offence.

258. Proposed paragraphs 103(1)(c)-(e) ensure that those who were involved in the offending or were aware of the offending but chose to turn a blind eye to it are not able to benefit by being able to obtain a buy-back order, at the expense of the property being put out for sale to the general public.

259. Proposed paragraph 103(1)(f) requires a court to turn its mind to the source of the amounts that will be used to repurchase the property and whether the financial circumstances of the applicant are such that they will be able to repay any amounts borrowed under a loan used to wholly or partially buy back the property, along with their eligible living expenses and any eligible debts. This paragraph provides that the court must be satisfied that these amounts would not be property that is covered by subsection 103(6), which includes any of the following:

(a)

property that is wholly or partly derived or realised by the person, directly or indirectly, from 'unlawful activity';

(b)

property that is used in, or in connection with, the commission of 'unlawful activity';

(c)

property that is intended to be used in, or in connection with, the commission of 'unlawful activity'.

260. Extending this paragraph in this manner is designed to allow greater scrutiny of the person's financial affairs to ensure that the person is able to finance their lifestyle free from illicitly obtained funds (not just the loan component).

261. This paragraph could be satisfied, for example, by pointing to a legitimate source of income that would indicate the ability to support: the repayment of a loan that has been used to obtain amounts to buy back the property, any eligible debts of the person and the eligible living expenses of the person. Where an applicant cannot point to evidence of a legitimate source of income, there is a risk that they will service the loan or their lifestyle using proceeds or instruments of an offence, and it would not be appropriate to afford them the exclusive right to repurchase the property in these circumstances.

262. Proposed subsection 103(2) provides that, for the purposes of section 103, it is immaterial whether the loan was made under an arrangement entered into before or after the buy-back application. This ensures that the court will consider a situation where a person accesses a redraw facility or refinances an existing loan on a separate property to buy back the forfeited property.

263. Proposed subsection 103(3) further provides that, for the purposes of section 103, 'loan' includes anything that may be reasonably regarded as equivalent to a 'loan', and 'borrow' has a corresponding meaning. The intention is that these terms be interpreted broadly. This is designed to ensure that the court considers the source of repayments under any equivalent legal arrangement used to obtain funds to buy back the property, including (but not limited to) any encumbrance or security, or a liability incurred, to obtain this amount.

264. Proposed subsection 103(4) provides that each of the following are 'eligible living expenses' of a person: the person's reasonable living expenses; the reasonable living expenses of any of the dependents of the person; the reasonable business expenses of the person.

265. Proposed subsection 103(5) clarifies that, for the purposes of this section, an 'eligible debt of a person is a debt incurred in good faith by the person. These definitions align with the expenses that may be allowed out of restrained property, or a specified part of restrained property, under existing subsection 24(1) of the POC Act.

266. Proposed paragraph 103(1)(g) provides that a court must also be satisfied that it would not be contrary to the public interest for the interest to be transferred to the person and that there is no other reason why the interest should not be transferred to the person. This replicates the current test for issuing a buy-back order under section 103, and allows the court to take into account any other relevant considerations.

267. If the criteria at proposed paragraphs 103(1)(a)-(g) are satisfied, proposed paragraphs 103(1)(h)-(i) provide that the court may make an order declaring the nature, extend and value (as at the time when the order is made under this subsection) of the interest and declaring that the forfeiture ceases to operate in relation to the interest if payment is made under existing section 105.

268. The words 'as at the time when the order is made under this subsection' is intended to ensure that the amount payable to obtain the property under existing section 105 is the value of the person's prior interest in the property at the time that the buy-back order was made, not at the time the forfeiture occurred. Where a buy-back order is made after forfeiture, this will ensure that an applicant pays the full value of the property and does not obtain the property at a discounted price where the property has appreciated in value post-forfeiture.

Items 3 and 4 - Section 104

269. These items amend section 104 to clarify that the procedures for applying for an order under this section only relate to applying for a transfer order under section 102 and do not relate to applying for a buy-back order under section 103. The procedural issues surrounding applications for buy-back orders are outlined in new subsection 104A.

Item 5 - After section 104

270. This item inserts proposed section 104A, which contains provisions to assist in the timely resolution of POC Act matters and clarifies the procedural requirements underpinning a buy-back application under proposed section 103.

Assisting in timely resolution of POC Act matters

271. In recent buy-back cases, applicants have sought to unnecessarily delay POC Act proceedings by making buy-back applications only after the courts have resolved relevant forfeiture orders and applications for exclusion and compensation.

272. Proposed subsections 104A(1)-(4) seek to resolve this issue, and facilitate the more timely resolution of POC Act matters, by aligning the procedure for buy-back orders with existing procedures for compensation orders under existing section 94A, encouraging an applicant to apply to buy back property before forfeiture so a court can consider all relevant applications in a timely manner.

273. Proposed subsection 104A(1) provides that a person who claims an interest in property covered by a restraining order referred to in existing paragraph 92(1)(b) may apply to the court that made the restraining order for an order under section 103 at any time.

274. Proposed subsection 104A(2), however, provides that if the property has already been forfeited under section 92, the person cannot, unless the court gives leave, apply under proposed subsection 104A(1) of this section if the person:

•

was either given notice under proposed subsection 92A(1) in relation to the property or was not given such a notice because of proposed subsection 92A(2), and

•

did not make the application under subsection (1) of this section before that forfeiture.

275. Proposed subsection 104A(3) states that a court may give the person leave to apply if the court is satisfied that:

•

the person had a good reason for not making the application before that forfeiture; or

•

the person now has evidence relevant to the application that was not available before that forfeiture; or

•

there are special grounds for granting leave.

276. Proposed subsection 104A(4) further provides that the court must not hear an application under subsection 104A(2) if the Official Trustee has taken any action in relation to the property under section 100 and, it would not be practicable for the court to make an order in relation to the interest under section 103.

277. This is designed to deal with situations in which the Official Trustee has already taken steps to dispose of the property, entered into a contract to sell the property or finally disposed of, or otherwise dealt with, the property after appeal periods have elapsed in a manner that makes buying back this property impossible or likely to cause significant cost or inconvenience to the Commonwealth. For example, if the Official Trustee has already sold this property to a third party after all relevant appeal periods have ended, the Commonwealth will no longer have an interest in the property and will be unable to transfer it to the applicant. Similarly, if the Official Trustee had marketed a property and signed a contract of sale with a prospective purchaser, it would not be practicable for a court to entertain an application for buy-back (noting that this could also lead to a contractual dispute between the Commonwealth and the prospective purchaser).

278. Proposed subsection 104A(4) only relates to hearing an application, not making this application, noting that an applicant may not always be aware of whether the Official Trustee has begun to deal with the property, and the court will only be in a position to determine whether it is practicable for it to make an order if it has an application for that order in front of it.

Other matters

279. Proposed subsections 104A(5)-(9) replicate existing procedural requirements under current subsections 104(4)-(7) of the POC Act and section 15 of the Proceeds of Crime Regulations 2019.

280. Proposed subsection 104A(5) provides that an applicant must give written notice to the responsible authority of both the application and the grounds on which the order is sought. This replicates current section 104A(4) of the POC Act.

281. Proposed subsection 104A(6) provides that the responsible authority may appear and adduce evidence at the hearing of the application, while proposed subsection 104A(7) clarifies that, to avoid doubt, the responsible authority may represent the Commonwealth in proceedings relating to an application under subsection 104A(1). Subsection 104A(6) and (7) replicate current subsection 104(5) of the POC Act and section 15 of the Proceeds of Crime Regulations 2019 respectively.

282. The purpose of proposed subsections 104A(5) and (6) is to make it abundantly clear that it is the 'responsible authority' (and not the Minister) that is the emanation of the Commonwealth responsible for conduct of the relevant proceedings. It should also be noted that there are many other provisions of the POC Act that permit the 'responsible authority' to 'appear and adduce evidence' at hearings, but do not explicitly permit the 'responsible authority' to represent the Commonwealth in associated proceedings. It is not necessary to include a provision equivalent to proposed subsection 104A(7) for those provisions, as it is clear from their legislative context that the 'responsible authority' is the emanation of the Commonwealth that may represent the Commonwealth in relevant proceedings.

283. Proposed subsection 104A(8) provides that the responsible authority must give an applicant notice of any grounds on which it proposes to contest the application. However, the authority need not do so until it has had a reasonable opportunity to conduct examinations in relation to the application.

284. Proposed subsection 104A(9) provides, however, that the application must not be heard until the responsible authority has had a reasonable opportunity to conduct examinations in relation to the application.

Item 6 - After section 181

285. This item inserts proposed sections 181A and 181B after existing section 181 of the POC Act to allow a responsible authority to seek examination orders in relation to buy-back applications. This is necessary to ensure that the responsible authority has sufficient information-gathering powers to put material before the court to determine whether it is appropriate for a person to be granted a buy-back order.

Section 181A Examination orders relating to applications under section 57A

286. Proposed section 181A allows a responsible authority to apply for an examination order in relation to an application for a buy-back order under proposed section 57A.

287. Proposed subsection 181A(1) provides that, if an application for an order under section 57 (which deals with buying back forfeited property) is made under proposed section 57A in relation to property that is the subject of a forfeiture order, the court to which the application is made may make an order (an examination order) for the examination of any person.

288. Proposed paragraphs 181A(1)(a)-(d) further clarify that 'any person' includes: (a) the person who made the application; (b) or a person who is a suspect in relation to the forfeiture order; (c) or in the case where the property was covered by a restraining order when the forfeiture was made - a person who is a suspect in relation to the restraining order ; or the spouse or de facto partner of a person referred to in paragraph (a), (b) or (c). While an examination may be made against these people, an examination order can also be made against any other person who may have knowledge about the affairs of these people.

289. Proposed subsection 181A(1) further clarifies that the examination may be about the 'affairs' of a person referred to in proposed paragraph 181A(1)(a), (b), (c) or (d). Existing section 338 of the POC Act relevantly defines the 'affairs' of a person to include, but not be limited to the nature and location of property of the person or property in which the person has an interest; and any activities of the person 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 POC Act.

290. This broad definition of 'affairs' would extend to all circumstances surrounding a person which are relevant to deciding whether to make a buy-back order under proposed section 57. This could include, for example, whether the applicant had knowledge of any relevant offending, were involved in any underlying offending or whether their financial circumstances would enable them to buy back the property, or discharge any loan used to obtain an amount to buy back the property, using only lawful funds.

291. Proposed subsection 181A(2) provides that the examination order ceases to have effect when (a) the application is withdrawn; or (b) the court makes a decision on the application.

Section 181B Examination orders relating to applications under section 104A

292. Proposed section 181B allows a responsible authority to apply for an examination order in relation to an application for a buy-back order under proposed section 104A.

293. Proposed subsection 181B(1) provides that, if an application for an order under proposed section 103 (which deals with buying back forfeited property) is made under proposed section 104A in relation to property, the court to which the application is made may make an order (an examination order) for the examination of any person.

294. Proposed paragraphs 181B(1)(a)-(c) further clarify that 'any person' includes: (a) the person who made the application; (b) or a person who is a suspect in relation to the restraining order mentioned in proposed section 103; (c) or the spouse or de facto partner of a person referred to in paragraph (a) or (b). While an examination may be made against these people, an examination order can also be made against any other person who may have knowledge about the affairs of these people.

295. Proposed subsection 181B(1) further clarifies that the examination may be about the 'affairs' of a person referred to in paragraph 181B(1)(a), (b) or (c). Section 338 of the POC Act relevantly defines the 'affairs' of a person to include, but not be limited to the nature and location of property of the person or property in which the person has an interest; and any activities of the person 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 POC Act.

296. This broad definition of 'affairs' would extend to all circumstances surrounding a person which are relevant to deciding whether to make a buy-back order under proposed section 103. This could include, for example, whether the applicant had knowledge of any relevant offending, were involved in any underlying offending or whether their financial circumstances are such that they will be able to buy back the property, or discharge any loan used to obtain an amount to buy back the property, using lawfully acquired funds.

297. Proposed subsection 181B(2) provides that the examination order ceases to have effect when (a) the application is withdrawn; or (b) the court makes a decision on the application.

Item 7 - At the end of subsection 187(4)

298. This item inserts proposed paragraphs 187(4)(c) and (d) at the end of subsection 187(4).

299. Proposed paragraph 187(4)(c) states that, if the examination relates to an application for an order under section 57 and the person is no longer a person whose affairs can, under section 181A, be subject to the examination, then the examination must not relate to a person's affairs.

300. Similarly, proposed paragraph 187(4)(d) states that, if the examination relates to an application for an order under proposed section 103 and the person is no longer a person whose affairs can, under proposed section 181B, be subject to the examination, then the examination must not relate to a person's affairs.

301. This is intended to address scenarios where circumstances have changed in a way that means that the affairs of a certain person would no longer be subject to an examination. For example, if business associate 1 and 2 of a suspect had each applied for a buy-back order but business associate 2 withdrew his application, only the affairs of business associate 1 would be examinable. However, business associate 2 could still be examined about the affairs of business associate 1, to the extent that he was aware of them.

Item 8 - Paragraph 187(5)(b)

302. This item omits 'or 181' at existing paragraph 187(5)(b) and substitutes '181, 181A or 181B'. This will clarify that an approved examiner may require the person to answer a question that is put to the person at the examination that is relevant to the affairs of a person whose affairs can, under existing section 181 or new section 181A or 181B, be subject to examinations.

Item 9 - After paragraph 202(5)(eb)

303. This item amends the definition of 'property tracking document' in existing subsection 202(5) to insert proposed paragraphs 202(5)(ec) and (ed) after existing paragraph 202(5)(eb). The proposed paragraphs clarify that production orders can be used to obtain documents to guide a court's determination as to whether:

•

property that would be the subject of a buy-back order will be purchased using property that is not any of the following:

o

wholly or partly derived or realised by the person, directly or indirectly, from 'unlawful activity'

o

used in, or in connection with, the commission of 'unlawful activity'

o

intended to be used in, or in connection with, the commission of 'unlawful activity', or

•

where whole or part of an amount to be paid for property would be the subject of a buy-back order is obtained through a loan - whether the person's financial circumstances are such that the person will be able to repay the loan, meet the person's eligible living expenses and meet any eligible debts of the person using property that is not any of the following:

o

wholly or partly derived or realised by the person, directly or indirectly, from 'unlawful activity'

o

used in, or in connection with, the commission of 'unlawful activity', or

o

intended to be used in, or in connection with, the commission of 'unlawful activity'.

304. Proposed paragraph 202(5)(ec) ensures that a production order can be granted to obtain a document that is relevant to an application under proposed section 57A for an order under proposed section 57. Proposed paragraph 202(5)(ed) ensures that a production order can be granted to obtain a document that is relevant to an application under proposed section 104A for an order under proposed section 103. This could include, for example, documents relevant to an applicant's financial circumstances, loan applications and other loan documentation, and personal or business records that are relevant to ascertaining the reasonable living expenses of the person.

Item 10 - Paragraph 202(5)(f)

305. This item omits 'or (eb)' at existing paragraph 202(5)(f) and substitutes '(eb), (ec) or (ed)'. The effect of this is to ensure that a production order can be used to obtain a document that would assist in the reading or interpretation of a document referred to in proposed paragraphs 202(5)(ec) and (ed). This might include for example internal policies or documents that help understand the terms of a loan or other financial product, or correspondence or file notes that gives further context to the circumstances surrounding the application for a loan.

Item 11 - At the end of section 202

306. This item inserts proposed subsections 202(7)-(11) at the end of existing section 202 of the POC Act. These subsections ensure that key terms in proposed paragraphs (5)(ec) and (5)(ed) apply in the same manner as the buy-back order provisions they relate to.

307. Proposed subsection 202(7) provides that, for the purposes of section 202, it is immaterial whether the loan mentioned in proposed subparagraph (5)(ec)(ii) was made under an arrangement entered into before or after the making of the application mentioned in proposed paragraph (5)(ec).

308. Proposed subsection 202(8) similarly provides that, for the purposes of section 202, it is immaterial whether the loan mentioned in proposed subparagraph (5)(ed)(ii) was made under an arrangement entered into before or after the making of the application mentioned in proposed paragraph (5)(ed).

309. Proposed subsection 202(9) further provides that, for the purposes of section 202, 'loan' includes anything that may be reasonably regarded as equivalent to a 'loan', and 'borrow' has a corresponding meaning. This is designed to ensure that the court considers the source of repayments under any equivalent legal arrangement used to obtain funds to buy back the property, including (but not limited to) any encumbrance or security, or a liability incurred, to obtain this amount.

310. Proposed subsection 202(10) provides that each of the following are 'eligible living expenses' of a person: the person's reasonable living expenses; the reasonable living expenses of any of the dependents of the person; the reasonable business expenses of the person. Proposed subsection 202(11) clarifies that, for the purposes of this section, an 'eligible debt' of a person is a debt incurred in good faith by the person. These definitions align with the expenses that may be allowed out of restrained property, or a specified part of restrained property, under existing subsection 24(1) of the POC Act.

Item 12 - Section 338 (definition of examination order)

311. This item amends the definition of 'examination order' under existing section 338 to ensure that it refers to new examination orders under proposed sections 181A and 181B.

Item 13 - Section 338 (before paragraph (h) of the definition of serious offence)

312. Law enforcement's efforts to restrain and confiscate criminal assets are being delayed and frustrated by persons who refuse to comply with coercive information-gathering powers under Chapter 3 of the POC Act. In the context of examination notices under Part 3-3 of the POC Act, existing criminal penalties are often not sufficient to encourage compliance and a wider remit of enforcement options are required.

313. To address this issue, this item inserts proposed paragraphs (gh) and (gi) into existing section 338, which characterise offences of failing to attend an examination (under existing section 195 of the POC Act), offences relating to appearance at an examination (under existing section 196 of the POC Act) and offences of giving false of giving misleading answers or documents (under existing section 197A of the POC Act) as 'serious offences' under existing section 338 of the POC Act where particular circumstances are met. These amendments align with other amendments made in relation to examination offences more broadly under item 19 of Schedule 6 of the Bill.

314. The POC Act provides enhanced restraint and confiscation powers where property is linked to a 'serious offence' or a person commits a 'serious offence'.

315. If a person is reasonably suspected of committing a 'serious offence', a court is able to make a restraining order against property under a person's 'effective control' and to forfeit this property unless the person can establish that, on the balance of probabilities, it was not derived from unlawful activity (see existing sections 18, 29, 47 and 73 of the POC Act). In addition, if a person is convicted of a 'serious offence', all property subject to a restraining order under existing section 17 or 18 will forfeit by operation of the POC Act six months after the date of conviction unless the person can prove it was not the proceeds of unlawful activity or an instrument of a serious offence (existing sections 29, 92 and 94 of the POC Act).

316. The court also has the ability to restrain and forfeit instruments of serious offences under the 'asset-directed' restraint and forfeiture powers in the POC Act, even where the offender cannot be identified (see existing subparagraphs 19(d)(ii) and 49(1)(c)(iv) of the POC Act).

317. Existing sections 195, 196 and 197A will only be 'serious offences' under proposed paragraph (gh) where they relate to the examination of a person who is the subject of an examination order under proposed section 181A (which relates to a buy-back application under proposed section 57A) and the person committing the offence is:

•

the applicant for the buy-back order under proposed paragraph 181A(1)(a); or

•

a person who is a suspect in relation to the forfeiture order under proposed paragraph 181A(1)(b); or

•

in a case where the property was covered by a restraining order when the forfeiture order was made - a person who is a suspect in relation to the restraining order.

318. Similarly, these offences will only be 'serious offences' under proposed paragraph (gi) where they relate to the examination of a person who is the subject of an examination order under proposed section 181B (which relates to a buy back application under proposed section 104A) and the person committing the offence is:

•

the applicant for the buy-back order under proposed paragraph 181B(1)(a); or

•

a person who is a suspect in relation to the restraining order mentioned in proposed section 103 under proposed paragraph 181A(1)(b).

319. These qualifiers ensure that enhanced restraint and forfeiture powers are only available against a person who either has a sufficient connection to the proceeds of crime proceedings, intends to generate a benefit or loss of at least $10,000 through non-compliance (see existing subparagraph 338(a)(iii) and (iv) of the POC Act) or is found to have committed other relevant offences.

320. The offences at existing sections 195, 196 and 197A directly support the central purposes of the POC Act in uncovering wealth derived from serious and organised crime. By frustrating an examination, a suspect can potentially thwart proceeds of crime litigation and protect large amounts of criminal wealth. Prescribing these offences as 'serious offences' reflects the gravity of this conduct, allows for this wealth to be recovered, and is necessary to preserve the efficacy of the investigative powers under the POC Act.

321. Under the existing definition of 'serious offence' in existing subparagraph 338(a) of the POC Act, unless an offence is explicitly prescribed, an indictable offence under the POC Act will only fall within the definition of 'serious offence' where it fits one of the other categories under this subsection. This includes where the infringing activity subject to the offence has caused, or is intended to cause, a benefit or loss to the value of at least $10,000.

322. However, determining the monetary benefit derived from a failure to comply with an examination under the POC Act is often impossible, as the examination itself is often necessary to construct a financial profile of a person, and a failure to comply with the examination will often prevent authorities from obtaining this information.

323. It should also be noted that, under items 1-3 of Schedule 6 of the Bill, the maximum penalty for the offences under sections 195, 196 and 197A will be raised from '2 years imprisonment and/or a fine of 120 penalty units' to 'five years imprisonment and/or a fine of 300 penalty units. These amendments will align sections 195, 196 and 197A of the POC Act with similar offences relating to examinations under sections 30, 33, 21A(4) and 35 of the Australian Crime Commission Act 2002, which are also 'serious offences' under item 1 of table 1 in Schedule 4 of the Proceeds of Crime Regulations 2019.

Part 2 - Transitional provisions

Item 14 - Transitional - section 57 of the POC Act

324. This item is intended to preserve the operation of existing section 57 in relation to the following as if the amendment made by item 1 of Part 1 had not been made:

•

an application made before the commencement of this item for an order under section 57 of that Act; and

•

an order made under section 57 of that Act: after the commencement of this item, in response to such an application; or before the commencement of this item.

325. Noting that the amendments in Part 1 will operate prospectively in relation to applications made after commencement, this item ensures that applications made and decided before commencement can continue to rely on the law under section 57 that existed before these amendments were made.

Item 15 - Transitional - section 103 and 104 of the POC Act

326. This item is intended to preserve the operation of existing sections 103 and 104 in relation to the following as if the amendments made by items 2 and 5 of Part 1 had not been made:

•

an application made before the commencement of this item for an order under section 103 of that Act; and

•

an order made under section 103 of that Act: after the commencement of this item, in response to such an application; or before the commencement of this item.

327. Noting that the amendments in Part 1 will operate prospectively in relation to applications made after commencement, this item ensures that applications made and decided before commencement can continue to rely on the law under section 103 and 104 that existed before these amendments were made.

Schedule 4 - Benefit

Part 1 - Amendments

Proceeds of Crime Act 2002

Items 1-3 - Section 338

328. Part 1 of this Schedule clarifies for abundant caution that the definition of the term 'benefit' under the POC Act includes the avoidance, deferral or reduction of a debt, loss or liability, by making this explicit in the POC Act.

329. The calculation of a 'benefit' that a person has derived or realised from criminal conduct is integral to determining whether a civil debt is owed to the Commonwealth under pecuniary penalty orders (Part 2-4 of the POC Act) and literary proceeds orders (Part 2-5). The term 'benefit' also plays a role in monitoring orders, which compel a financial institution to provide information about transactions made through an account or stored value card, and can be made if a person has benefited, or is about to benefit, from the commission of a serious offence (see s 219). The term 'benefit' is also relevant to the 'evidential material' that can be obtained under a search warrant under Part 3-5 of the POC Act.

330. Section 338 of the POC Act currently provides that 'benefit includes service or advantage' but does not otherwise explain the meaning of the term. Item 1 will insert a new definition of advantage into section 338, which clarifies that an advantage also includes a financial advantage.

331. Item 2 of this Part includes a note at the end of the definition of 'benefit' in section 338 referring to the new definition of 'advantage' inserted by item 1. Item 3 then relevantly provides that the term 'financial advantage' includes the avoidance, deferral or reduction of a debt, loss or liability.

332. A 'financial advantage' could include, for example, the criminal evasion of import duties, excises or taxation. This amendment reflects the existing operation of the POC Act, which allows pecuniary penalty orders and literary proceeds orders to be made in relation to both a benefit gained and loss avoided through criminal conduct.

333. These amendments will reinforce the broad application of the POC Act in ensuring that criminals are not able to benefit in any way from their offending. For example, this would include where a person has incorrectly declared the import of goods (such as tobacco or alcohol) in order to pay lesser excise or import duty, which would allow them to gain a commercial advantage. Similarly, it would cover where a person provides false information to the Australian Taxation Office in order to reduce their tax liability.

Part 2 - Application provisions

Item 4 - Application

334. Subitem 4(1) provides that, subject to subitem 4(2) the amendments made by this Schedule, the extent that they are relevant to a benefit derived by a person, apply in relation to the benefit derived by the person before, at or after the commencement of this item.

335. Retrospective operation is required to ensure that asset confiscation action is not frustrated by requiring law enforcement agencies to obtain evidence of, and prove, the precise point in time at which certain benefits were derived.

336. Such a requirement would be unnecessarily onerous and would be contrary to the objects of the Act. Further, it would be almost impossible to show the point at which benefits were acquired or derived in cases where a person's offending had taken place over a long period of time, especially in relation to benefits not subject to registration requirements or where relevant financial, business and government records have been destroyed or lost over time.

337. Previous amendments to unexplained wealth orders and restraining orders have been applied retrospectively to property or wealth acquired before the amendments commenced (see item 34 of the Crimes Legislation Amendment (Unexplained Wealth and other Measures) Act 2015, item 2 of Schedule 3 to the Law Enforcement Legislation Amendment (State Bodies and Other Measures) Act 2016).

338. Subparagraph 4(1)(a) provides that the amendments made by this Schedule, to the extent that they are relevant to proceedings in a court, apply in relation to proceedings instituted after the commencement of this item.

339. Subparagraph 4(1)(b) provides that the amendments made by this Schedule, to the extent that they are relevant to proceedings in a court, also apply in relation to proceedings that were instituted before the commencement of this item and are pending as at the commencement of this item.

340. Retrospective application to ongoing proceedings is appropriate as the amendments merely seek to reinforce the existing operation of the POC Act, and do not constitute a substantial change this Act. There is also precedent for applying POC Act laws retrospectively to ongoing proceedings (see the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Act 2015).

Schedule 5 - Jurisdiction of courts

Part 1 - Amendments

Proceeds of Crime Act 2002

341. This Schedule amends the POC Act to reinforce its existing operation, clarifying that all courts with proceeds jurisdiction are able to make orders under the POC Act in respect of property located overseas.

342. These amendments are intended to better reflect, and not interfere with, the existing procedures by which restraint and confiscation action are taken against property located overseas under the POC Act, the MACMA and under the law of the foreign country in which the property is located.

Item 1 - Section 53

343. This item repeals existing section 53 of the POC Act.

344. Existing subsection 53(1) provides that a court cannot make a forfeiture order in respect of property if the court does not have jurisdiction with respect to the recovery of property of that kind. Existing subsection 53(3) also provides that a reference to a court having jurisdiction with respect to the recovery of property includes a reference to a court having jurisdiction, under a corresponding law, to make an interstate forfeiture order in respect of property.

345. These subsections will be repealed as they have produced unnecessary confusion as to whether the POC Act can be used to take action against property located overseas, despite courts being granted 'proceeds jurisdiction' to do so under sections 314 and 335 of the POC Act. Section 13 of the POC Act also explicitly provides that the Act extends to acts, matters and things outside Australia and section 32 of the MACMA explicitly provides processes to enforce domestic restraining and confiscation orders over property located overseas.

346. Existing subsection 53(2) provides that a court may make a forfeiture order in respect of property even though, apart from section 314, the court does not have jurisdiction with respect to property whose value equals the value of that property.

347. Existing subsection 53(2) has been repealed as subsection 314(2), as amended by item 4 of this Part, achieves its underlying purpose, ensuring that the jurisdiction vested in a court with respect to matters arising under the POC Act is not limited by any limits to which any other jurisdiction of the court may be subject, including that the court would not otherwise have jurisdiction with respect to property whose value equals the value of forfeited property.

Item 2 - After section 68

348. This item inserts proposed section 68A after existing section 68.

349. Proposed section 68A provides an exception to existing section 66, which states that property specified in a forfeiture order vests absolutely in the Commonwealth at the time the order is made. In cases where the Commonwealth takes action against property located in a foreign country following forfeiture under Commonwealth law, proposed section 68A is intended to better reflect the rights of the Commonwealth to this property as they interact with the sovereign right of the foreign country to make laws in relation to property located within its territory.

350. Proposed subsection 68A(1) provides that, despite existing section 66, if property specified in a forfeiture order is property located outside Australia:

(a)

That property vests in equity in the Commonwealth; and

(b)

That property only vests in the Commonwealth at law to the extent permitted under the law in force in the place where the property is located; and

(c)

The responsible authority has power, on behalf of the Commonwealth, to do anything necessary or convenient to: (i) give notice of, or otherwise protect, the Commonwealth's equitable interest in that property; or (ii) arrange for the enforcement of, or give effect to, the forfeiture order.

351. Proposed subsection 68A(1) contains a note specifying that an example of action by the responsible authority under paragraph 68A(c)(ii) would include arranging for a request under section 32 of the MACMA in relation to the enforcement of the forfeiture order.

352. Proposed subsection 68A(2) provides that any action by the responsible authority under subparagraph 68A(1)(c)(i) is not a dealing for the purposes of existing subsection 69(1), meaning that actions which are necessary or convenient to give notice of, or otherwise protect, the Commonwealth's interest in forfeited property will not be prohibited during appeal periods pursuant to existing subsection 69(1).

353. Proposed subsection 68A(3) provides that, despite existing section 66 and subsection 68A(1), property vests in a person under law if: that property is specified in a forfeiture order and is property located outside Australia; and under the law in force in the place where that property is located, that property vests in a person.

354. Proposed subsection 68A(4) provides that subsection 68A(3) does not affect any equitable interest vested in the Commonwealth by paragraph (1)(a). This ensures that, even if the property vests in a person in law under the law in the foreign country in which it is located, the Commonwealth retains the equitable interest that allows for the responsible authority to continue to do anything necessary or convenient to give notice of, or otherwise protect, this equitable interest under proposed subparagraph 68A(1)(c)(i).

355. Subsections 68A(3) and (4) are intended to facilitate the interaction between the enforcement of Australian forfeiture orders over property located overseas and foreign laws that may also apply to that property. This reflects that different countries may have different approaches and laws around the recognition and enforcement of foreign orders over property located within their territory. These subsections are not intended to provide additional rights to a person affected by the making of a forfeiture order.

356. For example, if the responsible authority made a mutual assistance request to a foreign country for enforcement of an Australian forfeiture order, the law of the foreign country may provide that the property vests in the body politic of that foreign country (along with other facilitative provisions that then allow for repatriation of all or part of that property to the requesting country). Under subsection 68A(3), the POC Act would recognise the operation of the law of the foreign country and for the purposes of the POC Act the property would vest in law in the foreign body politic (noting that under section 2C of the Acts Interpretation Act 1901, the term 'person' also includes a body politic, which would include a foreign body politic), though the Commonwealth would still retain an equitable interest in that property.

357. In the event that the Australian order could not be registered or enforced in the foreign country under the laws of that country, subsection 68A(4) ensures that the Commonwealth still retains the equitable interest in that property. This allows the Commonwealth to still move to enforce its order in relation to that property if the laws of the foreign country later change to allow enforcement, or if the property is later moved back into Australia or to a jurisdiction that can recognise the Commonwealth's forfeiture order.

Item 3 - After section 98

358. This item inserts new section 98A after existing section 98.

359. Proposed section 98A provides an exception to current section 96, which states that property forfeited under existing section 92 vests absolutely in the Commonwealth at the time of the forfeiture. In cases where the Commonwealth takes action against property located in a foreign country following forfeiture under Commonwealth law, proposed section 98A is intended to better reflect the rights of the Commonwealth to this property as they interact with the sovereign right of the foreign country to make laws in relation to property located within its territory.

360. Proposed subsection 98A(1) provides that, despite existing section 96, if property forfeited under existing section 92 is property located outside Australia:

(a)

that property vests in equity in the Commonwealth; and

(b)

that property only vests in the Commonwealth at law to the extent permitted under the law in force in the place where the property is located; and

(c)

the responsible authority has power, on behalf of the Commonwealth, to do anything necessary or convenient to: (i) give notice of, or otherwise protect, the Commonwealth's equitable interest in that property; or (ii) arrange for the enforcement of, or give effect to, the declaration under section 95 that relates to the forfeiture of that property.

361. Proposed subsection 98A(1) contains a note specifying that an example of action by the responsible authority under proposed subparagraph 98A(1)(c)(ii) would include arranging for a request under section 32 of the MACMA in relation to the enforcement of the declaration under existing section 95 of the POC Act that relates to the forfeiture of that property.

362. Proposed subsection 98A(2) provides that any action by the responsible authority under proposed subparagraph 98A(1)(c)(i) is not a dealing for the purposes of existing subsection 99(1), meaning that actions which are necessary or convenient to give notice of, or otherwise protect, the Commonwealth's interest in forfeited property will not be prohibited during appeal periods pursuant to existing subsection 99(1).

363. Proposed subsection 98A(3) provides that, despite existing section 96 and proposed subsection 98A(1), property vests in a person under law if: that property is specified in a forfeiture order and is property located outside Australia; and under the law in force in the place where that property is located, that property vests in a person.

364. Proposed subsection 98A(4) provides that subsection 98A(3) does not affect any equitable interest vested in the Commonwealth by paragraph (1)(a). This ensures that, even if the property vests in a person in law in the foreign country in which it is located, the Commonwealth retains the equitable interest that allows for the responsible authority to continue to do anything necessary or convenient to give notice of, or otherwise protect, this equitable interest under proposed subparagraph 98A(1)(c)(i).

365. Subsections 98A(3) and (4) are intended to facilitate the interaction between the enforcement of Australian forfeiture declarations over property located overseas and foreign laws that may also apply to that property. This reflects that different countries may have different approaches and laws around the recognition and enforcement of foreign orders over property located within their territory. These subsections are not intended to provide additional rights to a person affected by the making of a forfeiture order or declaration.

366. For example, if the responsible authority made a mutual assistance request to a foreign country for enforcement of an Australian forfeiture declaration, the law of the foreign country may provide that the property vests in the body politic of that foreign country (along with other facilitative provisions that then allow for repatriation of all or part of that property to the requesting country). Under subsection 98A(3), the POC Act would recognise the operation of the law of the foreign country and for the purposes of the POC Act the property would vest in law in the foreign body politic (noting that under section 2C of the Acts Interpretation Act 1901, the term 'person' also includes a body politic, which would include a foreign body politic), though the Commonwealth would still retain an equitable interest in that property.

367. In the event that an Australian declaration could not be registered or enforced in the foreign country under the laws of that country, subsection 98A(4) ensures that the Commonwealth still retains the equitable interest in that property. This allows the Commonwealth to still move to enforce its declaration in relation to that property if the laws of the foreign country later change to allow enforcement, or if the property is later moved back into Australia or to a jurisdiction that can recognise the Commonwealth's forfeiture declaration.

Item 4 - Subsection 314(2)

368. This item amends existing subsection 314(2) to omit the words 'subject to section 53. The" and substitute 'the'. This reflects that section 53 is being repealed under item 1 of this Schedule. This amendment will ensure that any jurisdictional limitations, including as to value of property, that would otherwise apply to a court of a State or Territory will not fetter the jurisdiction of that court under existing subsection 314(1). This subsection provides that justification is vested in the several courts of the States and Territories with respect to matters arising under the POC Act.

Item 5 - At the end of section 314

369. This item inserts proposed subsection (4) at the end of existing section 314, which provides that the jurisdiction of a court with respect to matters arising under this Act is not excluded or limited merely because the proceedings relate to, or may otherwise concern, property located outside Australia. This provides further clarification that, even if State and Territory courts would not ordinarily have jurisdiction in relation to property located outside Australia, they will be granted this jurisdiction by virtue of the POC Act.

Part 2 - Application provisions

Item 6 - Application

370. Subitem 6(1) provides that, subject to subitem 6(2), the amendments made by this Schedule, to the extent that they are relevant to property acquired by a person, apply in relation to property acquired by the person before, at or after the commencement of this item.

371. Retrospective operation is required to ensure that asset confiscation action is not frustrated by requiring law enforcement agencies to obtain evidence of, and prove, the precise point in time at which certain property was acquired.

372. Such a requirement would be unnecessarily onerous and would be contrary to the objects of the Act. Further, it would be almost impossible to show the point at which certain property was acquired in cases where a person has accumulated significant amounts of property over decades and has no apparent source of legitimate income, especially in relation to property not subject to registration requirements or where relevant records have been destroyed or lost over time. This is also complicated by the fact that property and records pertaining to that property are likely to be located overseas, and not all countries will have the same record keeping requirements or capacity as Australia.

373. Previous amendments to unexplained wealth orders and restraining orders have been applied retrospectively to property or wealth acquired before the amendments commenced (see item 34 of the Crimes Legislation Amendment (Unexplained Wealth and other Measures) Act 2015, item 2 of Schedule 3 to the Law Enforcement Legislation Amendment (State Bodies and Other Measures) Act 2016).

374. Paragraph 6(2)(a) provides that the amendments made by this Schedule, to the extent that they are relevant to proceedings in a court, apply in relation to: proceedings instituted after the commencement of this item.

375. Paragraph 6(2)(b) provides that the amendments made by this Schedule, to the extent that they are relevant to proceedings in a court, apply in relation to: proceedings that were instituted before the commencement of this item and are pending as at the commencement of this item.

376. Retrospective application to ongoing proceedings is appropriate as the amendments are merely procedural amendments relating to jurisdiction that reinforce the existing operation of the POC Act and the MACMA. These amendments serve to clarify that courts with jurisdiction under the POC Act can hear matters relating to property located overseas, and do not impact on the court's substantive consideration of the facts before it. There is also precedent for applying procedural amendments to the POC Act retrospectively to ongoing proceedings (see the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Act 2015).

Schedule 6 - Information

Part 1 - Amendments

Proceeds of Crime Act 2002

377. The coercive information-gathering powers in the POC Act directly support the central purposes of this Act by ensuring that law enforcement has the necessary tools to uncover wealth derived from serious and organised crime. However, the effectiveness of these powers is undermined by legislative ambiguity in the underlying enforcement mechanisms and the permissible use of information and documents that are obtained.

378. Law enforcement's efforts to restrain and seize criminal assets are being frustrated by persons who refuse to comply with coercive information-gathering powers under the POC Act. While non-compliance attracts a criminal penalty, these penalties are relatively low and it is not clear on the face of the Act whether information or documents gained by using POC Act powers can be disclosed, used for the purposes of and be admitted, in criminal proceedings for offences of failing to comply with these powers.

379. This Schedule ensures that existing criminal offences function as an effective deterrent by raising the maximum penalty for non-compliance offences under existing sections 195, 196, 197A, 211 and 218 of the POC Act (see items 1-3 and 5-6). The Schedule also ensures that these offences can be effectively enforced by clarifying that information or documents gained under POC Act powers: can be disclosed to authorities that are responsible for investigating and prosecuting non-compliance offences (see item 2D of the table in item 9), can be used to investigate non-compliance offences and may be admissible in criminal proceedings relating to non-compliance offences (see items 4 and 13-17).

380. Even where criminal penalties can be enforced, they may not sufficiently incentivise compliance with an information-gathering power under the POC Act where the subject of that power is willing to incur a criminal penalty through non-compliance to maximise their chances of retaining their illicitly derived property. To address this behaviour, this Schedule (at item 18) provides that non-compliance offences under existing sections 195, 196 or 197A that relate to an examination notice will be 'serious offences' for the purposes of the POC Act in certain circumstances, allowing authorities to take enhanced restraint and confiscation action where non-compliance occurs.

381. Finally, this Schedule seeks to increase the efficacy of information and documents obtained under POC Act information-gathering powers by clarifying and expanding relevant provisions governing disclosure and use. In particular, item 8 allows the Official Trustee to disclose information and documents gained through its powers to a wider range of authorities for a wider range of purposes, while items 9-12 allow for information and documents gained under POC Act powers to be disclosed to particular authorities for purposes relating to mutual assistance and extradition and enabling or assisting the International Criminal Court, the International War Crimes Tribunal or a professional disciplinary body.

Items 1-3, 5 and 6 - Increasing maximum penalties for offences

Item 1 - Section 195 (penalty)

382. This item omits the words "2 years or 120" in existing section 195 and substitutes "5 years or 300". The effect of this amendment is to increase the penalty for failing to attend an examination under existing section 195 from '2 years imprisonment or 120 penalty units or both' to '5 years imprisonment or 300 penalty units or both'.

383. This aligns the maximum penalty of imprisonment for this offence with the 'failure of witness to attend and answer questions' offence in existing subsection 30(6) of the Australian Crime Commission Act 2002, with relevant adjustments to the maximum penalty unit fine (300 penalty units rather than 200 penalty units) to ensure that it meets the imprisonment/penalty units ratio specified under Part 3.1.3 of the Guide to Framing Commonwealth Offences.

Item 2 - Subsection 196(1) (penalty)

384. This item omits the words "2 years or 120" in existing subsection 196(1) and substitutes "5 years or 300". The effect of this amendment is to increase the penalty for offences relating to appearance at an examination under existing subsection 196(1) from '2 years imprisonment or 120 penalty units or both' to '5 years imprisonment or 300 penalty units or both'.

385. This aligns the maximum penalty of imprisonment for this offence with the 'failure of witness to attend and answer questions' offence in existing subsection 30(6) of the Australian Crime Commission Act 2002, with relevant adjustments to the maximum penalty unit fine (300 penalty units rather than 200 penalty units) to ensure that it meets the imprisonment/penalty units ratio specified under Part 3.1.3 of the Guide to Framing Commonwealth Offences.

Item 3 - section 197A (penalty)

386. This item omits the words "2 years or 120" in existing section 197A and substitutes "5 years or 300". The effect of this amendment is to increase the penalty for giving false or misleading answers or documents under existing section 197A from '2 years imprisonment or 120 penalty units or both' to '5 years imprisonment or 300 penalty units or both'.

387. This aligns the maximum penalty of imprisonment for this offence with the 'false or misleading evidence' offence in existing section 33 of the Australian Crime Commission Act 2002, with relevant adjustments to the maximum penalty unit fine (300 penalty units rather than 200 penalty units) to ensure that it meets the imprisonment/penalty units ratio specified under Part 3.1.3 of the Guide to Framing Commonwealth Offences.

Item 5 - subsection 211(1) (penalty)

388. This item omits the number "100" in existing subsection 211(1) and substitutes the number '120'. The effect of this amendment is to increase the maximum fine for the offence of failing to comply with a production order under existing subsection 211(1) from 100 penalty units to 120 penalty units. Noting that this offence may also be punishable by up to two years imprisonment, this maximum fine ensures that the offence accords with the imprisonment/penalty units ratio specified under Part 3.1.3 of the Guide to Framing Commonwealth Offences.

Item 6 - 218(1) (penalty)

389. This item omits the number "100" in existing subsection 218(1) and substitutes the number '120'. The effect of this amendment is to increase the maximum fine for the offence of failing to comply with a notice to a financial institution under existing subsection 218(1) from 100 penalty units to 120 penalty units. Noting that this offence may also be punishable by up to two years imprisonment, this maximum fine ensures that the offence accords with the imprisonment/penalty units ratio specified under Part 3.1.3 of the Guide to Framing Commonwealth Offences.

Items 4, 13-17 - Clarifying that information and documents obtained under POC Act powers may be admissible in proceedings for non-compliance offences

390. These items amend various 'use' and 'derivative use' immunities throughout the POC Act to clarify that information or documents obtained by using an information-gathering power under the POC Act can be used in related criminal investigations and may be admissible as evidence in criminal proceedings relating to non-compliance with these powers.

391. This is necessary as, in cases of non-compliance with an information-gathering power, often the only evidence of non-compliance with this power will be given in response to the exercising of this information-gathering power. If under a production order in Part 3-2, for example, a person is required to produce three documents, and only produces two, then the original production order and the two documents provided will need to be provided in evidence to indicate that a person has committed an offence of failing to comply with a production order under existing section 211.

392. Clarifying that 'use immunity' does not apply to evidence provided in criminal proceedings relating to non-compliance also accords with Part 9.5.5 of the Guide to Framing Commonwealth Offences, which acknowledges that legislation may specify that self-incriminating evidence given under a 'use immunity' may be used in proceedings alleging that the person has given false or misleading information or not complied with a relevant information-gathering power.

Item 4 - at the end of section 198

393. This item amends the use immunity at existing section 198 to clarify that, while an answer given or document produced in an examination would ordinarily not be admissible in evidence in civil or criminal proceedings against the person who gave the answer or produced the document, this rule will not apply in proceedings for an offence against Part 3-1 (examinations).

394. These offences currently include: failing to attend an examination under existing section 195; offences relating to appearance at an examination under section 196; the giving of false or misleading answers or documents under existing section 197A; unauthorised presence at an examination under existing section 199; breaching conditions on which records of statements are provided under existing section 200; and breaching directions preventing or restricting publications under existing section 201.

395. While existing paragraph 198(a) currently allows answers given to be used in criminal proceedings for giving false or misleading information, there is no other mention of criminal proceedings in this section. This may call into doubt, for example, whether answers given that are relevant to other types of non-compliance offences (such as an answer in which the person says that they won't answer the question) could be used to support a prosecution for those offences.

Item 13 - After paragraph 266(4)(e)

396. This item inserts proposed paragraph 266A(4)(f) after existing paragraph 266A(4)(e).

397. Existing subsection 266A(3) provides that, in civil or criminal proceedings against a person who gave an answer or produced a document in an examination, the answer or document, and the information contained in the answer or document, is not admissible in evidence against the person.

398. Proposed paragraph 266A(4)(f) will provide an exception to this use immunity for proceedings for an offence against Part 3-1. This ensures that subsection 266A(4) reflects section 198, as amended by this Bill.

399. Offences under Part 3-1 currently include: failing to attend an examination under existing section 195; offences relating to appearance at an examination under existing section 196; the giving of false or misleading answers or documents under existing section 197A; unauthorised presence at an examination under existing section 199; breaching conditions on which records of statements are provided under existing section 200; and breaching directions preventing or restricting publications under existing section 201.

Item 14 - After subsection 266A(6)

400. This item inserts proposed subsection 266A(6A) after existing subsection 266A(6).

401. Existing subsection 266A(5) relevantly provides that, in a criminal proceeding against a person who produced or made available a document under a production order, the document and information contained in the document that is disclosed under section 266A is not admissible in evidence against the person.

402. Proposed subsection 266A(6A) relevantly provides that existing subsection 266A(5) does not apply in proceedings for an offence against Part 3-2, being non-compliance offences in the context of a production order. Offences under Part 3-2 currently include making false statements in an application under existing section 209, disclosing the existence or nature of production orders under existing section 210, failing to comply with a production order under existing section 211 and destroying etc. a document subject to a production order under existing section 212.

Items 15, 16 and 17 - subsection 271(2)

403. The Official Trustee has coercive information-gathering powers under Division 2 of Part 4-1 of the POC Act that are used to obtain information and documents to assist it in discharging its functions under the POC Act.

404. Existing subsection 271(1) relevantly provides that a person is not excused from giving information or producing a document under Part 4-1 on the ground that to do so would tend to incriminate the person or expose the person to penalty.

405. However, the existing subsection 271(2) provides that in the case of a natural person (a) the information given (b) the giving of the document or (c) any information document or thing obtained as a direct or indirect consequence of giving the information or document; is not admissible in evidence in criminal proceedings against the natural person except proceedings under, or arising out of, existing section 137.1 or 137.2 of the Criminal Code in relation to giving the information or document.

406. Item 16 repeals the derivative use immunity at existing paragraph 271(2)(c) and item 15 makes amendments to remove the word 'or' at existing paragraph 271(2)(b) as a consequence.

407. Derivative use immunity has been removed for operational reasons. As criminal proceedings, proceeds of crime proceedings and the management of restrained or confiscated assets by the Official Trustee are often conducted simultaneously, a defendant could use a derivative use immunity (if it were included in this provision) to frustrate a prosecution.

408. For example, if a defendant made certain admissions in response to a written notice provided by the Official Trustee under existing section 270 and provided similar information elsewhere, the defendant could claim that the Commonwealth Director of Public Prosecutions (CDPP) or the investigating agency obtained the similar information as the result of a notice under existing section 270.

409. 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 and set up strict information-sharing protocols with the Official Trustee in anticipation that an application to exclude might be made. This is not desirable and can significantly restrict the Official Trustee from working closely with relevant agencies under the POC Act.

410. Item 17 omits the words after 'against the natural person' and substitutes the following exceptions to the remaining 'use immunity' under existing subsection 271(2), allowing evidence gathered using the Official Trustee's information-gathering powers under Part 4-1 to be admissible as evidence:

(c)

in criminal proceedings under, or arising out of, section 137.1 or 137.2 of the Criminal Code 1995 (as outlined in current subsection 271(2)), and

(d)

in criminal proceedings for an offence against Division 2 of Part 4-1 (new).

411. Offences under Division 2 of Part 4-1 include: offences relating to the exercise of powers under existing section 268 or 269 under existing section 272; failure to provide information under existing section 273; failure of person to attend under existing section 274 and; refusal to be sworn or give evidence under existing section 275.

Items 8-12 and 18 - Clarifying limitations surrounding disclosure and use of information or documents obtained under POC Act powers

Item 8 - At the end of paragraph 266A(1)(a)

412. This item adds proposed subparagraph (iii) which allows information obtained under the Official Trustee's information-gathering powers in Division 2 of Part 4-1 of the POC Act to be disclosed to, and used by, the authorities specified in section 266A for the purposes specified in that section.

413. This item is necessary as there are no existing provisions in the POC Act that allow the information gathered by the Official Trustee under Division 2 of Part 4-1 to be passed on to agencies to investigate or prosecute offending, or to protect public revenue, severely undermining the utility of the information. This item significantly increases the utility of the information gathered by the Official Trustee and ensures that the Official Trustee can work more closely with Commonwealth agencies in managing assets on behalf of the Commonwealth.

Item 9 - Subsection 266A(2) (after table item 2C)

414. This item inserts new table items 2D, 2E and 2F into the table at subsection 266A(2), expanding the table to enhance the ability of law enforcement to enforce compliance with information-gathering powers. Information gathered under Chapter 3 of the POC Act often cannot be used to enforce non-compliance offences as the information can only be disclosed to investigators or prosecutors to investigate or prosecute an offence punishable by 3 years imprisonment (item 2 of the table at section 266A(2)). As most non-compliance offences under the POC Act are punishable by less than 3 years imprisonment, the amendments in this item are necessary to ensure that they can be properly enforced.

415. Table item 2D will allow information to be disclosed to Commonwealth, State and Territory investigative or prosecutorial agencies for the purpose of assisting in the prevention, investigation or prosecution of offences arising from non-compliance with obligations under the POC Act.

416. The insertion of table item 2D also acknowledges that noncompliance with obligations in the POC Act could give rise to other offences in the POC Act, specifically sections 15G, 197A, 209, 216, 222, 266 or an offence against clause 8 or 15 of Schedule 1 to the POC Act, as well as offences against section 137.1 or 137.2 of the Criminal Code Act 1995 (Cth).

417. Items 2E and 2F expand the table for an abundance of caution to ensure that information can be disclosed for the purpose of international crime cooperation. They will facilitate cooperation between countries in relation to extradition and mutual assistance, including with respect to proceeds of crime orders

418. Table item 2E will allow the disclosure of information to the Mutual Assistance Department for the purposes of facilitating the performance of its functions in relation to the Extradition Act 1988, the International Criminal Court Act 2002, the International War Crimes Tribunals Act 1995 or the MACMA or for purposes ancillary or incidental to the performance of those functions.

419. Table item 2F will allow the disclosure of information to an authority of a foreign country with functions corresponding to the functions of the Mutual Assistance Department that are covered by item 2E for the purposes of:

•

assisting in the prevention, investigation or prosecution of an offence against a law of the country constituted by conduct that, if it occurred in Australia, would constitute an offence against a law of the Commonwealth, State or Territory punishable on conviction by imprisonment for at least 3 years or for life; or

•

assisting in the identification, location, tracing, investigation or confiscation of proceeds or instruments of crime under the POC Act or a corresponding law of a State or Territory.

Item 10 - Subsection 266A(2) (at the end of the table)

420. This item adds items 4, 5 and 6 at the end of the table in subsection 266A(2). These items expand the table to allow information to be disclosed to the International Criminal Court, International War Crimes Tribunals and professional disciplinary bodies respectively for the purposes of assisting the body to perform any of its functions.

Item 11 - At the end of subsection 266A(2)

421. This item inserts a note at the end of subsection 266A(2) to confirm that relevant laws continue to apply to the sharing of information with foreign countries. It provides that the amendments to section 266A are not intended to alter the procedures applicable to the disclosure of information to foreign countries (for example, procedures under the MACMA).

422. For example, the amendments to section 266A could facilitate the AFP proactively sharing information with the Mutual Assistance Department so that the Mutual Assistance Department could advise the Attorney-General on whether he or she should authorise the AFP to provide the material to a foreign country under section 13A of the MACMA. However, if the Attorney-General choses to exercise this authority and provide it to the foreign country the relevant procedures under section 13A of the MACMA would then be followed.

423. This note reflects that there may be other procedures or legislation that operates independently of sections 13A of the MACMA and 266A of the POC Act, and these sections are not intended to detract from these procedures or legislation. It should also be noted that there will also be circumstances where disclosure under section 266A is not governed by other procedures (for example, in certain cases of informal cooperation with other foreign authorities).

Item 12 - After subsection 266A(2)

424. This item inserts subsection 266A(2A) to make it abundantly clear that section 266A does not prevent a person who obtained information under subsection 266A(1) from disclosing or using that information for the purpose for which the information was originally obtained, or for purposes directly or indirectly connected with or incidental to the purpose for which the information was originally obtained. As such, this provision is intended to legislatively enshrine existing common law principles around how information obtained using investigative powers can be used.

425. Proposed subsection 266A(2A) also makes clear in paragraph (c) that if a person obtains information as a result of a disclosure, or a chain of disclosures, under section 266A or clause 18 of Schedule 1 of the POC Act, the person can disclose or use the information for the purpose for which the information was originally obtained as a result of that disclosure or any of the disclosures in the chain, as well as for purposes directly or indirectly connected with, or incidental to, the purpose for which the information was obtained.

426. This ensures that section 266A, by allowing information obtained under the POC Act to be disclosed for purposes that extend beyond the original purpose for which the information was obtained, does not unintentionally limit the extent to which information can be permissibly disclosed or used in relation to that original purpose.

427. This amendment provides clarity on the operation of section 266A to ensure that information can be used for the purpose for which it was obtained and that operational agencies can disclose information to one another, and use that disclosed information fully to further the purpose for which it was disclosed.

428. For example, if the AFP obtained information for the purposes of proceedings under the POC Act, the AFP can then use that information or disclose/share it with any person for the purpose of the proceeds of crime investigation, supporting the proceedings under the POC Act as well as any purposes that are directly or indirectly connected with, or incidental to that purpose (such as an appeal, determining a claim for legal professional privilege or responding to an administrative law challenge). If the AFP were then to disclose the information to the ATO for the purposes of protecting public revenue under item 3 of the table at subsection 266A(2), the ATO could use this information to investigate a person's non-compliance with tax laws, including using and disclosing that information to other persons or authorities where that is necessary to further their investigation into that person, obtain further information or levy a tax debt.

Item 18 - section 338

429. This item inserts the definitions of International Criminal Court, International War Crimes Tribunal and Mutual Assistance Department in section 338.

430. International Criminal Court has the same meaning as in the Criminal Code. International War Crimes Tribunal means a Tribunal (within the meaning of the International War Crimes Tribunals Act 1995). Mutual Assistance Department means the Department administered by the Minister who administers the MACMA.

Item 19 - Section 338 (after paragraph (g) of the definition of serious offence)

431. Law enforcement's efforts to restrain and seize criminal assets are being frustrated by persons who refuse to comply with coercive information-gathering powers under Chapter 3 of the POC Act. In the context of examination notices under Part 3-3 of the POC Act, existing criminal penalties are often not sufficient to encourage compliance and a wider remit of enforcement options are required.

432. To address this issue, this item inserts new paragraphs (ga), (gb), (gc), (gd), (ge), (gf), (gg) into section 338, which characterise offences of failing to attend an examination (under section 195 of the POC Act), offences relating to appearance at an examination (under section 196 of the POC Act) and offences of giving false of giving misleading answers or documents (under section 197A of the POC Act) as 'serious offences' under section 338 of the POC Act where:

•

these offences relate to the examination of a person who is the subject of an examination order under section 180A, 180B, 180C, 180D, 180E or 181; and

•

the person was a person covered by paragraph 180A(1)(a), 180B(1)(a), 180C(1)(a), 180D(1)(a), 180E(1)(a) or 181(1)(a) or (b) (respectively) - This is generally limited to suspects, or a person who has or claims an interest in the property, that is the subject of the application or order to which the examination order relates; or

•

the person is or was a party to proceedings relating to the relevant application or order to which the examination order relates under 180A, 180B, 180C, 180D, 180E or 181 (respectively).

433. These qualifiers ensure that enhanced restraint and forfeiture powers are only available against a person who either has a sufficient connection to the proceeds of crime proceedings, intends to generate a benefit or loss of at least $10,000 through non-compliance (see subparagraph 338(a)(iii) and (iv) of the POC Act) or is found to have committed other relevant offences.

434. The POC Act provides enhanced restraint and confiscation powers where property is linked to a 'serious offence' or a person commits a 'serious offence'.

435. If a person is reasonably suspected of committing a 'serious offence', a court is able to make a restraining order against property under a person's 'effective control' and to forfeit this property unless the person can establish that, on the balance of probabilities, it was not derived from unlawful activity (sections 18, 29, 47 and 73 of the POC Act). In addition, if a person is convicted of a 'serious offence', all property subject to a restraining order under section 17 or 18 will automatically forfeit six months after the date of conviction unless the person can prove it was not the proceeds of unlawful activity or an instrument of a serious offence (sections 29, 92 and 94 of the POC Act).

436. The court also has the ability to restrain and forfeit instruments of serious offences under the 'asset-directed' restraint and forfeiture powers in the POC Act, even where the offender cannot be identified (subparagraphs 19(d)(ii) and 49(1)(c)(iv) of the POC Act).

437. Under the existing definition of 'serious offence' in subparagraph 338(a) of the POC Act, unless an offence is explicitly prescribed, an indictable offence under the POC Act will only fall within the definition of 'serious offence' where the infringing activity subject to the offence falls into one of the categories within that paragraph. This includes where the offence is intended to cause, a benefit or loss to the value of at least $10,000.

438. However, determining the monetary benefit derived from a failure to comply with an examination under the POC Act is often impossible, as the examination itself is often necessary to construct a financial profile of the person, and a failure to comply with the examination will often prevent authorities from obtaining this information.

439. It should also be noted that, under items 1-3 of Schedule 6 to the Bill, the maximum penalty for the offences with sections 195, 196 and 197A will be raised from '2 years imprisonment and/or a fine of 120 penalty units' to 'five years imprisonment and/or a fine of 300 penalty units. These amendments will align sections 195, 196 and 197A of the POC Act with similar offences relating to examinations under sections 21A(4), 30, 33 and 35 of the Australian Crime Commission Act 2002, which are also 'serious offences' under table 1 of Schedule 4 to the Proceeds of Crime Regulations 2019.

Part 2 - Application provisions

Item 20 - Application section 266A of the Proceeds of Crime Act 2002

440. This item provides that the amendments of section 266A of the POC Act made by this Schedule apply in relation to information obtained before, at or after the commencement of this item.

441. This retrospective application is necessary to ensure that there is a single and unified regime around the disclosure of information obtained within a single investigation. In practice, an investigation can often involve significant amounts of information obtained over many years. If the amendments were only applied prospectively to information obtained after the commencement of this item, this would mean that multiple laws would apply to information obtained within the same investigations, significantly impeding law enforcement outcomes.

442. There is also precedent for applying amendments to POC Act information-gathering powers retrospectively to information obtained before commencement (see clause 8 to Schedule 1 to the Unexplained Wealth Legislation Amendment Act 2018). These amendments also do not have the effect of criminalising conduct which was otherwise lawful prior to the amendments.

Schedule 7 - Official Trustee

443. This Schedule amends the COAG Reform Fund Act 2008 and the POC Act to enhance the powers of the Official Trustee, who has responsibility for managing the CAA and property seized under the POC Act.

444. In particular, this Schedule ensures that the Official Trustee can use its powers to gather information and deal with property in relation to property forfeited under the POC Act or subject to a direction under section 282 or 282A, allowing this property to be located and preserved during appeal periods. This remedies an existing limitation in the Official Trustee's powers which has allowed the Official Trustee to exercise its powers and perform its duties with respect to property under a restraining order and subject to a custody and control order, but not property which has vested absolutely in the Commonwealth.

445. Amendments have also been made to allow the Official Trustee to tailor its written notices to obtain information in a more precise fashion and enable persons subject to notices under the Official Trustee's information-gathering powers to provide evidence remotely. Amendments also clarify notice requirements when disposing of property by consent.

446. Purely administrative tasks that are currently the responsibility of the Minister under the POC Act, including transferring property to a person under court order, will be given to the Official Trustee under proposed amendments. The Minister will be given the ability to decide whether to transfer forfeited interests to a person where this is contested by a person who had this interest before forfeiture, and will be able to authorise a senior departmental officer to exercise this power.

447. To assist the Official Trustee in meeting its cost-recovery obligations, this Schedule also makes amendments to allow the Official Trustee to recover its remuneration, expenses and costs directly from the CAA, including those incurred under relevant provisions of the MACMA, the Crimes Act 1914 and the Customs Act 1901. This Schedule also makes minor amendments to assist the Official Trustee in meeting its obligations under the A New Tax System (Goods and Services Tax) Act 1999.

448. This Schedule also allows the Minister for Home Affairs to make payments from the CAA to the States and Territories through the COAG Reform Fund, while maintaining the existing ability to provide direct grants to the States and Territories or other organisations such as local councils and community organisations.

449. The amendments also provide that money paid to the Commonwealth by a person under a Commonwealth or foreign deferred prosecution agreement that represents benefits or property derived from, or used or intended to be used in the commission of, unlawful criminal activity in Australia or in a foreign country must be credited to the CAA. This recognises that this money may otherwise be subject to confiscation action under the POC Act. These amendments will not affect financial penalties paid to the Commonwealth under the proposed domestic deferred prosecution agreement, which will be paid to the Consolidated Revenue Fund, reflecting the current practice in Commonwealth criminal matters.

Part 1 - General Amendments

Division 1 - Amendments

COAG Reform Fund Act 2008

Item 1 - Subsection 5(2) (after note 5)

450. This item inserts a note after note 5 which states: 'Note 5A: An amount originating in the Confiscated Assets Account may be transferred to the COAG Reform Fund-see the Proceeds of Crime Act 2002'

Item 2 - At the end of subsection 7(1)

451. This item adds new paragraph 7(1)(e), which states that section 7 of the COAG Reform Fund Act 2008 applies if a grant is not covered by section 298F of the POC Act. This recognises that the process for making a grant from the CAA through the COAG Reform Fund will be outlined in the POC Act rather than the COAG Reform Fund Act 2008.

Item 3 - At the end of subsection 7(3)

452. This item adds note 4 at the end of subsection 7(3) of the COAG Reform Fund Act 2008. Note 4 states that 'the provision referred to in paragraph (1)(e) deals with the channelling, through the COAG Reform Fund, of State/Territory grants payments from the Confiscated Assets Account established by the Proceeds of Crime Act 2002. For terms and conditions of those grants, see the Proceeds of Crime Act 2002'.

Proceeds of Crime Act 2002

Item 4 - Paragraph 9(a)

453. This item omits the words ", which largely relate to property that is subject to restraining orders". This amendment reflects the expansion of the Official Trustee's powers and duties under this Schedule to now also relate to property that is subject to forfeiture orders or forfeited under section 92 and property that is subject to a direction under section 282 or 282A of the POC Act.

Item 5 - At the end of section 69

454. This item adds the heading "Controlled property" and creates subsection 69(4) to clarify that, if property covered by a forfeiture order is controlled property for the purposes of Division 3 of Part 4-1, the limitations imposed by section 69 on when the Commonwealth can begin dealing with forfeited property, do not prevent the Official Trustee from exercising its powers or performing its duties in relation to the controlled property under that Division.

455. This ensures that the Official Trustee can continue to exercise its powers to preserve the value of property during appeal periods where property is forfeited under Part 2-2 of the POC Act.

Item 6 - After paragraph 70(1)(b)

456. This item inserts new paragraph (ba) to require that where a forfeiture order remains in force after the relevant appeal period lapses or the appeal is determined the Official Trustee must, on the Commonwealth's behalf and as soon as practicable:

•

apply any amounts received from the disposal of property under paragraph 70(1)(a); and

•

apply any property specified in the forfeiture order that is money

to the payment of an associated GST entity's liability to pay GST in connection with the disposal.

457. This item will assist the Official Trustee to meet its cost-recovery obligations by allowing the Official Trustee to pay GST liabilities under the A New Tax System (Goods and Services Tax) Act 1999 directly from the funds obtained from the disposal of forfeited property.

458. This item creates an additional step by which the Official Trustee must apply amounts received from the disposal of property and forfeited property that is money before the remainder is credited to the CAA. The effect is that the Official Trustee must first apply amounts received from the disposal of property or property that is money in accordance with existing paragraph 70(1)(b), followed by new paragraph (ba) as inserted by this item, followed by crediting the remained of the money and amounts received to the CAA under existing paragraph (c). This reflects the status quo by which the Official Trustee's costs are paid before proceeds from the sale of forfeited property is finally credited to the CAA.

Item 7 - After Division 4 of Part 2-2

459. This item inserts a new heading "Division 4A-Controlled property" into Part 2-2 of the POC Act.

460. This item inserts section 71A into new Division 4A which allows the Official Trustee to take custody and control of forfeited property.

461. Subsection 71A(1) provides that the Official Trustee may take custody and control of any or all of the property covered by a forfeiture order. Subsection 71A (1) also includes a note that Part 4-1 of the POC Act sets out the Official Trustee's powers over the property. This reflects the fact that the Commonwealth now has an interest in this forfeited property, and it is appropriate that the Official Trustee should be empowered to protect this interest on behalf of the Commonwealth.

462. If the Official Trustee decides to take custody and control of property under subsection 71A(1), subsection 71A(2) allows the court that made the forfeiture order that covers the property that the Official Trustee has taken custody and control of, to make either or both of the following orders:

•

an order determining any question relating to the exercise of powers conferred on the Official Trustee under Division 3 of Part 4-1, or the performance of duties imposed on the Official Trustee under that Division, to the extent that those powers or duties relate to the property;

•

an order directing any person to do anything necessary or convenient to enable the Official Trustee to take custody and control of the property

463. Subsection 71A(3) gives standing to make an application for an order under subsection 71A(2) to the responsible authority, the person who, prior to the forfeiture order, owned the property covered by that order, the Official Trustee, or any other person who has the leave of the court.

464. This item addresses a longstanding deficiency in the POC Act whereby the Official Trustee could not exercise its powers to deal with property or perform its functions under Division 3 of Part 4-1 with respect to property that was the subject of a forfeiture order during appeal periods, even if the property had vested absolutely in the Commonwealth under section 66 of the POC Act.

465. In contrast, the Official Trustee can exercise its powers to deal with property that is the subject of a custody and control order under section 38, including to destroy or dispose of it. This has created the unusual situation whereby property that has been restrained and is subject to a custody and control order can be disposed of or destroyed by the Official Trustee under Division 3 of Part 4-1, but these powers cannot be exercised once the Commonwealth has an interest in this property after forfeiture.

466. Division 4A will remedy this situation, allowing the Official Trustee, in matters where the Official Trustee considers that it is appropriate to do so, to take custody and control over property that is subject to a forfeiture order and, by making the property 'controlled property' for the purposes of Divisions 2 and 3 of Part 4-1, allowing the Official Trustee to exercise its powers in relation to this property.

Items 8-12 - Sections 88 - 89

467. These items omit the word "Minister" and substitute "Official Trustee" in subsections 88(1) and 88(2) and paragraph 89(1)(d).

468. The effect of these items is to ensure that the Official Trustee, not the Minister, is responsible for arranging for the return of property following the discharge of a forfeiture order. This task is purely administrative and better sits with the Official Trustee.

Item 13 - Section 90

469. This item repeals the section and substitutes a new section 90 'Buying out interests in forfeited property'.

470. Subsection 90(1) sets out the mechanism by which a person who is required under subsection 88(1) or 89(1) or under a direction under paragraph 73(2)(c) to have an interest in property transferred to them (the relevant person) can buy out other interests in property that has been forfeited to the Commonwealth under Part 2-2 of the POC Act.

471. Subsection 90(1) of this item replicates the previous section 90, requiring the relevant person to give notice to each other person who had an interest in the property immediately before its forfeiture to the Commonwealth, but includes the Official Trustee in the role of receiving objections under paragraphs 90(1)(d)(ii) and (e). The effect of this is that written objections to the purchase of other interests in the property are lodged with both the Minister and the Official Trustee.

472. Subsection 90(2) as inserted by this item provides that if a written objection is lodged in response to a notice under paragraph 90(1)(d), the Minister or a senior Departmental officer authorised by the Minister for the purposes of this subsection may direct the Official Trustee to transfer the other interest that was the subject of the objection to the person who is seeking to buy out the interest in the property.

473. This item ensures that the Minister, or a Departmental Senior Executive Service delegate will ultimately have responsibility for deciding whether a person will be able to buy out an interest in property in the event that this transfer is opposed by a previous owner of the property. This is appropriate as the Minister generally has responsibility for determining whether forfeited property should be disposed of in an alternate fashion (see sections 70 and 100 of the POC Act).

Item 14 - At the end of section 99

474. This item adds the heading "Controlled property" and creates subsection (4) to clarify that, if property forfeited under section 92 is controlled property for the purposes of Division 3 of Part 4-1, the limitations imposed by section 99 on when the Commonwealth can begin dealing with forfeited property, do not prevent the Official Trustee from exercising its powers or performing its duties in relation to the controlled property under that Division.

Item 15 - Subsection 100(1)

475. This item omits the words "If subsection 99(1) no longer prevents" substituting "If subsection 99(1) authorises".

476. This item makes it clear that the Official Trustee will only apply any amounts received from the disposal of forfeited property and any forfeited property that is money to the CAA once the relevant appeal periods have ended.

Item 16 - After paragraph 100(1)(b)

477. This item inserts new paragraph (ba) to require that where subsection 99(1) authorises disposal of or dealing with property forfeited under section 92, the Official Trustee must, on the Commonwealth's behalf and as soon as practicable:

•

apply any amounts received from the disposal of property under paragraph 100(1)(a); and

•

apply any property specified in the forfeiture order that is money

to the payment of an associated GST entity's liability to pay GST in connection with the disposal

478. This item replicates the effect of paragraph 70(1)(ba), as inserted by item 6, for property that is forfeited by operation of the Act under section 92 and requires that the Official Trustee undertake an additional step, applying amounts received from the disposal of property and any property that is money in accordance with paragraphs (b) and (ba) before crediting the remainder to the CAA.

Item 17 - After Division 2 of Part 2-3

479. This item inserts a heading "Division 2A-Controlled property" into Part 2-3 of the POC Act.

480. This item inserts section 101A into new Division 2A which allows the Official Trustee to take custody and control of forfeited property.

481. Subsection 101A(1) provides that the Official Trustee may take custody and control of property forfeited to the Commonwealth under section 92. Subsection (1) also includes a note which provides that Part 4-1 of the POC Act sets out the Official Trustee's powers over the property.

482. If the Official Trustee decides to take custody and control of property under subsection 101A(1), subsection 101A(2) allows the court that made the restraining order referred to in paragraph 92(1)(b) in relation to the property to make either or both of the following orders:

•

an order determining any question relating to the exercise of powers conferred on the Official Trustee under Division 3 of Part 4-1, or the performance of duties imposed on the Official Trustee under that Division, to the extent that those powers or duties relate to the property;

•

an order directing any person to do anything necessary or convenient to enable the Official Trustee to take custody and control of the property

483. Subsection 101A(3) gives standing to make an application for an order under subsection (2) to the 'responsible authority', the person who, prior to the forfeiture order, owned the property covered by that order, the 'Official Trustee', or any other person who has the leave of the Court.

484. This item addresses a longstanding deficiency in the POC Act whereby the Official Trustee could not exercise its powers to deal with property or perform its functions under Division 3 of Part 4-1 with respect to property that had been automatically forfeited under section 92 during appeal periods, even if the property had vested absolutely in the Commonwealth under section 96 of the POC Act. In contrast, the Official Trustee can deal with restrained property under Division 3 of Part 4-1 where it is subject to a custody and control order, despite this property merely having been restrained and not vesting in the Commonwealth.

485. This item remedies this unusual situation, allowing the Official Trustee, in matters where the Official Trustee considers that it is appropriate to do so, to take custody and control over property that is subject to forfeiture under section 92 of the POC Act and, by making the property 'controlled property' for the purposes of Divisions 2 and 3 of Part 4-1, allowing the Official Trustee to exercise its powers in relation to this property.

Item 18 - Subsection 105(1)

486. This item omits the word "Minister" and substitutes "Official Trustee".

487. The effect of this item is to ensure that the Official Trustee, not the Minister, is responsible for arranging for the return of property following an order made by a court under section 103 of the POC Act. This task is purely administrative and better sits with the Official Trustee.

Item 19 - Section 106

488. This item repeals the section and substitutes new section 106 entitled "Buying out other interests in forfeited property".

489. Proposed subsection 106(1) sets out the mechanism by which a person who is required under section 105 or under a direction under subparagraph 102(d)(i) to have an interest in property transferred to them(the relevant person) can buy out other interests in property that has been forfeited to the Commonwealth under section 92 of the POC Act.

490. Proposed subsection 106(1) replicates the effect of current section 106, requiring the relevant person to give notice to each other person who had an interest in the property immediately before its forfeiture to the Commonwealth, but includes the Official Trustee in the role of receiving objections under paragraphs 106(1)(d)(ii) and (e). The effect of this is that written objections to the purchase of other interests in the property are lodged with both the Minister and the Official Trustee.

491. Proposed subsection 106(2) provides that if a written objection is lodged in response to a notice under paragraph 106(1)(d), the Minister or a senior Departmental officer authorised by the Minister for the purposes of this subsection may direct the Official Trustee to transfer the other interest that was the subject of the objection to the person seeking to buy out that interest.

492. This item ensures that the Minister, or a Departmental Senior Executive Service delegate will ultimately have responsibility for deciding whether interests in forfeited property can be bought out in the event that this purchase is opposed by a previous owner of the property. This is appropriate as the Minister generally has responsibility for determining whether forfeited property should be disposed of in an alternate fashion (see sections 70 and 100 of the POC Act).

Items 20-23 - Section 114

493. These items omit the word "Minister" and substitute "Official Trustee".

494. The effect of these items is to ensure that the Official Trustee, not the Minister, is responsible for arranging for the return of property following forfeiture ceasing to have effect. This task is purely administrative and better sits with the Official Trustee.

Item 24 - After section 267

495. This item inserts new sections 267AA "Additional Property to which the Official Trustee's powers under Division 2 apply" and 267AB "Additional property to which the Official Trustee's powers under Division 3 apply".

496. These sections ensure that the Official Trustee can exercise its powers and perform its duties under Divisions 2 and 3 of Part 4-1 of the POC Act in relation to property that is the subject of a forfeiture order, property forfeited under section 92, or property that is subject to a direction under section 282 or 282A respectively.

497. Proposed section 267AA relates to the Official Trustee's information-gathering powers under Division 2. Subsection 267AA(1) provides that the powers conferred on the Official Trustee under Division 2 may be exercised in relation to property that is the subject of a forfeiture order, property forfeited under section 92 or property that is subject to a direction under section 282 or 282A. Subsection 267AA(2) provides that for the purposes of Division 2, that property is controlled property.

498. The information-gathering powers are intended to function both during appeal periods and until property is finally disposed of (should the Commonwealth succeed on appeal) or returned to an applicant (should the applicant succeed). This ensures that the information-gathering powers can be used to locate property in rare instances in which the location of the property is not known to the Official Trustee at the end of relevant appeal periods.

499. Proposed section 267AB relates to the Official Trustee's powers to deal with property under Division 3. Subsection 267AB(1) provides that the Official Trustee can exercise those powers over the same categories of property as outlined in proposed subsection 267AA(1).

500. Subsection 267AB(2) sets out the period during which the Official Trustee can exercise its powers and perform its duties under Division 3 in relation to property that is the subject of a forfeiture order. Subsection 267AB(3) sets out the period during which the Official Trustee can exercise its powers and perform its duties under Division 3 in relation to property that is forfeited under section 92. Subsection 267AB(4) sets out that the Official Trustee may exercise its powers and perform its duties in relation to property that is subject to a direction under section 282 or 282A during the appeal period set out at section 285 of the POC Act.

501. The purpose of subsections 267AB(2)-(4) is to ensure that the powers under Division 3 are only exercised during relevant appeal periods. Exercising these powers after the appeal period would not be appropriate as the Official Trustee will either be under an obligation to return the property to an applicant (if the applicant is successful on appeal) or to dispose of the property and credit the sale proceeds to the CAA if the Commonwealth is successful (see sections 70, 100 and 294 of the POC Act).

502. Subsection (5) provides that for the purposes of Division 3 and sections 289 and 290 of the POC Act, the property covered by subsections 267AB(1), (2), (3) or (4) is 'controlled property'.

Item 25 - Subsection 270(1)

503. This item inserts the words "to do any or all of the following things" after the words "require the person" in subsection 270(1).

504. This item is consequential to the amendments made to the Official Trustee's power to obtain information and evidence in item 26 and remedies the erroneous interpretation generated by the vague framing of the current section 270 that a person is required to produce information, evidence and books.

505. This item makes it clear that the Official Trustee, by written notice, can require a person to do any of the things set out in paragraphs (a) through (e) of this subsection as amended by item 26, or all of the things set out in that those paragraphs.

Item 26 - Paragraphs 270(1)(a) and (b)

506. This item repeals existing paragraphs 270(a) and (b) and substitutes new paragraphs (a), (b), (c), (d), and (e). Section 270 allows the Official Trustee to require a person, by written notice, to provide information, evidence and books in order to assist the Official Trustee in carrying out its functions and exercising its powers under Part 4-1.

507. Currently, existing paragraph 270(1)(b)-repealed by this item-requires a person to physically attend before the Official Trustee or a person authorised in writing by the Official Trustee to exercise powers to obtain information and evidence. This has created inefficiencies as travel needs to be organised to ensure that persons can attend the Official Trustee's offices, which are often interstate, to provide relevant information directly to the Official Trustee.

508. The new paragraphs inserted by this item provide that the Official Trustee can, by written notice, require a person to:

•

paragraph 270(1)(a): give the Official Trustee such information as the Official Trustee requires for the purposes of the exercise of the Official Trustee's powers or the performance of the Official Trustee's duties under Part 4-1 of the POC Act, and to do so within the period and in the manner specified in the notice

•

paragraph 270(1)(b): attend before the Official Trustee (or a person authorised in writing by the Official Trustee for the purposes of that paragraph), at the time and place specified in the notice, to give evidence relating to any matters connected with the exercise of the Official Trustee's powers or the performance of the Official Trustee's duties under Part 4-1 of the POC Act. This paragraph retains the requirement for person to physically attend the Official Trustee's premises for instances where that is beneficial

•

paragraph 270(1)(c): give evidence by video link, if the evidence relates to any matters connected with the exercise of the Official Trustee's powers or the performance of its duties under Part 4-1, and to commence doing so at the time specified in the notice. This new paragraph provides the Official Trustee with a more efficient tool by which it can use to facilitate the giving of evidence, rather than the existing requirement to physically attend before the Official Trustee

•

paragraph 270(1)(d): give evidence by telephone, if the evidence relates to any matters connected with the exercise of the Official Trustee's powers or the performance of its duties under Part 4-1, and to commence doing so at the time specified in the notice. This new paragraph provides the Official Trustee with a more efficient tool by which it can use to facilitate the giving of evidence, rather than the existing requirement to physically attend before the Official Trustee, and/or

•

paragraph 270(1)(e): produce all books in their possession relating to any matters connected with the exercise of the Official Trustee's powers or the performance of its duties under Part 4-1, and to do so within the period and in the manner specified in the notice.

Item 27 - Subsection 270(2)

509. This item repeals subsection 270(2) and substitutes additional subsections 270(2), (3) and (4). These additional subsections relate to the giving of an oath or affirmation in relation to evidence given under paragraphs 270(1)(b), (c) or (d) as amended by item 26.

510. New subsection 270(2) provides that the Official Trustee, or a person authorised under the paragraph concerned may require the evidence given under that paragraph to be given on oath or affirmation, and either orally or in writing and for that purpose may administer an oath or affirmation.

511. New subsection 270(3) provides that an oath or affirmation to be sworn or made by a person who is to give evidence by video link may be administered by means of video link, or by a person who is authorised by the Official Trustee (or the person authorised under paragraph 270(1)(c)) and is present at the place where the person giving evidence is present.

512. New subsection 270(4) provides that an oath or affirmation to be sworn or made by a person who is to give evidence by telephone may be administered by telephone, or by a person who is authorised by the Official Trustee (or a person authorised under paragraph 270(1)(d)) and is present at the place where the person giving evidence is present.

Item 28 - Section 275

513. This item inserts "(1)" before the words "A person" to create a new subsection 275(1).

Item 29 - Subparagraph 275(b)(ii)

514. This item omits the words "be; or" and substitutes the word "be".

Item 30 - Subparagraph 275(b)(iii)

515. This item repeals the subparagraph. This is necessary to ensure that items 31 and 32 functions as intended.

Item 31 - At the end of section 275

516. This item adds subsections 275(2) and 275(3) creating offence provisions for failing give evidence under paragraph 270(1)(c) and 270(1)(d) respectively, which are inserted by item 26.

517. This amendment is necessary as the offence provision currently in existing section 275 only applies to situations where a person is required to physically attend the Official Trustee to give evidence under existing section 270 and refuses to attend.

518. The offences under new subsections 275(2) and (3) are activated where a person is required under paragraph 270(1)(c) to give evidence by video link (in the case of subsection (2)), or under paragraph 270(1)(d) to give evidence by telephone (in the case of subsection (3)) and the person refuses or fails to be sworn or make an affirmation, or to answer a question that the person is required to answer.

Item 32 - At the end of Division 2 of Part 4-1

519. This item inserts section 275A "Failure to produce a book". This section provides that it is an offence for a person to refuse or fail to comply with a notice under paragraph 270(1)(e) to produce a book.

Item 33 - Paragraph 278(2)(a)

520. This item inserts the word "written" before the word "agreement" to require that an agreement made under paragraph 278(2)(a) is in written form.

Item 34 - Section 279 (at the end of the heading)

521. This item adds the word "etc." at the end of the heading.

Item 35 - Paragraphs 279(1)(a) and (b)

522. This item repeals the paragraphs and substitutes new paragraphs (a), (b) and (c). This item is consequential to the inclusion of property covered by a forfeiture order and property forfeited under section 92 as controlled property for purposes of Division 3 of Part 4-1 by item 24.

523. The effect of this item is to retain the requirement that the Official Trustee must give written notice of the proposed destruction or disposal of controlled property to:

•

the owner of the property, or in the case of property subject to a forfeiture order or forfeited under section 92, the person who owned the property immediately prior to the forfeiture of the property; and

•

any other person whom the Official Trustee has reason to believe may have an interest in the controlled property, or in the case of property subject to a forfeiture order or forfeited under section 92, may have had an interest in the property before its forfeiture.

524. Paragraph (a) applies if the controlled property is covered by a forfeiture order, paragraph (b) applies if the controlled property is property forfeited under section 92 and paragraph (c) applies in any other case involving controlled property.

Item 36 - At the end of section 279

525. This item adds a heading "Pre-disposal agreement" and additional subsections 279(5) and (6) to create a pre-disposal agreement regime whereby the Official Trustee can dispense with the requirement to give written notice of proposed disposal of controlled property to a person who has agreed in writing to the disposal of the controlled property. Under a pre-disposal agreement, when the Official Trustee disposes of the property, the Official Trustee must give the person, with whom the pre-disposal agreement was made, written notice of the property's disposal as soon as practicable after the disposal.

Item 37 - Section 281

526. This item inserts "(1)" before the word "Amounts" to create a new subsection (1). This is consequential to the addition of subsection 281(2) by item 39.

Item 38 - Paragraphs 281(a) and (b)

527. This item repeals the paragraphs and substitutes additional paragraphs (a), (b), (c), (d), (e), and (f) recognising that item 24 of this Schedule expands controlled property for the purposes of Division 3 of Part 4-1 of the POC Act to include property covered by a forfeiture order, property forfeited under section 92 and property subject to charge under section 142, 169 or 179SA that is subject to a direction under section 282 and/or 282A.

528. Section 281 is currently drafted to capture controlled property that is subject to a custody and control order, and as such only covered by a restraining order. This item ensures that any amounts realised from the sale of these additional categories of controlled property under section 278 are covered by the relevant order or charge that covered the controlled property prior to its sale.

Item 39 - At the end of section 281

529. This item adds new subsection (2) which provides that amounts realised from the sale under section 278 of controlled property that is covered by a restraining order or forfeiture order on the basis that the property was proceeds of an offence, or an instrument of an offence continues to be proceeds of that offence or an instrument of that offence.

Item 40 - At the end of Division 3 of Part 4-1

530. This item adds section 281A, which is titled "Official Trustee does not acquire any additional proprietary interests in controlled property". This section is added to make it clear on the face of the POC Act that the Official Trustee does not acquire any additional proprietary interests in controlled property when exercising its duties or performing its functions under Division 3 of Part 4-1.

531. This reflects that proprietary rights will change throughout the course of proceedings based on the operation of the POC Act, such as where forfeiture occurs. However, where the Official Trustee exercises powers or performs duties under Division 3, this does not in and of itself lead to the Official Trustee (acting on behalf of the Commonwealth) acquiring additional proprietary rights.

Item 41 - At the end of section 285

532. This item adds the heading "Controlled property" and creates subsection 285(5) to clarify that, if property to which a direction under section 282 or 282A relates is controlled property for the purposes of Division 3 of Part 4-1, the limitations imposed by this section on the Official Trustee not to carry out directions during appeal periods do not prevent the Official Trustee from exercising its powers or performing its duties in relation to the controlled property under that Division.

Item 42 - Paragraph 288(1)(a)

533. This item omits the words "or under" and substitutes ", under".

Item 43 - Paragraph 288(1)(a)

534. This item inserts the words "or under section 208DA or Division 3 of Part XIII of the Customs Act 1901" after "Mutual Assistance Act". This ensures that provisions under the Proceeds of Crime Regulations 2019 can relate to costs, charges and expenses incurred in connection with the Official Trustee's exercise of powers and performance of functions and duties under section 208DA or Division 3 of Part XIII of the Customs Act 1901.

Item 44 - At the end of subsection 289(1)

535. This item inserts a note that section 267AB extends the meaning of 'controlled property' for the purposes of this section.

Item 45 - Subsection 289(2)

536. This item omits the words "the restraining order relating to the controlled property ceases to be in force and the property is returned to its owner" and substitutes "the controlled property is returned to its owner as a result of a restraining order ceasing to be in force or as a result of the controlled property ceasing to be subject to forfeiture under this Act".

537. This item is consequential to the expansion of the term 'controlled property' for the purposes of Division 3 of Part 4-1 of the POC Act to include property subject to a forfeiture order, property forfeited under section 92 and property subject to a confiscation direction under section 282 or 282A.

Item 46 - At the end of subsection 290(1)

538. This item inserts a note which provides that section 267AB extends the meaning of 'controlled property' for the purposes of this section.

Item 47 - After paragraph 296(1)(a)

539. This item inserts new paragraph 296(1)(aa) which requires that amounts be credited to the CAA equal to input tax credits to which the Official Trustee is entitled, following the disposal of property section 70 and 100 of the POC Act and applying any amounts realised from the disposal, and any property that is money to the payment of GST liability. This allows the Official Trustee to credit these input tax credits to the CAA.

Item 48 - Paragraph 296(3)(b)

540. This item omits "90(f)" and substitutes "90(1)(f)" as a consequential amendment to the amendments in item 13.

Item 49 - Paragraph 296(3)(d)

541. This item omits "106(f)" and substitutes "106(1)(f)" as a consequential amendment to the amendments in item 19.

Item 50 - After paragraph 297(b)

542. This item inserts new paragraph (ba) to allow the transfer of amounts from the CAA to the COAG Reform Fund in accordance with proposed section 298E-inserted by item 55-to enable grants to be made to the States and Territories for crime prevention and other measures under proposed section 298A-inserted by item 55.

Item 51 - Paragraph 297(e)

543. This item omits the words "but that the Official Trustee has been unable to recover" at paragraph 297(e) and substitutes "or (b)". The substitution of "or (b)" will allow the Official Trustee to make payments out of the CAA to recover their remuneration pursuant to paragraph 288(1)(b) of the POC Act. Currently, the Official Trustee recovers its remuneration from the sale proceeds of confiscated property (see paragraphs 70(1)(b), 100(1)(b) and 284(1)(b)) but, where the value of the property is less than the remuneration owed, the Official Trustee can struggle to meet its cost-recovery obligations.

Item 52 - After paragraph 297(e)

544. This item inserts new paragraph (ea) to enhance the Official Trustee's cost recovery function by allowing the transfer of amounts from the CAA to recover the Official Trustee's costs, charges, expenses and remuneration that was payable to the Official Trustee under regulations made for the purposes of subsection 9B(1) of the Crimes Act 1914.

Item 53 - After paragraph 297(f)

545. This item inserts new paragraph (faa) to enable the transfer of amounts from the CAA to make payments to discharge an associated GST entity's liability to pay GST in connection with a disposal under section 70 or 100. This amendment ensures that GST liabilities can be paid from money taken directly from the CAA, assisting the Official Trustee in discharging its cost-recovery obligations.

Item 54 - Before paragraph 296(1)(h)

546. This item inserts new paragraph (gb) which provides that money (other than a penalty) that is paid by a person to the Commonwealth (directly or indirectly) under, or in connection with, a 'foreign deferred prosecution agreement', and that represents any or all of the following must be credited to the CAA:

(i)

the whole or a part of benefits the person derived from alleged 'unlawful activity';

(ii)

the whole or a part of property that is wholly or partly derived or realised by the person, directly or indirectly, from alleged 'unlawful activity';

(iii)

the whole or a part of property that is used in, or in connection with, the commission of alleged 'unlawful activity';

(iv)

the whole or a part of property that is intended to be used in, or in connection with, the commission of alleged 'unlawful activity'.

547. A 'foreign deferred prosecution agreement' is defined at amended section 338 to mean an agreement that: is between a person and a competent authority of a foreign country; and provides for the indefinite deferral of the prosecution of the person for an offence against a law of the foreign country, so long as the conditions set out in the agreement are met. 'Unlawful activity' is relevantly defined under current section 338 to mean an act or omission that constitutes an offence against a law of the Commonwealth, a law of a State or Territory or a law of a foreign country.

548. 'Foreign deferred prosecution agreements' often require the payment of an amount that represents the value of one of the following: a criminal fine that may have been ordered should the prosecution for the 'unlawful activity' have proceeded; the benefits derived from the 'unlawful activity'; or property that was derived from, used in, or intended to be used in 'unlawful activity'.

549. New paragraph (gb) allows amounts to be credited to the CAA that may otherwise have been subject to confiscation action under Australian law. Amounts representing the payment of a criminal penalty will generally be paid to the foreign country or, if they are paid to the Commonwealth, will be credited to the Consolidated Revenue Fund. This reflects current practice in respect of financial penalties in Commonwealth criminal matters.

Item 55 - At the end of Part 4-3

550. This item inserts a heading "Division 4-Grants to the States and Territories for crime prevention etc." which provides a regime by which the Minister can make grants to the States and Territories, for crime prevention measures, law enforcement measures, measures relating to the treatment of drug addiction and diversionary measures relating to illegal use of drugs.

551. Historically, funding for these measures has been provided to through direct funding agreements to organisations and agencies. This item provides the necessary legislative authority for amounts to be transferred from the CAA and channelled through the COAG Reform to be made as grants to States and Territories.

552. Section 298A provides the power for the Minister to make grants to the States and Territories for crime prevention and other measures as discussed above, and provides that, without limiting how grants may be made, grants for these measures may be made by way of the reimbursement, or partial reimbursement, of costs or expenses.

553. Section 298B sets out the terms and conditions that apply to grants made under section 298A:

•

terms and conditions must be set out in a written agreement between the Commonwealth and the grant recipient;

•

the grant recipient must comply with the terms and conditions; and

•

the terms and conditions must provide for the circumstances in which the grant recipient must repay amounts to the Commonwealth (as a debt due to the Commonwealth).

554. The written agreement must be entered into by the Minister on behalf of the Commonwealth.

555. Section 298C provides that the Minister, on the Commonwealth's behalf, exercises all the rights, responsibilities, duties and powers of the Commonwealth in relation to the Commonwealth's capacity as the grantor of a grant made under section 298A.

556. Section 298D provides that the Minister may exercise the powers conferred on the Minister by the written agreement made under section 298B.

557. Section 298E provides the legislative authority for the channelling of funds from the CAA to the COAG Reform Fund for the purposes of a grant of financial assistance to a State or Territory. If the Minister decides that a grant should be made under section 298A, this section requires the Minister to direct that an amount equal to the amount of the grant be debited from the CAA and credited to the COAG Reform Fund.

558. Such a direction is necessary for an amount to be debited from the COAG Reform Fund for the purpose of making the grant and, to ensure efficiency, two or more directions by the Minister may be set out in the same document. For clarity, subsection (4) provides that a direction by the Minister is not a legislative instrument, and under subsection (5), the Minister must give a copy of the direction to the Treasurer. It is appropriate that this direction not be a legislative instrument as it is merely declaratory of the law, moving funding equal to the grant amount from one account to another in order to fulfil the terms of the grant made under section 298A, rather than determining or altering a law pursuant to subsection 8(4) of the Legislation Act 2003.

559. Section 298F provides the legislative authority for the Treasurer to ensure that the COAG Reform Fund is debited for the purposes of making the grant as soon as practicable after the amount has been credited under paragraph 298E(1)(b) to the COAG Reform Fund for the purpose of making a grant of financial assistance to a State or Territory.

Item 56 - Section 338

560. This item inserts definitions of 'associated GST entity' and 'COAG Reform Fund' in section 338 of the POC Act. These new definitions are consequential to amendments made by this Bill to ensure that the Official Trustee meets relevant GST liabilities, and to facilitate the making of grants of financial assistance to States and Territories using amounts in the CAA respectively.

Item 57 - Section 338 (note to the definition of controlled property )

561. This item omits "Note" and substitutes "Note 1" to enable additional notes to be added to this definition in item 58.

Item 58 - Section 338 (at the end of the definition of controlled property )

562. This item adds two additional notes consequential to altering of the meaning of 'controlled property' under item 24 to include property subject to a forfeiture order, property forfeited under section 92 and property subject to a direction under section 282 or 282A.

Item 59 - Section 338

563. This item inserts definitions for 'entitled', 'GST', 'input tax credit' and 'liability to pay GST' into the POC Act's dictionary (section 338). These new definitions are consequential to amendments made by this Bill to ensure the Official Trustee meets relevant GST liabilities. The item also inserts the definition of 'foreign deferred prosecution agreement', which is used in new paragraph 296(gb).

Division 2 - Application of amendments

Item 60 - Application-sections 270 and 275 of the POC Act

564. This item provides that the amendments of sections 270 and 275 made by this Schedule apply in relation to a notice given under section 270 of the POC Act after the commencement of this item.

Item 61 - Application-section 278 of the POC Act

565. This item provides that the amendment of section 278 made by this Schedule applies in relation to an agreement made or given by a person after the commencement of this item.

Item 62 - Application-section 279 of the POC Act

566. This item provides that the amendment of subsection 279(1) made by this Schedule applies in relation to a notice given, and the amendment of subsections 279(5) and (6) made by this Schedule apply in relation to an agreement made or given by a person, after the commencement of this item.

Item 63 - Application-section 281 of the POC Act

567. This item provides that the amendment of section 281 made by this Schedule applies in relation to a sale that occurs after the commencement of this item.

Item 64 - Application-paragraph 296(1)(aa) of the POC Act

568. This item provides that the insertion of paragraph 296(1)(aa) made by this Schedule applies in relation to input tax credits to which the Official Trustee becomes entitled after the commencement of this item.

Item 65 - Application-paragraph 297(e) of the POC Act

569. This item provides that the amendment of paragraph 297(e) made by this Schedule, so far as it concerns amounts payable to the Official Trustee under regulations made for the purposes of paragraph 288(1)(a) of the POC Act, applies in relation to costs, charges and expenses incurred after the commencement of this item.

570. This item also provides that the amendment of paragraph 297(e) made by this Schedule, so far as it concerns amounts payable to the Official Trustee under regulations made for the purposes of paragraph 288(1)(b) of the POC Act, applies in relation to remuneration that becomes payable after the commencement of this item.

Item 66 - Application-paragraph 297(ea) of the POC Act

571. This item provides that the insertion of paragraph 297(ea) under this Schedule, so far as it concerns amounts payable to the Official Trustee under regulations made for the purposes of paragraph 9B(1)(a) of the Crimes Act 1914, applies in relation to costs, charges and expenses incurred after the commencement of this item.

572. This item also provides that the insertion of paragraph 297(ea) made by this Schedule, so far as it concerns amounts payable to the Official Trustee under regulations made for the purposes of paragraph 9B(1)(b) of the Crimes Act 1914, applies in relation to remuneration that becomes payable after the commencement of this item.

Part 2 - Amendments contingent on the commencement of the Crimes Legislation Amendment (Combatting Corporate Crime) Act 2020

Proceeds of Crime Act 2002

Item 67 - After paragraph 296(1)(f)

573. This item inserts new paragraph (fa) which provides that money (other than a penalty) that is paid by a person to the Commonwealth (directly or indirectly) under a 'Commonwealth deferred prosecution agreement', and that represents any or all of the following must be credited to the CAA:

(i)

the whole or a part of 'benefits' the person derived from alleged 'unlawful activity';

(ii)

the whole or a part of property that is wholly or partly derived or realised by the person, directly or indirectly, from alleged 'unlawful activity';

(iii)

the whole or a part of property that is used in, or in connection with, the commission of alleged 'unlawful activity';

(iv)

the whole or a part of property that is intended to be used in, or in connection with, the commission of alleged 'unlawful activity'.

574. A 'Commonwealth deferred prosecution agreement' is defined at amended section 338 to mean a 'deferred prosecution agreement' (within the meaning of the Director of Public Prosecutions Act 1983). This definition would be inserted upon the commencement of Part 1 of Schedule 2 to the Crimes Legislation Amendment (Combatting Corporate Crime) Act 2020. 'Unlawful activity' is relevantly defined under current section 338 to mean an act or omission that constitutes an offence against a law of the Commonwealth, a law of a State or Territory or a law of a foreign country.

575. Under the proposed 'Commonwealth deferred prosecution agreement' scheme, 'deferred prosecution agreements' must contain a financial penalty of an appropriate severity. 'Deferred prosecution agreements' may also require the payment of an amount that represents the value of the 'benefits' derived from the 'unlawful activity'; or property that was derived from, used in, or intended to be used in 'unlawful activity'.

576. New paragraph (fa) will allow amounts representing the 'benefits' derived from the 'unlawful activity'; or property that was derived from, used or intended to be used in or in connection with, 'unlawful activity' to be credited to the CAA. This recognises that these 'benefits' or property would ordinarily be subject to confiscation action under the POC Act. These amendments will not affect the payment of financial penalties, which will be paid to the Consolidated Revenue Fund. This reflects current practice in respect of financial penalties in Commonwealth criminal matters.

Item 68 - Section 338

577. This item defines 'Commonwealth deferred prosecution agreement' to mean a 'deferred prosecution agreement' (within the meaning of the Director of Public Prosecutions Act 1983). This definition would be inserted upon the commencement of Part 1 of Schedule 2 to the Crimes Legislation Amendment (Combatting Corporate Crime) Act 2020.

Attachment A Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

CRIMES LEGISLATION AMENDMENT (ECONOMIC DISRUPTION) BILL 2020

1. This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Bill

2. The purpose of the Crimes Legislation Amendment (Economic Disruption) Bill 2020 (the Bill) is to enhance Commonwealth agencies' ability to undermine the business model of transnational, serious and organised criminal groups. These groups are profit-motivated, and employ a range of new technologies and methodologies to manage, move and disguise the origin of funds. Driven by the possibility of commercial benefit, organised crime groups no longer adhere to particular associations or crime-types, and instead fluidly adjust their activities to maximise their illicit gains and avoid law enforcement detection.

3. The Bill amends the Crimes Act 1914 (the Crimes Act), the Criminal Code Act 1995 (the Criminal Code), the COAG Reform Fund Act 2008 and the Proceeds of Crime Act 2002 (the POC Act).

4. Schedule 1 updates Commonwealth money laundering offences to address modern money laundering networks and remove unnecessary obstacles to securing convictions and appropriate sentencing outcomes. Money laundering networks are typically led by 'controllers' who issue directions to others to deal with particular money or other property, intentionally keeping these individuals ignorant of its criminal origins while operating at an arms-length to avoid criminal liability.

5. The amendments target these networks by:

•

extending money laundering offences to persons who cause a criminal dealing with money or other property to occur, capturing the 'controllers' of these networks who do not typically deal with money or other property directly

•

preserving current money laundering offences that require the prosecution to prove a link between money or other property and a class of indictable offence (as outlined in Lin v the Queen [2015] NSWCCA 204) while establishing new criminal offences requiring a link to only be established to 'proceeds of general crime'

•

providing that, for the offence of attempting to commit a money laundering offence that requires a person to be reckless or negligent as to whether property is 'proceeds of general crime' or 'proceeds of indictable crime', recklessness will be the relevant fault element in relation to this circumstance

•

introducing a new offence of dealing with money and/or other property valued at $1,000,000 or more where it is reasonable to suspect that the money and/or other property was 'proceeds of indictable crime'

•

adding another tier of offences relating to money and/or other property valued at $10,000,000, and

•

addressing a vulnerability in the mistake of fact exemption at section 400.10 of the Criminal Code as created by the Victorian Court of Appeal in Singh v the Queen [2016] VSCA 163.

6. Schedule 2 amends the Crimes Act to clarify that the obligations imposed on investigating officials under Part IC, including the requirement under section 23F, to caution a person who is under arrest or who is a protected suspect before starting to question the person, do not apply to undercover operatives. This also includes those obligations listed in Division 2, in their capacity as undercover operatives. The requirements imposed upon investigating officials in Division 2 relate to the arrest and detention of persons and would only be exercised by officers acting overtly. The purpose of this Schedule is to ensure that any evidence gained by undercover operatives is admissible (subject to the court's ultimate discretion regarding admissibility of any evidence). Further, this Schedule brings the definition of the term 'investigating official' under the Crimes Act into line with the Evidence Act 1995 (Evidence Act).

7. Schedule 3 amends the POC Act to ensure that criminal entities are not afforded an opportunity to buy back forfeited property and that, if this opportunity is made available to a person, the forfeited property is not bought back with illicit funds or unexplained wealth. This Schedule also grants law enforcement appropriate information-gathering powers to achieve these objectives and makes procedural changes to ensure that a person cannot use buy-back applications to unnecessarily delay proceedings.

8. Schedule 4 clarifies the definition of the term 'benefit' under the POC Act, explicitly providing that 'benefit' includes the avoidance, deferral or reduction of a debt, loss or liability. This could include, for example, the criminal evasion of import duties, excises or taxation. This amendment reflects the existing operation of the POC Act, which allows pecuniary penalty orders and literary proceeds orders to be made in relation to both a benefit gained and loss avoided through criminal conduct.

9. Schedule 5 clarifies that orders made by a court with proceeds jurisdiction under the POC Act can be made in respect of property located overseas. This reflects the existing operation of the POC Act, in conjunction with the operation of international asset recovery mechanisms and domestic legislation such as the Mutual Assistance in Criminal Matters Act 1987 (the MACMA), which extends the reach of the POC Act to property located overseas.

10. Schedule 6 strengthens information-gathering powers under the POC Act by increasing penalties for non-compliance and clarifying the circumstances in which information gathered under these powers can be disclosed and used. The Schedule also allows enhanced restraint and confiscation action to be taken where a person commits a non-compliance offence under section 195, 196 or 197A of the POC Act in relation to an examination notice.

11. Schedule 7 expands the Official Trustee in Bankruptcy's powers to deal with property, gather information and recover costs under the POC Act to allow the Official Trustee to discharge its functions in a more cost-effective manner.

12. In particular, Schedule 7 ensures the Official Trustee can use its powers to gather information and deal with property in relation to property forfeited under the POC Act or subject to a direction under existing sections 282 and 282A, allowing this property to be located and preserved during appeal periods. Amendments have also been made to allow the Official Trustee to tailor its written notices to obtain information in a more precise fashion and to clarify notice requirements when disposing of property by consent.

13. To assist the Official Trustee in meeting its cost-recovery obligations, Schedule 7 also makes amendments to allow the Official Trustee to recover its remuneration, expenses and costs directly from the Confiscated Assets Account, including those incurred under relevant provisions of the Mutual Assistance in Criminal Matters Act 1987, the Crimes Act and the Customs Act 1901. Minor amendments are also made to assist the Official Trustee in meeting its obligations under the A New Tax System (Goods and Services Tax) Act 1999.

14. Schedule 7 also transfers purely administrative tasks that are currently the responsibility of the Minister under the POC Act, including transferring property to a person under court order, to the Official Trustee. The Minister will be able to decide whether to transfer forfeited interests to a person where this is contested by a person who had this interest before forfeiture, and will be able to authorise a senior Departmental officer to exercise this power.

15. Schedule 7 also allows the Minister for Home Affairs to make payments from the Confiscated Assets Account to the States and Territories through the COAG Reform Fund, while maintaining the existing ability to provide direct grants to the States and Territories or other organisations such as local councils and community organisations.

Human rights implications

16. This Bill engages the following human rights:

•

the right to life in Article 6 of the International Covenant on Civil and Political Rights (ICCPR)

•

the right to freedom of movement in Article 12(1) of the ICCPR

•

the right to the presumption of innocence in Article 14 of the ICCPR and Article 40 of the Convention on the Rights of the Child (CRC), the right to a fair trial and fair hearing in Article 14 of the ICCPR, and the right to minimum guarantees in criminal proceedings contained in Article 14(3) of the ICCPR

•

the prohibition against retrospective punishment in Article 15 of the ICCPR, and

•

the right to privacy in Article 17 of the ICCPR.

Right to life

17. Article 6 of the ICCPR provides that 'every human being has the inherent right to life' and that '[t]his right shall be protected by law.'

Schedule 6 - Information

18. Item 9 of Schedule 6 to the Bill may engage the right to life, as it amends the POC Act to allow information obtained through information-gathering powers to be disclosed to the 'Mutual Assistance Department' designated under the MACMA or an authority of a foreign country with functions corresponding to the functions of the 'Mutual Assistance Department' to assist in the prevention, investigation or prosecution of offences as well as assisting in the identification, location, tracing, investigation or confiscation of proceeds or instruments of crime.

19. Where the corresponding foreign authority is located in a foreign country that has not abolished the death penalty, there exists potential for the right to life to be engaged by the disclosure of information to the corresponding foreign authority as a result of the amendments in item 9.

20. However, the risk of the right to life being engaged by these amendments is mitigated by existing legislative requirements in the MACMA which prevent the provision of assistance to a foreign country where the death penalty may be imposed on the person subject to subsections 8(1A) and 8(1B) of the MACMA.

21. The MACMA expressly provides that a request by a foreign country for assistance must be refused if it relates to the investigation, prosecution or punishment of a person who has been arrested, detained, charged with, or convicted of, an offence in respect of which the death penalty may be imposed by the foreign country, unless the Attorney-General is of the opinion, having regard to the special circumstances of the case, that the assistance request should be granted. In addition, a request by a foreign country for assistance may be refused if the Attorney-General believes that the provision of the assistance may result in the death penalty being imposed on a person and, after taking into consideration the interests of international criminal cooperation, is of the opinion that in the circumstances of the case the request should not be granted.

22. The Explanatory Memorandum to Mutual Assistance in Criminal Matters Legislation Amendment Act 1996 provides that special circumstances of the case may include where the information would assist the defence, or where the foreign country undertakes not to impose or carry out the death penalty.

23. Item 9 of Schedule 6 is compatible with the right to life under Article 6 of the ICCPR as insofar as the disclosure of information to the Mutual Assistance Department, or the foreign equivalent, may potentially engage the right to life, existing legislative frameworks prohibit the provision of assistance to a foreign country where that assistance may result in the imposition of the death penalty.

Right to freedom of movement

24. Article 12(1) of the ICCPR provides that 'everyone lawfully within the territory of a State shall, within that territory, have the right to liberty of movement and freedom to choose his residence'. Article 12(2) of the ICCPR states that 'everyone shall be free to leave any country, including his own'.

25. Pursuant to Article 12(3), these rights can be restricted by laws consistent with other rights in the ICCPR where this is necessary to protect national security, public order, public health or morals or the rights and freedoms of others.

(a) Schedule 3 - Buy-backs

26. Buy-back orders under the POC Act give a person an exclusive right to buy back property confiscated by the Commonwealth before it is disposed of by the Commonwealth, often by public auction.

27. Item 6 of Schedule 3 to the Bill may engage the right to freedom of movement, as it amends the POC Act to allow a court to make an examination order in relation to a person's application to buy back property under the POC Act. An approved examiner may issue an examination notice to a person subject to an examination order under section 183 of the POC Act, requiring the person to physically attend an examination at the time and place specified in the examination notice pursuant to subsection 186(1).

28. However, to the extent this item places a limitation on the right to freedom of movement, the limitation is necessary to protect public order by ensuring that illicit funds are not used to acquire forfeited property.

29. Currently, law enforcement does not have access to adequate information-gathering powers to properly investigate applicants for buy-back orders. As a result, there is a risk that criminal entities could buy back property through proxies or using illicit funds or unexplained wealth, perpetuating the laundering of illicit finances and unfairly denying other potential buyers an opportunity to purchase the property. Applying examination orders to buy-back applications will allow a responsible authority to test a person's claim that they are purchasing the property legitimately.

30. These reforms serve the legitimate objective of ensuring that criminal entities or their proxies do not illegitimately buy back forfeited property. The requirement to attend an examination is reasonable, necessary and proportionate in achieving the legitimate objective and is the least restrictive means of achieving the desired result.

31. In addition, there are less restrictive options for examination currently available under the POC Act. Under section 190, an approved examiner may direct that a person be examined by video link or by telephone in appropriate circumstances. This section ensures that physical attendance may not be required where it would cause unreasonable expense or inconvenience to a person and it is in the interests of justice that a person be examined through alternative means.

32. Item 6 of Schedule 3 is therefore compatible with the right to freedom of movement under Article 12 of the ICCPR as, to the extent that right is limited, it does so in a manner which is reasonable and proportionate to achieving the legitimate objective of protecting public order.

(b) Schedule 7 - Official Trustee

33. Item 26 of Schedule 7 promotes the right to freedom of movement by amending section 270 to allow a person to give evidence via video link or telephone to the Official Trustee, or a person authorised in writing to the Official Trustee, and by removing the requirement that a person attend the Official Trustee in person to produce books in their possession.

34. This gives the Official Trustee greater flexibility in using its powers under paragraph 270(1)(b) which, in its current form, require a person to give evidence or produce books by attending in person before the Official Trustee. This requirement has meant that persons subject to this power have needed to travel great distances to produce material that could have been conferred through electronic or other means.

Presumption of Innocence

35. Article 14(2) of the ICCPR states that those charged with criminal offences have the right to be presumed innocent until proved guilty. The presumption of innocence imposes on the prosecution the burden of proving the charge and guarantees that no guilt can be presumed until the charge has been proved beyond reasonable doubt. Article 40 of the Convention on the Rights of the Child (CRC) also provides that a child should have the right to be presumed innocent unless proven guilty. To the extent that a minor is charged with any of the relevant offences, Article 40 of the CRC may also be engaged.

(a) Schedule 1 - Money laundering

36. Schedule 1 to the Bill engages these rights by creating new offences which engage the existing presumptions that particular elements of offences are satisfied in particular circumstances, and requiring the defendant to rely on exemptions to establish an absence of criminal liability.

37. The new offence provisions in this Schedule rely on the following existing presumptions and exemptions:

•

Existing subsection 400.9(2) - This subsection contains statutory presumptions that determine the circumstances in which, under the new offences created by item 62 in Schedule 1, it will be reasonable to suspect that money or other property is proceeds of an indictable offence. Absolute liability also applies to this element of the offence under item 67.

•

Existing subsection 400.9(5) - This subsection contains an exception which will apply to the offences at item 62 in Schedule 1, applicable where the defendant discharges a legal burden that he or she had no reasonable grounds for suspecting that the money or other property was derived or realised, directly or indirectly, from some form of unlawful activity.

•

Existing section 400.10 (as amended by items 68-72 of the Bill) - This is the existing exemption of reasonable mistake of fact as to the value of money or other property, which applies to all offence provisions included in Schedule 1. Absolute liability applies to the physical element relating to the value of money or other property for each offence.

38. These rebuttable presumptions and exemptions are reasonable and necessary to target money laundering networks, which are structured to deliberately keep participants at an arms-length from relevant information to avoid criminal liability. This problem is compounded as, even where these structures are not adopted, money laundering is usually conducted separately from the predicate offence and by persons other than the perpetrators of the predicate offence. In this context, members of money laundering networks may only have a reasonable suspicion that money or other property was derived from crime, and may not be able to come to this conclusion with any greater certainty or particularity, but nonetheless, in the circumstances, it was reasonable that they should have suspected that the money or the property they were dealing with was the proceeds of crime.

39. In this context, the Australian Law Reform Commission's review 'Confiscation that Counts: A Review of the Proceeds of Crime Act 1987', at recommendation 28, recommended that rebuttable presumptions as to when it is reasonable to suspect that property is proceeds of crime be included in relevant offence provisions. This approach was subsequently adopted in subsection 400.9(2) and in applying absolute liability to the element that it is reasonable to suspect that money or other property is proceeds of crime.

40. The new offence provisions will engage existing exceptions. The existing exceptions at subsection 400.9(5) and section 400.10 are justified on the basis that a person's purpose for dealing with money or other property, or causing a dealing to occur, and the extent of their subjective awareness as to its tainted nature or value, are matters peculiarly within the person's knowledge, and the person ought to lead evidence of these facts rather than the prosecution. Requiring the prosecution to establish these subjective matters beyond reasonable doubt is often impossible to achieve in practice, and severely undermines law enforcement's ability to target organised crime networks.

41. The exception at subsection 400.9(5) must be proven to a legal standard of proof. This is appropriate given the knowledge and information the defendant has regarding the nature of their own dealing with money or other property, or the situation in which they caused this dealing to occur, and the difficulty that law enforcement has in obtaining or proving the existence of this information.

42. These presumptions and exceptions maintain the rights of the accused by providing that they are not criminally liable in appropriate cases.

43. The effect of the new offences created by item 62 of Schedule 1 is that a defendant will not be criminally liable for an offence where they were subjectively unaware of any facts that would raise a reasonable suspicion that money or other property was derived or realised, directly or indirectly, from some form of unlawful activity. These facts may objectively exist but, if the defendant is unaware of these facts, it is not appropriate that they be found criminally liable for dealing with this money or other property under section 400.9 of the Criminal Code. This ensures that these offences are reasonable and proportionate, as they allow for a person's subjective knowledge to be taken into account, allowing a person to avoid criminal liability where they were unaware of circumstances which indicated that money or property was derived from unlawful activity.

44. The effect of the exception at section 400.10 is that, where the person is less culpable about the element of the offence concerning the value of money or other property, then he or she should be subject to a lower maximum penalty for dealing with this money or other property or causing a dealing to occur. This exception, as amended, will not mean that the person is not criminally liable where they simply refuse to consider the value of the money or other property, or where their erroneous belief as to its value is discharged while they are dealing with the property. This addresses the typical behaviour of money laundering networks, wherein individuals are often kept wilfully blind as to the value of money or property, and may only discover its true value when dealing with it.

Conclusion

45. Schedule 1 therefore engages the presumption of innocence. To the extent that the right is limited, the limitation is reasonable, necessary and proportionate to the legitimate aim of protecting public order and ensuring that the multiple layers of organised crime networks from money mules to kingpins can be brought to justice.

Right to a fair trial and fair hearing, and minimum guarantees in criminal proceedings

46. Article 14 of the ICCPR provides two separate sets of obligations. Article 14(1) provides for the right to 'a fair and public hearing by a competent, independent and impartial tribunal established by law', both in the cases of a 'criminal charge' and the determination of one's rights and obligations in 'a suit at law'. The fair trial rights provided for in Article 14(1) include the privilege against self-incrimination.

47. Articles 14(2) to (7) then provide the minimum guarantees which apply to criminal proceedings only. Article 14(3)(g) of the ICCPR provides that, in the determination of any criminal charges against him, everyone shall be entitled not to testify against himself or confess guilt. The prohibition against self-incrimination, together with the right to be presumed innocent, also provides for a right to silence during investigations or in pre-trial questioning as well as at trial.

Schedule 2 - Investigation of Commonwealth offences

48. Schedule 2 of the Bill amends the definition of 'investigating official' in Part IC of the Crimes Act to clarify that undercover operatives are exempt from the obligations imposed on investigating officials under this Part, including the requirement under section 23F, to caution a person who is under arrest or a protected suspect before starting to question the person. The Schedule engages the right to a fair trial and fair hearing in criminal proceedings under Article 14 of the ICCPR and Article 40(1) of the CRC, and the minimum guarantees in criminal proceedings contained in Article 14(3) of the ICCPR and Article 40(2) of the CRC.

49. The Evidence Act includes an express exemption in the definition of 'investigating official' from the obligation to caution for investigating officials who are engaged in covert investigations under the orders of a superior. This exemption however, does not override Part IC of the Crimes Act to excuse an undercover operative's breach of that law, and therefore highlights a key inconsistency between the two Acts.

50. Further, Schedule 2 provides an exemption for undercover operatives from the broader requirements under Division 3, such as those in relation to the right to communicate with a friend, relative and legal practitioner (section 23G), questioning Aboriginal persons and Torres Strait Islanders (section 23H), questioning persons under the age of 18 (section 23K) and the right to an interpreter (section 23N). For example, section 23K provides that 'investigating officials' must not question a person under the age of 18 unless an interview friend is present while the person is being questioned and, before the start of the questioning, the official has allowed the person to communicate with the interview friend in circumstances in which, as far as practicable, the communication will not be overheard. The court also continues to have discretion to consider whether or not to admit evidence obtained by an undercover operative, on fairness or other public policy grounds.

51. Schedule 2 serves the legitimate objective of maintaining public order, by ensuring that any evidence gained by undercover operatives is not considered to have been obtained unlawfully, by reason of the fact that an undercover officer did not comply with the Part IC procedures, improving the Commonwealth's capacity to prosecute serious criminal offences. The amendments are necessary, since requiring compliance with the obligations contained in Part IC, including under sections 23F, 23G, 23H, 23K and 23N, would directly undermine any undercover activity undertaken by law enforcement officers. The amendments are reasonable and proportionate, as the court retains its discretion to consider whether or not to admit any evidence obtained in this way, on fairness or other grounds. The amendments made by Schedule 2 also bring the definition of the term 'investigating official' under the Crimes Act into line with the Evidence Act.

52. To the extent that this Schedule may limit the right to a fair trial and to minimum guarantees in the criminal proceedings, the limitations are reasonable, necessary and proportionate in achieving the legitimate objective.

Schedule 3 - Buy-backs

53. Sections 57A and 104A in Schedule 3 make changes to the procedures for applying for a buy-back order under the POC Act to encourage people to make an application prior to the forfeiture of property. The measure is aimed at the legitimate objective of assisting in the timely administration of the Act, aligning the procedure for buy-back orders with existing procedures for exclusion and compensation orders under existing sections 74, 78 and 94A, allowing a court to consider all these orders in the context of the forfeiture proceedings.

54. These sections may engage the right to a fair hearing in civil proceedings under Article 14(1) but do not engage the guarantees in criminal proceedings conferred by Article 14(2) to (7). Proceedings under the POC Act are characterised as civil proceedings under section 315 of the Act, and are heard by state and territory courts in accordance with relevant procedures of those courts. Neither the information-gathering powers nor subsequent civil proceedings under the Act involve determinations being made as to a person's guilt or innocence or the conferral of criminal liability.

55. While sections 57A and 104A may engage the right to a fair hearing, to the extent that they limit the right by requiring a person to make an application for a buy-back prior to the forfeiture of property, the measures are proportionate, as a person is still afforded the right to bring an application to buy back property in appropriate circumstances. Under subsections 57A(2)-(4) and 104A(2)-(4) a court can give leave for a person to bring an application after forfeiture if a person has not had a reasonable opportunity to exercise their claim prior to forfeiture, the person has new evidence that was relevant to their application that was not available before forfeiture, the person had a good reason for not making an application before forfeiture or if there are special grounds for granting the leave.

56. These protections ensure that to the extent that sections 57A and 104A engage the right to a fair hearing in civil proceedings, the limitation is reasonable, necessary and proportionate.

Schedule 6 - Information

57. Item 9 of Schedule 6 to the Bill provides that a person may disclose information obtained under the coercive information-gathering powers in the POC Act to particular authorities to assist in the prevention, investigation or prosecution of offences relating to non-compliance with obligations or requirements under the POC Act.

58. Items 4 and 13-17 of Schedule 6 also remove limitations on admitting information and documents obtained under production orders, examination orders and the Official Trustee's information-gathering powers in Division 2 of Part 4-1 of the POC Act in proceedings for offences of non-compliance with these information-gathering powers.

59. These items may engage the right to a fair trial in criminal proceedings, as they allow information and documents obtained under existing information-gathering powers to be used against the person who produced them to prove criminal non-compliance with these powers.

60. Any limitation these items place on the right to a fair trial in criminal proceedings, however, is clearly prescribed by law, and is necessary to achieve the legitimate objective of ensuring public order by enhancing the effectiveness of information-gathering powers, and subsequent civil restraint and confiscation action, against serious and organised criminal entities under the POC Act.

61. These amendments are necessary as, in most cases, the only evidence of non-compliance with information-gathering powers will be that provided in response (or in failing to respond) to the exercise of these powers. If this evidence could not be used in criminal proceedings, relevant non-compliance offences would be unenforceable. There would then be no effective deterrent to prevent persons from simply failing to abide by these powers which would defeat the purpose of having information-gathering powers.

62. For example, if a person is asked a question in an examination, and states that they are refusing to answer that question, the only available information to substantiate an offence of failing to answer the question under section 196 of the POC Act would be the person's response to the question, which is not currently expressly admissible under section 198. This would effectively allow the person to escape criminal liability, undermining the efficacy of examination notices.

63. These amendments are also proportionate in achieving the legitimate aim of ensuring the effectiveness of the information-gathering provisions. Under the proposed amendments, information or documents given in response to an information-gathering power under the POC Act can be used in criminal proceedings relating to non-compliance with the information-gathering power used (along with other uses in criminal proceedings already permitted under the POC Act).

64. Using the above example, if the person in the above examination admits to committing a foreign bribery offence in response to a question from an approved examiner, this answer is not admissible in criminal proceedings against the person for this admitted offending.

65. Any limitation that items 4, 9 and 13-17 of Schedule 6 place on the right to a fair trial in criminal proceedings is therefore permissible, as these limitations are prescribed by law and are necessary and proportionate in achieving the legitimate objective of ensuring the effectiveness of information-gathering powers under the POC Act.

Prohibition against retrospective punishment

66. Part 2 of Schedule 4 and Part 2 of Schedule 5 provide that particular amendments to the POC Act apply retrospectively.

67. Article 15 of the ICCPR prohibits the retrospective operation of criminal laws, including the imposition of a heavier penalty than was applicable at the time when a criminal offence was committed.

68. This prohibition, however, does not extend to civil proceedings, such as the determination of a person's rights in non-conviction based asset recovery proceedings under the POC Act. The prohibition also does not extend to retrospective changes to procedure, practice or rules that do not affect the criminality of conduct or punishment to which an offender is liable.

69. The retrospectively-applied amendments referred to above relate to POC Act proceedings, and the treatment of information obtained pursuant to information-gathering powers under the POC Act. These amendments do not change any criminal offences or penalties imposed under these offences, and do not make any act or omission retrospectively criminal or retrospectively change penalties for criminal behaviour.

70. The retrospective application of amendments to the POC Act in the Bill therefore do not engage the prohibition on retrospective operation of criminal laws under Article 15 of the ICCPR.

Prohibition on arbitrary or unlawful interference with privacy

71. Article 17 of the ICCPR accords everyone the right to protection against arbitrary or unlawful interference with their privacy, family, home or correspondence. This includes the right to protection from interferences with a person's personal information and property, particularly where it is a family home. Interferences are permissible so long as they are authorised by law and are not arbitrary.

72. The term 'unlawful' in Article 17 means no interference can take place except in cases authorised by law. What is 'arbitrary' will be determined by circumstances of each case. In order for an interference with the right to privacy to not be arbitrary, the interference must be for a reason consistent with the ICCPR, and be reasonable in the particular circumstances. Reasonableness in this context incorporates notions of proportionality, appropriateness and necessity. In essence, this will require that these limitations serve a legitimate objective, adopt a means that is rationally connected to that objective and that are no more restrictive then they need to be to achieve this objective.

Schedule 3 - Buy-backs

73. Items 6-12 of Schedule 3 to the Bill may engage the protection against interference with a person's personal information under Article 17 of the ICCPR, as these items amend the POC Act to allow a court to make an examination order in relation to a person's application to buy back property under the Act, and a production order to determine if a person will buy back property with property derived from, or used or intended to be used in connection with, unlawful activity. Under these information-gathering powers, a person may be required to disclose personal information.

74. To the extent these amendments engage the protection against interference with privacy, they are not unlawful as they are authorised by law. They are also not arbitrary, as these amendments are necessary to ensure that forfeited property is not re-acquired by criminal elements acting either directly, or by proxy.

75. The amendments at Schedule 3 are necessary to achieve this objective as law enforcement currently does not have access to adequate information-gathering powers to properly investigate applicants for buy-back orders. As a result, there is a risk that criminal entities could buy back property through proxies or by using illicit funds or unexplained wealth, unfairly denying other potential buyers an opportunity to purchase the property and potentially perpetuating the cycle of laundering illicit funds through seemingly legitimate purchases.

76. The amendments are rationally connected to this aim as ensuring that examination orders and production orders can be used in relation to buy-back applications will allow a responsible authority to test a person's claim that they are purchasing the property legitimately and were unaware of, and played no role in, the criminal offending giving rise to forfeiture.

77. Production orders and examination orders must be made by magistrates in their personal capacity and the courts respectively, which will retain the discretion not to make these orders for any reason under proposed sections 181A and 181B and existing section 202 of the POC Act. Production orders can also only be obtained to gather a narrow range of documents, namely those that are in the possession, or under the control, of a corporation or are used, or intended to be used, in the carrying on of a business.

78. Information obtained under these information-gathering powers can be disclosed to specific authorities where a person believes on reasonable grounds that the disclosure will serve a purpose provided under subsection 266A(2) of the POC Act. Disclosure can be made, for example, to the Australian Taxation Office for the purpose of protecting public revenue.

79. Under section 266A, as amended by Schedule 6 to the Bill, information can be disclosed to an investigative or prosecutorial body for the purpose of investigating or prosecuting a crime punishable by at least 3 years imprisonment, or a non-compliance offence relating to the POC Act. The evidence given by a person in response to a production order or examination notice will also not be admissible in criminal proceedings against the person, unless these proceedings relate to non-compliance with the relevant information-gathering power used under the POC Act or are otherwise specified under the POC Act.

Schedule 6 - Information

80. Items 4 and 7-18 of Schedule 6 to the Bill may also engage the protection against interference with a person's personal information under Article 17 of the ICCPR as they expand the circumstances in which information or documents obtained using information-gathering powers under the POC Act can be disclosed and used. Information or documents could include personal information.

81. These amendments, however, are necessary to protect public order by ensuring that information-gathering powers under the POC Act remain effective in targeting serious and organised crime, and are rationally connected to this objective.

82. The amendments at item 8 are necessary as information gathered by the Official Trustee under Division 2 of Part 4-1 of the POC Act is currently not included within the permissible disclosure framework of current section 266A, raising doubts as to whether this information can be disclosed to relevant authorities, and for the vital purposes, outlined in this section. Item 8 addresses this issue by bringing information obtained under Division 2 of Part 4-1 into the framework of section 266A, clarifying that the Official Trustee can disclose this information to specific authorities for specific purposes, including to further POC Act investigations or enforce non-compliance offences relating to the POC Act.

83. The amendments at item 9 are necessary as there are currently doubts as to whether information gathered under sworn statements under an order made under paragraphs 39(1)(ca), (d) or (da), or under a power in Chapter 3 of the POC Act, can be disclosed to authorities for purposes that are vital to maintaining the effectiveness of the POC Act. The item addresses this issue by allowing information to be disclosed to:

•

Commonwealth, State or Territory investigatory and prosecutorial authorities for the purposes of investigating an offence of non-compliance with the Act

•

the authority responsible for the Extradition Act 1988, the Foreign Evidence Act 1994 and the MACMA to facilitate the performance of its functions under these Acts, and

•

authorities of a foreign country with functions corresponding to the above Acts to prevent, investigate or prosecute an offence that would also be an offence if committed in Australia, punishable by at least 3 years or for life, or assisting with a proceeds investigation.

84. The amendment at item 10 is necessary to allow information obtained under the POC Act to be disclosed to professional disciplinary bodies to enable or assist the body to perform their functions. This ensures that evidence of a serious breach of professional standards can be passed on to these bodies, assisting them in investigating professional facilitators of serious and organised crime. Item 10 is also necessary to ensure that information obtained under the POC Act can be disclosed to the International Criminal Court and the International War Crimes Tribunal to perform their respective functions.

85. The amendments at items 4 and 13-17 remove limitations on admitting information and documents obtained under production orders, examination orders and the Official Trustee's information-gathering powers in Division 2 of Part 4-1 of the POC Act in proceedings for offences of non-compliance with these information-gathering powers.

86. These amendments are necessary as, in most cases, the only evidence of non-compliance with information-gathering powers will be that provided in response to the exercise of these powers. If this evidence could not be used in criminal proceedings, relevant non-compliance offences would be unenforceable, and there would be no effective deterrent to prevent persons from simply failing to abide by these powers.

87. For example, if a person is asked a question in an examination, and states that they are refusing to answer that question, the only available information to substantiate an offence of failing to answer the question under section 196 of the POC Act would be the person's response to the question, which is not currently admissible under section 198.

88. The amendments are also no more restrictive than they need to be to achieve this objective.

89. Information-gathering powers under the POC Act can only be exercised if appropriate approvals are given. Information-gathering powers under paragraphs 39(1)(ca), (d) or (da) and Chapter 3 of the POC Act (with the exception of Part 3-3) may only be exercised under a judicial order, and it remains open to the judiciary not to issue such an order should they see fit.

90. Notices to financial institutions under Part 3-3 may only be issued by senior officers under subsection 213(3) if the officer reasonably believes that giving the notice is required to determine whether to take action under the POC Act or in relation to POC Act proceedings. The Official Trustee's information-gathering powers under Division 2 of Part 4-1 may only be exercised in relation to the Official Trustee's duties or powers under the Act, which are limited to administering the Confiscated Assets Account, and only apply to restrained property placed under their custody and control, forfeited property or property subject to a confiscation direction under section 282 or 282A of the POC Act.

91. A person may disclose information obtained under these powers to the authorities in subsection 266A(2) if they believe on reasonable grounds that it will serve a purpose outlined in this subsection. It remains open to a court to prohibit the disclosure of information to particular authorities for particular purposes.

92. The evidence obtained under a production order or examination notice, however, will not be able to be used against the person, and will not be admissible in criminal proceedings against the person, unless these proceedings relate to non-compliance with the relevant information-gathering power used under the POC Act or other proceedings listed in the relevant provisions.

93. In so far as Schedule 6 to the Bill interferes with the right to privacy, this interference is therefore lawful and not arbitrary, and is reasonable, necessary and proportionate in achieving the legitimate objective of maintaining public order.

Schedule 7 - Official Trustee

94. Currently, the Official Trustee's powers to obtain information and deal with property under Divisions 2 and 3 of Part 4-1 can only be exercised in relation to 'controlled property', defined as restrained property that is subject to a custody and control order under section 38 of the POC Act.

95. Schedule 7 to the Bill expands these powers to allow the Official Trustee to also exercise them in relation to property that is subject to a forfeiture order, property forfeited under section 92 of the POC Act, or property subject to a direction under sections 282 and 282A of the POC Act. This expansion engages the protection against arbitrary or unlawful interference with a person's personal information or their family home under Article 17 of the ICCPR, as it allows the Official Trustee to gather information about property, and exercise powers to deal with the property, including by disposing of or destroying it, including while appeal periods are ongoing.

96. Any interference with this protection by the Official Trustee is expressly authorised by law.

97. Any interference is also not arbitrary, as the amendments in Schedule 7 to the Bill are necessary to allow the Official Trustee to gather information and discharge its obligations under the POC Act to preserve the value of property that has vested in the Commonwealth during appeal periods.

98. Once property is confiscated by the Commonwealth and all relevant appeal periods have ended, the Official Trustee is generally under an obligation to dispose of the property and credit the proceeds to the Confiscated Assets Account (see sections 70, 100 and 284). Once property is forfeited to the Commonwealth, however, the Official Trustee can no longer exercise its information-gathering powers and power to preserve property, leaving the Official Trustee unable to properly exercise its powers or discharge its functions during appeal periods, despite, in the case of property subject to a forfeiture order or property forfeited under section 92, the property having vested absolutely in the Commonwealth.

99. This is problematic as appeal periods in complex matters can stretch over years and, without the ability to exercise its statutory powers, the Official Trustee has previously been unable to locate confiscated property or preserve its value. This can occur, for example, where property has been sent offshore in breach of a restraining order and its location is no longer known. This impacts negatively on both the Commonwealth and others with a legitimate interest in the property, as the value of this interest either cannot be realised or may depreciate.

100. The amendments are also no more restrictive than they need to be to achieve this objective.

101. The Official Trustee's powers and duties in dealing with forfeited property or property subject to a direction under section 282 or 282A under the POC Act is limited, and is primarily confined to taking custody and control of this property and preserving its value.

102. The Official Trustee can only exercise its information-gathering powers under Division 2 of Part 4-1 in relation to its limited role. If a person gives information or a document to the Official Trustee under these information-gathering powers, the information or the giving of the document is not admissible in evidence in criminal proceedings against the person, except for offences of non-compliance with these information-gathering powers and other specific criminal proceedings listed in the POC Act. Information obtained using these powers may be disclosed to specific authorities for specific purposes under section 266A (as amended by Schedule 6 to the Bill).

103. Similarly, the Official Trustee may only dispose of or destroy property using its powers in Division 3 of Part 4-1 in limited circumstances. Property may be destroyed only if it is in the public interest to do so or it is required for the health or safety of the public. Property may only be disposed of with the agreement of all parties with an interest in the property; if the property is likely to lose value in the opinion of the Official Trustee; if, in the opinion of the Official Trustee, the costs of controlling the property are likely to exceed or be a significant proportion of the value of the property when it is finally dealt with; or if the disposal is necessary to pay a legal aid commission's costs.

104. The Official Trustee must notify any person it believes may have an interest in the property under section 279 and, if a notified person objects in writing within 14 days of receiving the notice, the Official Trustee must apply for a court order under section 280 if it wishes to proceed with the proposed destruction or disposal. The court has broad discretion under section 280 to decline to make such an order.

105. If property is sold, the proceeds of this sale will be taken to be covered by the restraining order or forfeiture order that covered the property under section 281. This ensures that, if a forfeiture order, a conviction resulting in automatic forfeiture of property under section 92 or a direction under section 282 or 282A is overturned on appeal and ceases to have effect, an amount equal to the value of the person's interests in the property will be returned to them. The Official Trustee will not be permitted to credit the sale proceeds to the Confiscated Assets Account until all relevant appeal periods have ended.

106. In so far as Schedule 7 to the Bill interferes with the right to privacy, this interference is therefore lawful and not arbitrary, and is reasonable, necessary and proportionate to the legitimate objectives.

Conclusion

107. The Bill is compatible with human rights because, to the extent that it may limit human rights, those limitations are reasonable, necessary and proportionate.